4+ million sign ups for the new Robinhood platform competitor to Coinbase

[Hydrogen]

More than 4 million people have signed up to open accounts at Robinhood Markets Inc. as the brokerage app begins offering commission-free trading of Bitcoin and Ethereum today for the first time.

The Palo Alto, California-based firm, which first gained traction by offering a free stock-trading app, said last month that it was getting into digital assets. Trading in the two largest cryptocurrencies is available to users in California, Massachusetts, Missouri, Montana and New Hampshire. The startup aims offer the service in most U.S. states by midyear.

Robinhood had signed up 2 million users as of April, a figure it saw jump to 3 million in November and skyrocket since saying it would offer crypto trading.



This gives another financial technology startup and popular digital currency exchange, Coinbase Inc., a new competitor. It’s unclear how many of these new accounts either moved from Coinbase or have accounts at both startups, but each firm is targeting a similar demographic. According to a recent survey, more than half of Bitcoin holders are between the ages of 18 and 34. Robinhood said its average customer is 30. When comparing the user bases, Coinbase had 13 million users as of late last year.

Anyone that uses the Robinhood platform to buy Bitcoin or Ethereum today comes into a market that has lost roughly half of its value over the past couple of months. After nearly touching $20,000 in December, Bitcoin recently dropped below $10,000.

https://www.bloomberg.com/news/articles/2018-02-22/line-gets-longer-at-robinhood-as-cryptocurrency-trading-begins

....

Summary: A financial named Robinhood (https://crypto.robinhood.com)platform most have never heard of gained more than 1 million new users by offering crypto trading.

Another recent statistic for contrast.

JANUARY 25, 2018

NEW YORK (Reuters) - E*Trade Financial Corp will acquire 1 million retail brokerage accounts with around $18 billion of clients’ assets from Capital One Financial, it said on Thursday.

The discount brokerage will pay $170 million for the brokerage accounts, which will add roughly $1.7 billion in cash and $115 million in margin loans to E*Trade’s balance sheet, executives said on a conference call with analysts.

https://www.reuters.com/article/us-capital-one-fin-m-a-e-trade-financl/etrade-to-acquire-1-million-retail-brokerage-accounts-from-capital-one-idUSKBN1FE35J

An exchange adding more than 1 million new accounts simply by announcing crypto support could highlight the high growth potential of cryptocurrencies. This could also be good news in terms of it decentralizing away from coinbase and adding market competition which could benefit consumers in the form of lower fees, prices and better support.

I would be interested to know this communities stance on commission less trades(as offered by the Robinhood exchange mentioned in this article). Some have said in the past it can be utilized as a means of market manipulation. Is that a fair assessment?  

[LeGaulois]

Not sure if I got it correctly but how it is possible to get millions sign up if it's available in the only 4-5 state in the USA. And I don't see how a free trading commission can be used to manipulate
Anyway, it's crazy challenge they accepted with cryptocurrencies, so good luck to them

[darkangel11]

Very nice! It's about time that shitty and greedy Coinbase had a competitor. I have an account there but rarely use them as it's simply too expensive. Their api is very simple, like they were built for the masses, but the fees are huge. For someone who just got a few USD worth of BTC and needs to cash out quickly it looks fair and fast at first glance, but once you see the orders in real time at another exchange and compare them to what CB is offering, you start to see that you're being ripped off. I just hope they will keep high standards and be a company that strengthens the position of cryptocurrencies, not weakens it like GOX, BTCe, and many others.

[krishnapramod]

I went through their FAQ section, currently their services are available in only 5 states and right now they don't support coin withdrawals or coin deposits. Considering their crypto trading just went live and with more than 1,000,000 people in line, they might roll out these features soon, but still IMO with getting over 4+ million sign ups (compared with 13 million Coinbase users) they should have gone live with coin withdrawals and deposits. Getting 4+ million sign ups and their free trading model does bring competition to the crypto market, an edge over fee-based exchanges and that will get them more users, but to compete with Coinbase, I guess it would be more about credibility.

https://support.robinhood.com/hc/en-us/articles/360000088663-Crypto-Transfers-Deposits

[squatter]

Summary: A financial named Robinhood (https://crypto.robinhood.com) platform most have never heard of gained more than 1 million new users by offering crypto trading.

That's not entirely true. I've been using Robinhood for almost three years, basically since they launched. It blew up with millennials because it has free stock trading through a slick smartphone interface. For comparison, Robinhood now has almost as many users as E*Trade, who has been a major industry player since 1982.

I think the huge queue indicates the current demand for cryptocurrency trading and Robinhood's target demographic -- millennials.

I would be interested to know this communities stance on commission less trades(as offered by the Robinhood exchange mentioned in this article). Some have said in the past it can be utilized as a means of market manipulation. Is that a fair assessment?  

That's an issue for unregulated and opaque spot exchanges (like Okcoin and Huobi in 2016-2017). In those cases, we have to assume their profit comes from somewhere, and that could involve taking positions and trading against their customers. Robinhood works a lot differently. They actually have a sound business model that doesn't depend on commissions: they collect interest on the cash and securities in customer accounts and charge a monthly flat fee for access to margin. With millions of customers, that's no small sum.

As I understand it, they aren't looking to profit from cryptocurrency trading. They are basically going to operate like Shapeshift, providing liquidity to dozens of exchanges. I think the plan is to use crypto to grab market share, then they'll convert some of those customers into stock trading customers. After all, commission-free trading on all assets is pretty attractive.

Not sure if I got it correctly but how it is possible to get millions sign up if it's available in the only 4-5 state in the USA.

One of them is California, which alone has 10-15% of the US population.

[JesusCryptos]

These numbers are truly impressive, but also other exchanges have had incredible numbers. It seems that user adoption of the whole cryptoworld has suddenly skyrocket in an unprecedented way. I wonder how it will continue. Did it already start to be a mania or has it still to start?

[jeronimosuykens]

This is really a remarkable achievement of a new commercial site. I believe it will grow very strongly in the future because of the great interest of the community.

[gentlemand]

As no coin can be withdrawn or deposited, which exchange is Robinhood using? They also appear to be zero fee so the only way they're not losing money would be with a larger spread as there are no zero fee exchanges available in that part of the world.

I wonder how much money they're burning. I've seen them say that they make their money on the interest pooled from customer funds. I'm unaware of anywhere in the Western world that'll provide enough interest to safely beat inflation, let alone keep up with it.

[squatter]

As no coin can be withdrawn or deposited, which exchange is Robinhood using? They also appear to be zero fee so the only way they're not losing money would be with a larger spread as there are no zero fee exchanges available in that part of the world.

I wonder how much money they're burning.

They told CNBC that they would be working with a dozen or more exchanges.

When a broker says there are no commissions, I assume they're taking from the spread. It would be silly to assume otherwise. That doesn't mean Robinhood will be making much money off crypto trading. But they aren't running a charity and they aren't obligated to give their customers the best price. They won't lose money here (barring custodial fuck-ups).

I've seen them say that they make their money on the interest pooled from customer funds. I'm unaware of anywhere in the Western world that'll provide enough interest to safely beat inflation, let alone keep up with it.

There are retail CDs that pay considerably higher than the rate of inflation. And I'm sure Robinhood has access to higher-yielding instruments than you or I do, given their capital. Past that, compounding interest is powerful stuff.

[pixie85]

As no coin can be withdrawn or deposited, which exchange is Robinhood using? They also appear to be zero fee so the only way they're not losing money would be with a larger spread as there are no zero fee exchanges available in that part of the world.

I wonder how much money they're burning. I've seen them say that they make their money on the interest pooled from customer funds. I'm unaware of anywhere in the Western world that'll provide enough interest to safely beat inflation, let alone keep up with it.

If they are losing money they will have to make it up somehow. It's either a promotional strategy that is supposed to make them popular or it's a scam that will eventually run with the money and disappear. Robinhood disappearing with the coins, that would make some epic headlines. 

[Utuhikan]

I went through their FAQ section, currently their services are available in only 5 states and right now they don't support coin withdrawals or coin deposits. Considering their crypto trading just went live and with more than 1,000,000 people in line, they might roll out these features soon, but still IMO with getting over 4+ million sign ups (compared with 13 million Coinbase users) they should have gone live with coin withdrawals and deposits. Getting 4+ million sign ups and their free trading model does bring competition to the crypto market, an edge over fee-based exchanges and that will get them more users, but to compete with Coinbase, I guess it would be more about credibility.

https://support.robinhood.com/hc/en-us/articles/360000088663-Crypto-Transfers-Deposits

a very large waiting queue. my question is whether they will accept if there are users who register from outside the US? on our coinbase seems to get discriminated because we are forbidden to trade there. what's wrong with our country? if indeed they want to be a coinbase competitor I hope they accept all users without exception

[squatter]

I went through their FAQ section, currently their services are available in only 5 states and right now they don't support coin withdrawals or coin deposits. Considering their crypto trading just went live and with more than 1,000,000 people in line, they might roll out these features soon, but still IMO with getting over 4+ million sign ups (compared with 13 million Coinbase users) they should have gone live with coin withdrawals and deposits. Getting 4+ million sign ups and their free trading model does bring competition to the crypto market, an edge over fee-based exchanges and that will get them more users, but to compete with Coinbase, I guess it would be more about credibility.

https://support.robinhood.com/hc/en-us/articles/360000088663-Crypto-Transfers-Deposits

a very large waiting queue. my question is whether they will accept if there are users who register from outside the US? on our coinbase seems to get discriminated because we are forbidden to trade there. what's wrong with our country? if indeed they want to be a coinbase competitor I hope they accept all users without exception

No, non-US customers aren't allowed to use Robinhood.

That could change in the future, but if so, my guess is it'll be years from now. Here are the current account requirements:

To apply for a Robinhood account, you must:

-Be 18 years or older;
-Have a valid Social Security Number (not a Taxpayer Identification Number);
-Have a legal U.S. residential address within the 50 states or Puerto Rico; and
-Be a U.S. citizen, U.S. permanent resident, or have a valid U.S. visa*.

And they're even more restrictive with cryptocurrency trading -- only 5 (of 50) US states are supported. Like Coinbase, they're really concerned about legal and licensing issues.

[aso118]

As no coin can be withdrawn or deposited, which exchange is Robinhood using? They also appear to be zero fee so the only way they're not losing money would be with a larger spread as there are no zero fee exchanges available in that part of the world.

I wonder how much money they're burning.

They told CNBC that they would be working with a dozen or more exchanges.

When a broker says there are no commissions, I assume they're taking from the spread. It would be silly to assume otherwise. That doesn't mean Robinhood will be making much money off crypto trading. But they aren't running a charity and they aren't obligated to give their customers the best price. They won't lose money here (barring custodial fuck-ups).

There are some brokers who work on the deposit-withdrawal fee model. They take no commissions and they allow you to sell/ buy from other users, allowing you to get the best price. But they charge a deposit and withdrawal fee, which is sufficient to cover their overheads. If you frequently deposit and withdraw your coins, you will get ripped off.