Robinhood is a stock trading app that is immensely popular among a younger demographic looking to dip their feet in trading without paying exorbitant fees for each transaction. Now, it’s been announced that the platform will offer zero-fee cryptocurrency trading, and some see this as a move aimed directly at edging out crypto-only trading platforms such as Coinbase.
As the first mobile-brokerage app, Robinhood has rapidly expanded its footprint. With little overhead, avoiding the traditional offices and staffs that necessitate commissions to keep the lights on, Robinhood’s free platform has obvious appeal to those who are just getting into the trading game, and even those who know what they’re doing and simply don’t want to pay a broker to do it for them. Having surpassed the $6 billion mark in trading volume, accumulated 3 million registered accounts and engaged in a partnership with Baidu to expand the service to China, Robinhood has established its commission-free platform as certifiably revolutionary.
Now, they are taking that revolutionary, commission-free platform and applying it to the world of crypto. Users will be able to monitor the various markets for 16 major cryptocurrencies on the Robinhood platform without paying a dime.
Coinbase, alternatively, does charge a fee of 1.49% both when you purchase cryptocurrency and sell it. While Coinbase has been valued more highly than Robinhood– $1.6 billion versus $1.3 billion – it’s almost certain that Robinhood’s expansion into cryptocurrency will change those figures, adding to their own value while detracting from Coinbase’s.
Robinhood has already witnessed immense demand for its crypto-trading platform, for which users have already jumped on a waitlist. With stocks and crypto in one place, some will likely be asking themselves why crypto-only wallets are necessary, especially should Robinhood prove true to its commission-free model.
Still, some remain skeptical that Robinhood, which generates revenue from interest on users’ stored cash and plans on rolling out margin trading soon, will be able to maintain its commission-free model when it comes to crypto.
I am not sure how Robinhood will be able to afford to keep offering these trades for free at a large scale, TransitNet’s Grey told MarketWatch. It will be interesting to watch how this plays out as increased user demand puts pressure on the need for fees.