Robinhood adds zero-fee cryptocurrency trading and tracking



No-commission stock trading app Robinhood will let you buy and sell Bitcoin and Ethereum without any added transaction fees starting in February, compared to Coinbase’s 1.5 to 4 percent 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 break even basics and we don’t plan to profit from it for the foreseeable future” says Robinhood co-founder Vlad Tenev. “The value of Robinhood Crypto is in growing our customer base and better serving  our existing customers.”

By essentially 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. Simplifying trading and tracking could bolster Bitcoin and Ethereum. And by combining it with traditional equities trading in a single app, Robinhood could further legitimize the cryptocurrency craze.

Many of the startups dealing in crypto are upstarts with questionable reputations. But five-year-old 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.

Here’s how Robinhood Crypto works. You can instantly transfer up to $1000 from your connected banking account (more if you have Gold membership), with additional funds coming over slower ACH transfer. For smaller traders, that could eliminate the annoying delays on other platforms that can make you miss a low price to buy at. The whole Crypto section of Robinhood is styled with an 80s Tron design to denote the 24-hour trading window, compared to its day and night themes for when traditional stock markets are open or closed.

When you place a buy or sell order, Robinhood gives you an estimated price connects to a slew of trading venues, exchanges, and market centers to find the lowest price, and uses its economies of scale to improve to score better prices over time. To counter market volatility, Robinhood puts a “collar” around your trade so if it can’t execute it at close to the estimated price, it waits for the price to return or lets you know.

And in case the price of a coin skyrockets or plummets, you can place limit orders to set aprice before you automatically buy or sell. The full list of coins you can track is Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Ripple, Ethereum Classic, Zcash, Monero, Dash, Stellar, Qtum, Bitcoin Gold, OmiseGo, NEO, Lisk, and Dogecoin.

But only BTC and ETH will be be available for trading when that rolls out to waves of users starting in California, Massachusetts, Missouri, Montana, and New Hampshire in February, though more will be added. “We’re extremely selective about the cryptos we’re making available on the platform” says Tenev. “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.”

To back-up the new Robinhood Crypto feature, the company is adding new two-factor authentication options including integrations with authenticator apps to ensure people don’t get their wallets stolen and dumped. “There are several senior world class people that we’ve hired recently that are building the system in-house” says Tenev. Still, the move paints a giant target on Robinhood’s back. If the company gets hacked, or individual users get robbed, they could tarnish the fintech startup’s reputation.

Demand for the product was clear, though. 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.

“It 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” says Tenev. “We’re an established company and we can handle it” Tenev concludes in words that could either tank his startup with a massive security fail or greatly boost its traction.

Disclosures: The author of this article owns small positions in Bitcoin and Ethereum, and knows Robinhood’s founders from college.



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