Robinhood, the app that charges you no commission to trade stocks, has finally introduced its services to the crypto-coin market. Besides this, traders will now be able to track prices, set up alerts, and get new information on Bitcoin, Ethereum, and 14 other altcoins, including Ripple and Litecoin. According to Vlad Tenev, the founder of the app, they plan to operate on a break-even basis, and they do not plan to see any profits in the near future. He added,
The value of Robinhood Crypto is in growing our customer base and better serving our existing customers.
How This Could Benefit the App
By essentially using cryptocurrency trading as a loss leader rather than its main business such as Coinbase, Robinhood could grow its user base significantly beyond the current 3 million. Besides this, the simplified trading and tracking of Bitcoin and Ethereum could help to give the two digital coins a major boost. Also, combining the coins with ETFs, options trading, and the traditional stock market could help to bolster the legitimacy of crypto coins. These two worlds could benefit mutually, helping to ensure that more people trade in digital currencies.
Most startups that deal in crypto have a shady track record. However, Robinhood has been around for five years and managed to raise $176 million from major investors such as Index, NEA, and Andreessen Horowitz. The company’s market is $1.3 billion today and growing. There is a clear benefit to opening up to crypto traders. It will incentivize them to hold on to cash long-term on Robinhood as they earn interest. Another incentive might be the ability to pay for Robinhood Gold premium at $6 to $200 a month that lets users borrow from $1000 to $50,000.
How Robinhood Crypto Will Work
With your existing bank account, you will be able to transfer up to $1000 from your bank account – and more if you pay for Gold Premium. For small traders, this could be quite enticing as these platforms have low transfer times, which causes them to miss on low prices when they want to buy.
When you place buy or sell orders on the app, you will be given an estimated price. You will then be connected to an array of exchanges so that you can find the lowest price. To fight market volatility, the app will let you put a collar on your trade so that it does not execute at close to the estimated price. It waits for the price to go lower and lets you know when it happens.
In addition, in case the price skyrockets or falls suddenly, you can place a limit order to set a price for when you buy or sell. For the digital currency trading, only ETH, and BTC will be offered. It will first be available to traders in Montana, Missouri, Massachusetts, New Hampshire, and California. On their choice of crypto coins, Teven said,
We’re introducing those 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.
What do you think about this new feature by Robinhood? Leave us your thoughts in the comments section below.