PSA: You're buying CFDs (Contract for Difference) derivatives on Robinhood that are settled in fiat, not cryptocurrencies.

For anyone thinking of buying crypto on Robinhood:Robinhood doesn't actually allow people to buy cryptocurrencies on an exchange and they are not actually comparable to Coinbase, they're instead allowing trading of CFD's derivatives (contract for difference) to be settled in cash. These are basically derivatives whose underlying value is the market price of the cryptocurrency, that Robinhood looks up on other exchanges:When placing market orders, we display the best available price on Robinhood Crypto, which is based on the exchanges we connect to.http://bit.ly/2EQym1T is why you can't actually deposit cryptocurrencies to Robinhood or withdraw them to an actual wallet, or move them to another exchange. You won't even have your own address that you can look up on the blockchain explorer!Since no actual crypto is being exchanged, all that is happening is people are making bets within Robinhood's internal database on the external exchange price movement of various cryptos. Supposedly Robinhood will itself maintain some balance of cryptos in an external wallet it purchases from other exchanges in order to cover any increases in price through some unspecified clearing house, but they could also just cover the cash prices with a small reserve. They do say that at some unspecified time they will actually move to becoming a real cryptocurrency exchange, and you will be able to withdraw then.Even once they move to becoming an actual exchange (assuming it ever happens), don't assume that the price of crypto will moon because of Robinhood. Keep in mind that Robinhood's userbase has tiny balances. Their total volume traded last year was only $30 billion:http://nyti.ms/2FqHCul great that Robinhood is 80% millennial users since they tend to be most interested in cryptocurrencies, but its still a drop in the bucket. Looking at CMC today's market volume was $20 billion. Just in one day.Usually the way CFD brokers make their money is through the bid/ask spread, especially on the market order spread they set. Looking at Robinhood Crypto, they have a collar spread on market orders at 1% for buys, and 5% for sells. Most Robinhood investors are complete newbies and will fire off those market orders, and inherently pay that spread while believing its "no fees trading". via /r/Bitcoin http://bit.ly/2EO4TW7