Robinhood Expands Its Zero-Commission Crypto Trading App to Colorado

Siamak Masnavi
  • Californian startup Robinhood, which launched its commission-free cryptocurrency trading service ("Robinhood Crypto") on February 22, 2018, is expanding to Colorado.
  • One of the app's main competitors, Coinbase, charges higher fees and has over 13 million users.

Robinhood, the US-based commission-free online broker, announced yesterday via Twitter that it was expanding the rollout of its crypto trading service ("Robinhood Crypto") to Colorado. 

Robinhood's mobile app, which is available for both Android and iPhone, is called ""Robinhood - Investing, No Fees".

The company, headquartered in Palo Alto, California, was launched back in 2013. It was founded by two Stanford University graduates, Vlad Tenev and Baiju Bhatt, who decided that by cutting costs to the absolute minimum, they could offer a basic commission-free online brokerage service, via their mobile app, to people wishing to invest in US-listed stocks and exchange-traded funds (ETFs).

They realized they did not need to charge purchase/sale commission, and that instead they could make money by collecting interest on the funds held for their customers (they also have an optional $6 a month service for users who want to engage in after-hours stock trading). Free is always popular, and by February 2018, Robinhood had over four million users.

On January 25, 2018, it annouced via its blog and Twitter, a new service called "Robinhood Crypto" that would allow their customers commission-free cryptocurrency trading:

Initially, the Robinhood mobile app only allowed users to monitor cryptocurrency news and market data, but on February 22, 2018, Robinhood said that it was launching its commission-free crypto trading service, with invites initially going to customers residing in the US states of California, Massachusetts, Missouri, Montana, and New Hampshire. These lucky users would be able to buy and sell Bitcoin (BTC) and Ethereum (ETH) via the Robinhood mobile app without paying any commission. 

One of Robinhood's main competitors in the crypto space, Coinbase, had over 13 million users as of late November 2017. For US customers, on cryptocurrency buy/sell orders, Coinbase currently charges 1.49 percent for purchases/sales with a US bank account or a USD Coinbase wallet, 3.99 percent purchase commission if a US debit/credit card is used, and 3.99 percent for sending sales proceeds to a PayPal account.

In the coming months, Robinhood plans to add support for other cryptocurrencies and to extend the rollout of its cryptocurrency trading service to many more US states and eventually, other countries.

The Calfornian startup, whose latest round of funding is expected to value the company at around $5.6 billion, is backed by big name investors such as Andreessen Horowitz, IDG Ventures, and Y Combinator.

 

Case Study of US-China Trade War Points to Bitcoin as Safe Haven.

John Vibes
  • A recent Grayscale case study of the US-China trade war has identified Bitcoin (BTC) as a safe haven in times of economic uncertainty.
  • The study compared Bitcoin's performance with that of traditional currency markets in the midst of the trade war turmoil.

According to a recent case study conducted by the digital assets investment firm Grayscale Investments, Bitcoin (BTC) could be used as a hedge against financial instability.

The study takes a look at the recent trade hostilities between the United States and China to show how Bitcoin has outperformed traditional currencies in the midst of this economic uncertainty. The study suggested that:

"With continued adoption, Bitcoin represents a transparent, immutable, and global form of liquidity that can provide both wealth preservation and growth opportunities. As a result, we believe it deserves a steady strategic position within many long-term investment portfolios.”

For anyone keeping up with both traditional currency and crypto markets, it's apparent bitcoin has been on the rise as the trade war has caused turmoil in the economic systems of both countries, but this new study lays out the specifics. According to the study:

“While the risk asset drawdown is still in its very early stages, Bitcoin is on the rise as these risks are just beginning to show up in other asset and currency prices. Since Trump first announced the tariff hike in May, Bitcoin has generated a cumulative return of 104.8% through August 7, versus an average of -0.5% for the twenty other asset classes, markets, and currencies below during the same period.”

As the report notes, this is a study of the largest economies in the world, which comprise roughly 40% of annual global economic output, and bitcoin can still compete among them.

In smaller economies that are facing crisis, cryptocurrency has been used as a safe haven for many years. Cryptocurrency has caught on in places like Ukraine and Venezuela as a matter of necessity. Last week, CryptoGlobe reported that private bitcoin sales through localbitcoins.com were at an all time high in Venezuela amid unprecedented hyperinflation.

Skeptics Remain

Despite bitcoin’s performance during the crisis, insiders of traditional markets are still largely skeptical of cryptocurrency.

Brian Belski, chief investment strategist at the investment banking company BMO Capital Markets, appeared on CNN Business to voice his doubts about bitcoin as a safe haven. Belski said:

“Bitcoin has been excessively volatile, especially the last couple of years. It’s the sexy kind of thing to go to now. I don’t base my investments on sex appeal. I base my investment on longer-term perspective. And I think the longer-term perspective, in terms of Bitcoin being that safe haven, I think it’s way too soon to call that.”

Another report from Matt Egan of CNN Business indicated that many investors are rushing towards traditional assets like government bonds and gold as a hedge in these difficult times.

However, the bonds are showing negative yields, and gold prices are already at a six-year high.