Crypto Trading On Robinhood – It’s been a big year for crypto, and Robinhood shared some statistics today to provide more proof that the cryptocurrency boom is more than hype — at least for now.
In a blog post, Christine Brown, Robinhood’s head of crypto operations, revealed that in the first quarter of 2021, 9.5 million of its clients traded crypto through the company’s platform. That’s a whopping 1.7 million customers traded cryptocurrencies in the fourth quarter of 2020. The company first launched its Crypto unit in January 2018, but didn’t provide numbers last quarter.
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In February, Robinhood revealed that it saw six million new customers on Robinhood Crypto in the first two months of this year alone. This compares to a peak of 401,000 subscribers per month in 2020, with a monthly average of around 200,000 subscribers.
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Brown said the company’s intention behind the launch of Robinhood Crypto was to give its customers the opportunity to buy and sell cryptocurrencies in addition to the range of assets offered through its brokerage, Robinhood Financial.
Robinhood Crypto currently offers seven tradable currencies: Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic and Litecoin.
Brown also noted that Robinhood’s crypto team has more than tripled in size since the start of the year, though it’s not entirely clear how many employees the team currently has. There are several crypto-related openings on its career site, including an open “Crypto CFO” role.
The company has made it clear that encryption is an important part of its business and part of its mission to democratize access for the masses.
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“All it takes to spend, trade and store cryptocurrencies, in theory, is an Internet connection — you don’t need access to large lines of credit or seed capital,” Brown wrote. “You don’t even have to wake up at a certain time to trade. Crypto markets don’t close. Crypto was born out of a mission to take power from institutions and give it back to the people.
Last August, Robinhood raised $200 million more in a new valuation, on top of the $11.2 billion it raised in the third year before its public filing in March. The company has had a tumultuous past year filled with time in front of Congress, bad PR from user suicide, and settlements with the SEC.
Meanwhile, it was also reported earlier this week that in the first quarter of 2021, US cryptocurrency exchange giant Coinbase grew sharply while generating strong profits. Specifically, the company generated revenue of $1.8 billion in the first quarter of 2021, up from $585.1 million in the fourth quarter of 2020. Total net income was “approximately $730 million to $800 million,” up from $178.8 million dollars in the fourth quarter of 2020. The commission-free stock trading app will let you buy and sell Bitcoin and Ethereum with no additional transaction fees starting in February, compared to Coinbase’s 1.5 to 4% fees in the US. And now Robinhood will allow all users to track prices, news and set alerts about it and 14 other top cryptocurrencies, including Litecoin and Ripple.
“We intend to run this business at breakeven and we don’t intend to profit from it for the foreseeable future,” said Robinhood founder Vlad Tenev. “The value of Robinhood Crypto is to grow our customer base and better serve our existing customers.”
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By essentially using crypto trading as a loss leader instead of its core business, like Coinbase and other apps, Robinhood can expand significantly beyond the 3 million users it already has. Simplifying transactions and tracking can improve Bitcoin and Ethereum. And by combining it with traditional stock, ETF and options trading in one app, Robinhood can further legitimize the cryptocurrency craze. The two commercial worlds can cross-pollinate, drawing even more people into the crypto scene.
Many crypto startups are first-timers with questionable track records. However, five years on Robinhood has raised $176 million from top investors including Andreessen Horowitz, Index and NEA, which now values the company at $1.3 billion. There are clear long-term benefits to developing crypto traders and using the feature as a wedge to get them to keep money with Robinhood where it earns interest and pay Robinhood Gold premium rates of $6 to $200 per month that allow them to borrow between . $1,000 and $50,000.
This is how Robinhood Crypto works. You can instantly transfer up to $1000 from your linked bank account (more if you have a Gold membership), with additional funds coming from slow ACH transfers. For smaller traders, it can eliminate annoying delays on other platforms that can cause you to miss the opportunities you want to buy. Robinhood’s entire Crypto section is designed with Tron’s 80s design to show a 24-hour trading window, compared to the day-and-night theme when the traditional stock market opens or closes.
When you place a buy or sell order, Robinhood gives you a price estimate, connects to a number of trading parties, exchanges and buy-side centers to find the lowest price, and uses economies of scale to improve the price score over time. To deal with market volatility, Robinhood puts a “collar” around your trade, so if it can’t execute it close to the estimated price, it waits for the price to return or lets you know.
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And in the event that a currency’s price spikes or plummets, you can place a limit order to set a price where you automatically buy or sell. The full list of coins you can track are Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Ripple, Ethereum Classic, Zcash, Monero, Dash, Stellar, Qtum, Bitcoin Gold, OmiseGo, NEO, Lisk and Dogecoin.
Only BTC and ETH will be available for trading when they roll out to a wave of users starting in California, Massachusetts, Missouri, Montana and New Hampshire in February, though more will be added. “We are very selective about the cryptocurrencies we have on the platform,” Tenev said. “We introduced it first because this is the most mature currency that people exchange today. Many times people say they are dead and come back stronger than ever.
To back up Robinhood Crypto’s new features, the company added a new two-factor authentication option, including integration with authentication apps to ensure users don’t get stolen and throw away their wallets. “There are some world-class senior people we hired recently who built the system internally,” says Tenev. However, the move paints a huge target on Robinhood’s back. If a company is hacked or a single user is robbed, it can damage the reputation of the fintech startup.
However, the demand for the product is clear. Robinhood’s 100,000 users regularly search for crypto prices and trade on the app, and 95% of respondents said they would invest in crypto if the product supported it. Robinhood even sent a cease-fire to “Cobinhood,” a competing cryptocurrency trading app that carved its name and raised $10 million in an ICO.
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Judging by the selection of the top two startups, you can see this week as a sign of a change in goals in cryptocurrencies. Yesterday Stripe removed Bitcoin as a payment option on their platform and now Robinhood is embracing transactions. “People think of cryptocurrencies less in terms of payments and more in terms of investing in assets,” Tenev explained.
As for why he’s personally invested in the crypto scene, Tenev admitted that “I’m a fan, sure, but I wouldn’t say it’s that important.” But it suits his business, which uses a lean engineering team to reduce the cost of trading stocks to zero, while competitors like Scottrade and E*trade can charge more than $6 per trade to cover expanding marketing and of their retail with huge overheads. Now Robinhood has done $100 billion in transactions, saving its users more than $1 billion in fees.
“[Cryptocurrency] puts the power previously held by financial institutions into the hands of the people. I think it aligns directly with Robinhood’s mission to democratize the financial system,” Tenev told me, concluding “We’re an established company and we can make the The confidence to explode into the wild west of crypto can replace its launch with a massive security failure, or increase its appeal by conforming to what has become a cultural phenomenon.
Disclosures: The author of this article owns a small position in Bitcoin and Ethereum and has known the founders of Robinhood since college. Robinhood, a trading platform known for commission-free trading, has announced a beta program for its crypto wallet. The program will begin in mid-January, with more than 1.6 million customers already on the waiting list.
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Robinhood has announced that it will soon launch a beta version of its cryptocurrency wallet. This crypto wallet will allow you to trade, send and receive cryptocurrencies using the Robinhood app.
According to Robinhood, a trading platform known for commission-free stock trading and investing, about 1.6 million people have signed up for one of its crypto wallets. The company saw 1 million subscribers sign up within 30 days of the initial launch announcement.
So far, the app has been tested with customers in an alpha state
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Originally posted 2023-06-19 07:08:31.