World's "Fastest-Growing Brokerage" Adds Cryptocurrency Trading

Robinhood Financial, which is reportedly the "fastest-growing online brokerage in history" for the simple reason that it is - or rather was - free, is getting into cryptocurrencies. The popular free stock-trading app with more than 3 million users said it will add options for trading Bitcoin and other digital coins, entering competition with fellow fintech startup Coinbase.

Digital currency trading will mark the first paid product for Robinhood, which became wildly popular among millennials by letting anyone buy and sell small amounts of stock without fees. The company said it’ll only charge for cryptocurrency transactions to recoup the costs associated with trading the assets and won’t take a commission.

Still, the total transaction costs will be decidedly lower compared to Coinbase’s 1.5 to 4% fees in the US. And as of today Robinhood will let all users track the price, news, and set up alerts on those and 14 other top crypto coins, including Litecoin and Ripple.

“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” said Robinhood co-founder Vlad Tenev. “The value of Robinhood Crypto is in growing our customer base and better serving our existing customers.”

Robinhood plans to roll out the option gradually and hopes to have it available to customers in most U.S. states by midyear, Bloomberg reports.

Why Bitcoin?

“Bitcoin has a resiliency to it,” said Baiju Bhatt, co-founder and chief executive officer of Robinhood. “This is something that we also feel like really fundamentally aligns with the mission of the company -- to make the financial system more accessible to the rest of us.”

Not really: in a world of trader apathy, cryptos remain the one product which Millennials are excited and fascinate by, and the rush to grab - and steal - market share for the most active retail trading segment is only just starting.

According to TechCrunch, by using crypto trading as a loss leader instead of its primary business like Coinbase and other apps, Robinhood could substantially expand beyond the 3 million users it already has. Meanwhile, simplifying trading and tracking could bolster Bitcoin and Ethereum. And by combining it with traditional stock, ETF, and option trading in a single app, Robinhood could further legitimize the cryptocurrency craze. The two trading worlds could cross-pollinate, dragging even more people into the crypto scene.

Robinhood's new product offering should be especially popular among Robinhood’s young customer base, whose average age is 30 years old. According to a recent survey, more than half of Bitcoin holders (sic) are from the ages of 18 to 34.

Some more from Bloomberg:

Coinbase and Robinhood were founded around the same time about five years ago and are part of a small crowd of fintech startups with valuations exceeding $1 billion. Coinbase, one of the world’s largest cryptocurrency exchanges, makes money by charging the buyer and seller a fee. It’s easy to see why Robinhood wants in on the action.

While Robinhood added more than 300,000 accounts in November and now has more than 3 million users, Coinbase has grown more rapidly, to more than 13 million as of late last year.

As TechCrunch adds, Robinhood has raised $176 million from top investors including Andreessen Horowitz, Index, and NEA that now value the company at $1.3 billion. There’s clear long-term benefit to rolling up crypto traders and using the feature as a wedge to get them to hold money with Robinhood where it earns interest, and pay for the Robinhood Gold premium tier for $6 to $200 a month that lets them borrow between $1,000 and $50,000.

Meanwhile, in an attempt to maintain its recent momentum, Coinbase which on several days in recent months saw as many as 100,000 new daily user, added a former Twitter executive to its ranks to lead customer service and vowed to substantially increase its support staff. Robinhood says it has also added to that department recently.

As Robinhood rolls out the new functionality, “There will be a wait list, and we will onboard customers at a rate at which we can support them,” Bhatt said. “We’re not strangers to trading operations. We’ve been doing this for years now in public markets, and we’ll take what we’ve learned from doing this and apply it to crypto.”

The slow rollout should help. Starting in February, all Robinhood customers will be able to have watch lists for Bitcoin and other crypto-assets like Ethereum and Ripple. Trading will come later. A Robinhood spokesman declined to say which exchange it will use, but he said the company will add multiple ones over time, with the goal of getting customers the best prices.

The early demand for the product was clear. 100,000 of Robinhood’s users were regularly seaching for crypto pricing and trading in its app, and 95% of those surveyed said they’d invest in cryptos if the product supported it. Robinhood even had to send a cease-and-desist to “Cobinhood”, a competing crypto trading app that cribbed its name and raised $10 million in an ICO.

Judging by the choices of two top startups, you could see this week as a sign of cryptocurrency’s shifting purpose. Yesterday Stripe removed Bitcoin as a payment option on its platform, and now Robinhood is adopting trading. “People are thinking about cryptos less from a payments standpoint and more from an assets investment standpoint” Tenev explains.

“[Cryptocurrency] puts power that’s historically been held by financial institutions in the hands of the people. I think that lines up directly with Robinhood’s mission to democratize the financial system” Tenev told TechCrunch, concluding “We’re an established company and we can handle it”. The confidence to burst into the wild west of crypto could either tank his startup with a massive security fail or greatly boost its traction by alligning with what’s become a cultural phenomenon.

That said, Robinhood - and Coinbase - have a long way to go before they become true market makers, a title reserved for Japan's millions of rabid bitcoin traders and, of course, South Korea's "Bitcoin Zombies."


cro_maat WorkingClassMan Thu, 01/25/2018 - 21:51 Permalink

Wrap your minds around this:

Utility tokens have.... wait for it.... Utility

And a company can define that utility any way that they like. For instance, access to products / services earlier than the masses, new features unlocked, VIP access to events, payment of fees, early access to partner ICOs, use of the token as collateral for a loan (without losing control of the collateral), product design input, free swag, air drops, etc.

And if the company who launched the token goes bankrupt, the blockchain continues and the token has value as long as the user base continues to find UTILITY in being part of the technology stack / token platform.

Now tell me the utility of a stock certificate? And can you verify for me how many are in circulation? What happened at the paper storage facility of DTCC in downtown Manhattan during Hurricane Sandy again?

In reply to by WorkingClassMan

RAT005 cro_maat Thu, 01/25/2018 - 22:38 Permalink

The current unbacked fiat system is the big problem.  A cute unbacked token doesn't offer any solutions to the original problem.  If block chain has value and a future, it will have to be managed with something of value.  Right now it is just practice with tokens.  Like a poker game with plastic chips.  It's exciting to win but the chips aren't worth anything.  Change the game that the casino backs the chips with fiat and it gets a lot more real.  Next if the casino backs the chips with gold and silver it is very real.

In reply to by cro_maat

ProstoDoZiemi Truther Fri, 01/26/2018 - 02:01 Permalink

What's backing the dollar and the almighty gold that everyone beats their dick to

You going to pay gas with a 1 oz coin of gold at the station or are you going to cut off a piece, same argument can be made with shit coin

.... just saying it's all the same shit, banksters are already in the e-coin pie, just a matter of how much they got thus far, recent action as a result of futures should tell you that they're eating away at the pie piece by piece

In reply to by Truther

cro_maat DEMIZEN Thu, 01/25/2018 - 22:01 Permalink

You must be from a planet where they have price discovery. LMAO

I can assure you that crypto traders read reports and do their homework. The weak hands sell on FUD just like the stawk mawket but the serious traders know who the real players are and what tech. stacks will make an impact.

There will come a day (and soon) where you will see a listed public company issue a utility token via an ICO and use the proceeds to buy back their shares and go private. And the crypto community will back them to the hilt if they create the right utility. Then the flood gates will open and global stawk mawkets will start their inevitable swan song.

In reply to by DEMIZEN

M O B BennyBoy Thu, 01/25/2018 - 20:11 Permalink

What exactly are you saying here?

I should go pay $5+ per trade while my broker front-runs my order at one of the big boys? What's the difference? In either place they collect my data and work against my interests, but at least I don't pay fees at once of them.

In reply to by BennyBoy

wtftech Thu, 01/25/2018 - 18:23 Permalink

People will spend $5000.00 creating 1 coin, when they could have printed it on paper for less than a penny .001 cents.

This will turn out real well in the end.
Instead of wallets, Americans will have wheel barrels for their money to buy their nacho fries.

Yen Cross Thu, 01/25/2018 - 18:27 Permalink

  Oops, don't look now...  I do believe I'm seeing some serious euro profit taking.

 Once the scam is exposed, there's no moar useful idiots/

  *paging the PBoC red phone.

MusicIsYou Thu, 01/25/2018 - 18:34 Permalink

Crytocurrency is just a form of bartering. "I'll trade my delusion for your delusion." Haha. Because crytocurrency is mainly used for what people want and not what they need.

Mr Hankey Thu, 01/25/2018 - 18:35 Permalink

OT .yall might as well be speaking Chinese anyhoo.

How does one get banned from /pol/? 

I was on topic.

The topic was religion & I was shitposting onthe usual chrislings & christer cuckfags, nothing I dont do here.

WTF? What makes me an ubertroll over there & not here?

Yall read some of the shit goes on over there?

Whatta Thu, 01/25/2018 - 20:01 Permalink

I've had a Robinhood account since it started. Not bad for free if all you do is trade US stocks and etf's. It works pretty well for no-frill platform.

They are adding option trading too.

Texas, where I am, is not one of the first states that will be available for crypto trading on the platform though. Hopefully it comes soon.

adr Thu, 01/25/2018 - 22:12 Permalink

Is Robin Hood actually trading the stocks and cryptos or are they just creating virtual Ponzi accounts and never really executing trades?

I only say this because it seems Coinbase really isn't executing real crypto trades.

Redpointist adr Thu, 01/25/2018 - 22:42 Permalink

Coinbase's backend is their GDAX exchange. Looks real enough to me. Some of the asian exchanges on the other hand look to be full of wash trading and fake volume.

I'd think the companies bought on Robinhood would be a bit mad if they found out that Robinhood wasnt actually buying the stocks. Looks like they just sell your ordersteam data just like every other brokerage.

PS, Use my referral code for a free stock if you decide to download the robinhood app:

In reply to by adr