Best known for its sleek smartphone app and commission-free trading, Robinhood is now breaking into the cryptocurrency game. Adding to its platform that already supports publicly traded companies’ stocks and exchange-traded funds, the fintech startup will start allowing users to exchange Bitcoin (BTC) and Ethereum (ETH) come February. The app has become a popular trading option for millennials, accumulating an active user body of over 3 million.
Backed by $176 million in venture capital funding by an impressive lineup of investors that includes Google Ventures and Andreessen Horowitz, the financial services company is now valued at over $1 billion and made a big splash with its announcement to support cryptocurrencies. Bitcoin and Ethereum, are the first and second most valuable digital currencies by market cap, respectively.
Robinhood earns revenue through collecting interest on cash and securities in user accounts and margin lending.
Those who visit the “Robinhood Crypto” landing page are greeted with a neon-lit headline beaming “Don’t sleep”, referencing the cryptocurrency market’s round the clock operating cycle in contrast to traditional markets that open and close at set times.
While Robinhood co-founder Vlad Tenev said in October 2017 he didn’t expect a major transition from traditional stock to cryptocurrencies, the move makes sense for the budding company on a number of levels. From a demand standpoint, Techcrunch reported, “100,000 of Robinhood’s users were regularly searching for crypto pricing and trading in the app, and 95% of those surveyed said they’d invest in cryptos if the product supported it.”
Further, cryptocurrencies, especially Bitcoin, are currently being used more as investment vehicles than they are true currencies for payments, so adding elements of the sector into its asset trading platform is seemingly a logical fit.
Most compellingly, perhaps, is the gaping market opportunity standing before Robinhood. While it’s too soon to say for certain, the development is likely to introduce some much-needed competition amongst user-friendly cryptocurrency marketplaces. For much of the recent past, Coinbase has singlehandedly dominated the entryway into retail cryptocurrency investing. The San-Francisco based unicorn has served more than 13 million customers and done $50 billion in digital currency exchanged.
