In whichever direction the crypto market goes, one set of firms will always make money – the cryptocurrency exchanges. In order to dominate in this space, startup firms with innovative strategies are jumping in to attract more and more traders to their platforms.
On Thursday, Robinhood, a blockchain-based firm, announced that it will offer free trading for all its users. This is a very bold move on the part of a trading platform, as charging for trades makes them millions. But for Robinhood, this bet has totally paid off, as people are flooding to the platform and signing up for early access – there is currently a waiting list of more than a million people.
If all these people on the list become clients, it will add more than 30 percent to the company’s overall user base of more than 3 million.
Baiju Bhatt, co-founder of Robinhood, is very confident about this move: “Crypto is going to change the world and we want to help drive that. Today our business transacts 10,000 different symbols in equities and ETFs. We see millions of trades a day. In our brokerage industry, there is no excuse for downtime. We plan on bringing that mindset to the crypto space. We don’t view any of that stuff as acceptable.”
FBS Receives Best Forex Broker Europe 2019 Award by The European MagazineGo to article >>
One of the major issues with cryptocurrency trading platforms, as we have seen in past, is server limitations during sudden bursts of high volume and demand. Most trading platforms, including major ones, simply shut their doors during such occasions. And with such a huge user base, Robinhood will be very vulnerable to such issues, unless it invests heavily in its infrastructure.
Robinhood will begin trading in February, and it will roll out its service in phases. In the first phase, it will open trading to residents in only five US states – California, Massachusetts, Missouri, Montana, and New Hampshire.
By mid-2018, the trading app will make the new instruments available nationwide with its newly created unit Robinhood Crypto. It plans to release this service gradually.
Among millennials, investing in cryptocurrencies is becoming a mania. Even following the recent major fraud at Japan’s largest cryptocurrency exchange, the market did not slow down.
The United States is currently the second largest cryptocurrency market after Japan, and a huge section of this market is dominated by Coinbase, because of its easy to use and secure trading platform. Last year, Coinbase registered revenue of over a billion dollars amid the boom in cryptocurrency market. And now with so much demand for the upcoming platform of Robinhood, Coinbase will face some very tough competition.