Robinhood, a company known for its investment app, announced yesterday that it is opening access to cryptocurrency trading on its Robinhood Crypto platform.
The biggest part of the news is that crypto trading for now (and the company says “for the foreseeable future) will free.
While the move will certainly be attractive to current crypto investors looking for lower cost alternatives to popular exchanges like Coinbase (which currently charges fees for exchanging fiat to crypto and fees to trade back again), it also creates another entry point for new investors in the space.
Not to mention having crypto portfolios and traditional stock portfolios in the same app somehow begins to blur the line between traditional investing tools and crypto’s “alternative investment” reputation.
Robinhood Crypto: Watch now, trade later
As part of the launch announcement, Robinhood is allowing users to now track price information and market movements for 16 cryptoassets (the list, for now, is Ethereum, Bitcoin Cash, Litecoin, Ripple, Ethereum Classic, Zcash, Monero, Dash, Stellar, Qtum, Bitcoin Gold, OmiseGo, NEO, Lisk, and Dogecoin).
You can sign up here to get a notification when the free crypto trading begins (reportedly sometime in February). Users will only be allowed to exchange for bitcoin and ethereum initially, but the company says that more cryptoassets will be added to the platform in the future.
Another important note: According to a blog post by the company, access to crypto trading will begin in a handful of states, with more to come later. “Trading functionality for BTC and ETH will be released gradually in waves to Robinhood residents in California, Massachusetts, Missouri, Montana, and New Hampshire. Robinhood Crypto will be available in more states soon.”
Cryptoasset adoption and crypto competition
Digging a little bit deeper, what does this rollout by Robinhood mean for the rest of the crypto space?
A couple of thoughts:
Excitement: Robinhood currently has a user base of about 3 million, according to a TechCrunch article. Nevertheless, the announcement that Robinhood will begin zero fee crypto trading set crypto Twitter and certain subReddits aflame yesterday. So why the excitement? I think even more than the savings on fees, portions of the crypto world crave some version of Wall Street legitimacy and for some, this could be viewed as a step in that direction.
Ease of use/design: Robinhood has great design and the platform makes buying and selling stocks super easy. It’s also secure (although there are concerns that by adding crypto, the company is also adding additional security risks in the form of hacks, digital heists, and identity thefts). A lot of the heavy lifting in terms of sending and receiving money from banks happens behind the scenes. As mentioned elsewhere, one of the greatest needs in the crypto space to get more people interested is to create a better and easier user experience, which this app addresses.
Crypto is an asset, a cryptoasset: The question of whether crypto is best suited as a payment system, like digital cash, or is it an asset is still an ongoing debate/question. While it can be both, movements like the Robinhood release definitely show that crypto has a future being traded in a format similar to traditional assets.
While we are still in the early days of crypto investing, it will be interesting to see if this move by Robinhood begins a trend of crypto adoption by traditional investment companies and tools.
It will also be interesting to see if how this affects the existing crypto trading infrastructure, and whether it inspires better design, user experiences, and maybe even lowers trading costs.
Also published on Medium.