The Robinhood platform has shown its true colors in recent days. While advertising itself as a company to make investing accessible to everyone, there are a fair few caveats to keep in mind. There are several good reasons not to use this application or offerings in the same category.
Robinhood Can Freeze Trading
As has become painfully evident this week, traders on Robinhood may find themselves in awkward positions. More specifically, it is not uncommon to see certain assets being frozen from trading, preventing users from either buying or selling them for profit. Why a company feels the need to make such decisions will always remain baffling. From a consumer point of view, such a turn of events is entirely unacceptable.
This week, Robinhood has received a lot of backlash over these decisions. When regular people start making big money with investments- and oppose the majority of Wall Street traders in the process – it is seemingly not allowed to happen. This is one reason why centralized gatekeepers like this one will eventually become a relic of the past.
Don’t Buy Crypto, It’s Not Yours
Although many people are excited about investing in crypto-assets through Robinhood, there are some serious drawbacks. Users don’t know their wallet address or private key and they do not own any assets directly. It is also impossible to move one’s funds to a different wallet, as external transfers are not allowed.
The crypto approach by Robinhood continues to raise a lot of questions today. Nothing is known about whether they own any cryptocurrency at all. The company may provide exposure to derivatives vehicles, albeit that has never been officially confirmed. A bizarre system that is best avoided altogether.
Customer Service Is A Problem
Following the recent string of events involving Gamestop and AMC stocks, another shortcoming of Robinhood becomes apparent. As thousands of users found themselves locked out of trading, the company did very little to explain the situation adequately. Failing to communicate with users who trust you with their money shows where the company’s priorities lie.
The lack of communication and customer support is nothing new either. Since its inception, the company has received bad marks for its customer support. Waiting weeks for an answer is relatively common, and emails are ignored most of the time. For an investing platform, this approach raises a lot of uncomfortable questions.
As is often the case during incidents like these, a company can gain momentum or lose a lot of traction. For Robinhood, it remains unclear what the future will bring. The PR disaster this week will linger in the minds of many traders for some time to come.
Those who are passionate about trading financial markets may want to look at more viable alternatives. Any solution that takes away control from its users is best avoided, especially when trading crypto-assets. Empowering users needs to be the priority for firms like Robinhood, rather than catering to the wealthy.
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