We’re here to help you understand the basics of cryptocurrency trading.
A blockchain is a digital, decentralized ledger of crypto transactions. The Bitcoin and Ethereum networks are both blockchains where all transactions are recorded. Where assets tied to governments were formerly backed by gold or silver, Bitcoin and Ethereum are backed by their respective networks. A typical cryptocurrency transfer is first published to the blockchain, where it’s then securely verified by multiple sources in the network. Once a transfer is confirmed by several sources and verified for all to see, it’s accepted by the network. Since the blockchain verifies the transfer of assets, you no longer need to go through a bank to initiate a transaction.
Crypto is digital currency, created and stored electronically in the blockchain using cryptography (hence “crypto”) to control their creation and to verify the transfer of funds. Crypto is unique because they don’t have any physical form and exist only in the network. Their supply, or circulation, isn’t determined by any central bank or government, and the network itself is completely decentralized. There are a growing number of cryptocurrencies, but the most popular to date are Bitcoin, Ethereum, and Litecoin.
Robinhood Crypto supports market and limit orders for cryptocurrencies, which work similar to market and limit orders for stocks and options. When you place a market order, the order is executed at the current market price available on the Robinhood Crypto platform. You’ll never get charged a commission on top of the execution price. For limit orders, you specify the maximum (or minimum) price you’re willing to buy (or sell) at. Cryptocurrency prices are volatile. To help protect your market orders against dramatic price moves, we adjust market orders to limit orders collared up to 1% for buys, and 5% for sells. Any price difference between the estimated price and the execution price is due to market movement.
Aave (AAVE) is an ERC-20 token and the native cryptocurrency of Aave, a decentralized protocol that allows the lending and borrowing of more than 20 different cryptocurrencies. AAVE offers its holders lower transaction fees and the ability to participate in platform governance. There’s currently no maximum supply of AAVE.
Avalanche (AVAX) is a crypto asset and open-source blockchain network launched in 2020 by Ava Labs. As a platform it supports decentralized apps (dApps) and enables the creation of custom blockchains, inter-operable blockchains and financial services. AVAX is Avalanche’s native asset and functions as a standard unit of value between Avalanche and its sub-platforms. Its supply is capped at 720 million coins, and is used both to pay network transaction fees and to allow users to participate in Avalanche’s Proof-of-Stake (PoS) consensus algorithm.
Bitcoin, created in 2009, is the first decentralized cryptocurrency. Like many cryptocurrencies, it’s not tied to any government or issuing authority, and there’s no middleman involved when it’s used to purchase goods. Most of its concepts have been applied to other fields, and replicated in other cryptocurrencies. Bitcoin denotes both the name of the network and the currency that’s built on top of it. Its symbol is BTC. Bitcoin is tradable on Robinhood Crypto, and you can buy and sell fractions of BTC. The minimum order size is 0.000001 BTC. Bitcoin is not a stock and your cryptocurrency investments are not protected by SIPC.
Bitcoin Cash, launched in 2017, was created as an offshoot of Bitcoin that allows faster transactions on the network. Similar to Bitcoin, Bitcoin Cash is capped at 21 million coins. Its symbol is BCH. Bitcoin Cash is tradable on Robinhood Crypto, and you can buy and sell fractions of BCH. The minimum order size is 0.001 BCH. Bitcoin Cash is not a stock and your cryptocurrency investments are not protected by SIPC.
Cardano (ADA) is a crypto asset and blockchain platform launched in 2017. As a platform, Cardano’s goal is to be as environmentally sustainable as possible by using a proof-of-stake (PoS) system, which requires less processing power than the alternative proof-of-work models. Like Bitcoin, transactions are settled on Cardano’s first layer, and smart contracts are executed on Cardano’s second layer, which is similar to Ethereum. ADA is Cardano’s native token; it’s used both to pay transaction fees and to allow users to participate in Cardano’s PoS.
Chainlink (LINK) is an ERC-20 token and decentralized oracle network that was launched in 2017. Chainlink translates real-world data— like currency conversion rates, supply chain data, and even sports scores— to smart contracts on the blockchain. LINK is Chainlink’s native token; it’s used to help support the underlying technology of the Chainlink network by incentivizing data accuracy and rewarding node operators for access to services.
Compound is an algorithmic, autonomous interest rate protocol built for developers to create open financial applications. It was created in 2017 by entrepreneurs Robert Leshner and Geoffrey Hayes. Compound allows users to earn interest by depositing crypto into lending pools that can be accessed by borrowers. COMP is Compound’s Ethereum-based governance token, which enables holders and delegates to propose and vote on changes to the protocol. Users can earn COMP through lending or borrowing assets on Compound. There is a maximum total supply of 10 million COMP.
Dogecoin, introduced in 2013, is known for its playful take on the cryptocurrency phenomenon. It’s typically used in online communities to “tip” users for content that’s particularly witty or useful. It’s also become a popular cryptocurrency for donating to charities. Its symbol is DOGE. Dogecoin is tradable on Robinhood Crypto. The minimum order size is 1 DOGE. Dogecoin is not a stock and your cryptocurrency investments are not protected by SIPC
Like Bitcoin, Ethereum is a digital currency based on a blockchain technology. Though the applications of Ethereum extend beyond currency, the coin, technically called an Ether, is a tradable asset on Robinhood. Its symbol is ETH. Ethereum is tradable on Robinhood Crypto, and you can buy and sell fractions of ETH. The minimum order size is 0.0001 ETH. Ethereum is not a stock and your cryptocurrency investments are not protected by SIPC.
Ethereum Classic is the original Ethereum blockchain. On July 20th, 2016, Ethereum executed a “hard fork,” which means that the single Ethereum blockchain split into two distinct blockchains. As a result of this split, what was once simply referred to as Ethereum became Ethereum Classic, and the newly created blockchain is now referred to as Ethereum. All transactions on both blockchains are identical up until the hard fork at block 1920000. Starting at the split, the two cryptocurrencies began living on separate blockchains. Its symbol is ETC. Ethereum Classic is tradable on Robinhood Crypto, and you can buy and sell fractions of ETC. The minimum order size is 0.01 ETC. Ethereum Classic is not a stock and your cryptocurrency investments are not protected by SIPC.
Litecoin was launched in 2011 as an alternative cryptocurrency to Bitcoin. Like Bitcoin, it’s based on blockchain technology. Litecoin has quickly become one of the most popular cryptocurrencies because of its fast transfer confirmation times when compared to Bitcoin. Its symbol is LTC. Litecoin is tradable on Robinhood Crypto, and you can buy and sell fractions of LTC. The minimum order size is 0.001 LTC. Litecoin is not a stock and your cryptocurrency investments are not protected by SIPC.
Polygon (previously Matic Network) is a decentralized Ethereum scaling platform that enables developers to build user-friendly apps with low transaction fees. It was created in 2017 by Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic. Polygon claims to be able to process up to 65,000 transactions per second with network fees of a fraction of a cent. The native token used to pay for transaction fees on Polygon is called MATIC, which has a maximum total supply of 10 billion. MATIC is an Ethereum-based ERC-20 token, but it can also be bridged to the Polygon network. MATIC purchased on or sent to Robinhood may be held partially on either the Ethereum or Polygon network.
Shiba Inu (SHIB) is an Ethereum-based token that was launched as an alternative to Dogecoin (DOGE) in August 2020 by an anonymous person or group under the name Ryoshi. There is a circulating supply of 589,735,030,408,323 SHIB.
Solana is a decentralized blockchain built to enable scalable, user-friendly apps that was launched in 2017 by the Geneva-based Solana Foundation and San Francisco-based Solana Labs. Solana can theoretically process up to 65,000 transactions per second with low fees by combining proof-of-stake and proof-of-history consensus mechanisms. Solana’s native cryptocurrency used to pay for transaction fees is called SOL, which has theoretically no total maximum supply.
Stellar Lumens (XLM) is the native cryptocurrency of Stellar. Stellar is an open-source decentralized payment network established in 2014, with the goal to transmit payments and currencies across borders faster and more securely than traditional financial networks. Lumens (XLM) are used to fund activity on the Stellar network in the form of minimum balances and per-transaction fees. XLM supply is capped at 50bn.
Tezos (XTZ) is the native cryptocurrency of Tezos, a blockchain that supports smart contracts and decentralized applications. Tezos emphasizes community governance and allows XTZ holders to participate with protocol upgrade proposals.There’s currently no maximum supply of XTZ.
Uniswap (UNI) is an ERC-20 token and decentralized exchange launched in 2020. Uniswap uses Automated Market Maker (AMM) technology to enable decentralized cryptocurrency exchange, without relying on intermediaries. UNI is Uniswap’s native token; it functions to reward users who provide liquidity using their digital assets on the Uniswap platform. Holding UNI allows users to engage in Uniswap governance, with voting power proportional to their UNI balance.
USD Coin (USDC) is a digital asset issued by Circle Internet Financial and is fully backed by US dollars or US dollar equivalents, which include cash and short-dated US government obligations. USDC was developed to represent a US Dollar equivalent on the blockchain, and is used to transfer money between people and businesses using a stable asset without the need for third-party financial institutions.
Robinhood facilitates USDC purchases and redemptions from Circle. Robinhood is not the issuer of USDC, does not hold reserves for USDC, and has no obligation to repurchase your USDC for USD. See the Robinhood Crypto Customer Agreement for additional information.
The prices of cryptocurrencies are volatile largely because they’re a new asset class, and there’s no consensus on their overall worth as a currency or investment.