A New Venture
Starting in February, stock trading app Robinhood will let users buy and sell the cryptocurrencies bitcoin and ether without paying any transaction fees. As of today, January 25, users can track 16 total cryptocurrencies via the app, setting up price alerts and monitoring the growing crypto market.
Currently, Coinbase, one of the world's largest cryptocurrency platforms, charges U.S. customers a 1.5 to 4 percent fee for transactions. Some of this money goes to pay the miners who maintain each cryptocurrency's blockchain. So, how does Robinhood plan on doing the same thing for free?
"We’re planning to operate this business on a break-even basis and we don’t plan to profit from it for the foreseeable future," Robinhood co-founder Vlad Tenev told TechCrunch. “The value of Robinhood Crypto is in growing our customer base and better serving our existing customers.”
The Future of Trading
Essentially, Robinhood Crypto would operate as a loss leader for the company while it continues to earn revenue through traditional stock transactions. However, it has the potential to increase the app's userbase, which is currently set at about 3 million users, by appealing to a number of demographics.
For cryptocurrency traders who trade frequently or in large sums, zero-fee transactions could be a complete game-changer, and the elimination of transaction fees could incentivize potential traders to jump into the market.
The move could also please those who argue that today's sometimes sky-high fees are stifling cryptocurrency adoption. After all, blockchain is supposed to eliminate costly "middle men," and the companies charging these fees are essentially filling that role. Robinhood's zero-fee method of trading and buying crypto is more inline with the intended nature of blockchain.
Robinhood Crypto could also further legitimize the cryptocurrency market — by placing crypto assets alongside traditional equities in a single app the former could appear more on par with the latter.
Ultimately, the move is likely to encourage the trading of crypto, and it could even prompt other companies to explore zero-fee crypto trading in an effort to remain competitive.
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.
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