Robinhood, the popular commission-free stock trading app will soon let users also trade cryptocurrencies with zero transaction fees. On January 26, 2018, the platform first let users track the prices of top cryptocurrencies by market capitalization, including bitcoin, ripple and several more.
New Crypto Kid on the Block
The hugely popular stock trading app announced via its blog, stating that it will now offer a single platform for trading stocks and cryptocurrencies. Another interesting data point explains that the average age of traders at Robinhood is approximated to be 26 years old.
Offering cryptocurrency trading on the zero commission model could give it an upper hand over incumbents such as Coinbase that charges anywhere between 1.5 to four percent as a trading fee.
Introducing Robinhood Crypto. Invest in Bitcoin and other cryptocurrencies commission-free on the Robinhood platform, 24/7. #DontSleep. Get early access https://t.co/28TamoX4rO pic.twitter.com/MiQ9xnsoaq
— Robinhood (@RobinhoodApp) January 25, 2018
Robinhood is a U.S. based financial services company founded in 2014 and based in Palo Alto, California. It has raised $176 million from investors including Andreessen Horowitz, Index, and the NEA. The company was founded by Baiju Bhatt and Vladamir Tenev and valued at $1.3 billion in the latest funding round.
Robinhood obtains its revenue by earning interest on its users’ balance and by providing a margin trading service. The founders were motivated to start the company after having previously worked on high-frequency trading algorithms.
The firm’s cryptocurrency trading platform is expected to be live sometime in February across all U.S. states where it earns approval. Initially, only users located in the states of California, Massachusetts, Missouri, Montana, and New Hampshire will be able to use the new cryptocurrency platform.
According to an article by Techcrunch, a user will be able to easily transfer up to $1,000 from their connected bank account to Robinhood. For larger amounts, the cryptocurrency platform will require a gold membership, billed between $6 and $200 depending on borrowing volume. Any additional funds are transferred using the slower ACH transfer.
High Barrier to Entry
Users of the Robinhood platform can begin keeping an eye on their preferred cryptocurrencies from a list that includes Bitcoin, Ethereum, Bitcoin Cash, Bitcoin Gold, NEO, Litecoin, Ripple, Lisk, Ethereum Classic, Zcash, Monero, Dash, Stellar, Qtum, OmiseGo, and Dogecoin.
Speaking on the launch of Robinhood’s cryptocurrency endeavor, the company’s cofounder, Vlad Tenev, said, “We’re planning to operate this business on a break-even basis, and we don’t plan to profit from it for the foreseeable future.”
He further emphasized that the value of the Robinhood trading platform had kept growing and that the company is taking steps to serve its users better. Robinhood could substantially expand beyond its current user base of 3 million primarily because it offers a zero commission trading model for cryptocurrencies as well.
Tenev had earlier remarked that Robinhood’s cryptocurrency platform would also be operated on a no-profit and no-loss business model as the focus for the company was on expanding users and improving customer experience. “We’re extremely selective about the cryptos we’re making available on the platform,” he added.
“We’re introducing those (cryptocurrencies) first because these are the most mature coins that people are trading these days. Multiple times people have declared them dead, and they’ve come back stronger than ever.”
Robinhood Crypto, on its website, labels itself as a commission-free platform to invest in cryptocurrencies, stocks, and options. It also offers the ability to track different coins and provide latest market news. To ensure that people don’t have their wallets compromised, the company is also adding a new two-factor authentication option shortly.