Nothing could be more remarkable! The resilience of holding on to a dream after getting rejected not once, twice or even ten times; but a whole seventy-five times. That’s what the founders of Robinhood, the ever popular zero-fees cryptocurrency trading App that’s the darling of Millennials had to endure in its series D funding to raise an estimated $365 million to place the company’s net worth at $5.6 billion.
Business Insider quoted Robinhood co-founder Vlad Tenev saying the round netted serious investors like Iconiq, Sequoia, Kleiner Perkins and Capital G among others. Tenev revealed that they would use the money to scout for fresh talent, launch new financial service products which included a cryptocurrency trading platform. The Wall Street Journal quoted unnamed sources in March who said the company had intended to raise $350 million led by its longtime investor firm DST of Russia.
Robinhood’s confirmation of the success of their Series D funding made the startup a formidable competitor in the market and leading cryptocurrency exchanges like Coinbase has to worry. Robinhood rolled out its no commission crypto trading platform on April 2, 2018, in Massachusetts, California, Montana, Missouri and New Hampshire where users bought and sold Bitcoin, Ethereum, and 14 other coins without paying commission. This is compared to Coinbase where users pay 1.5% to 4% commission. This alone translates into a huge saving for investors and it’s not surprising that at least four million people joined Robinhood’s waiting list within five days of its announcement in January.
What Makes Robinhood Different?
The regular “Cryptocurrency platforms have exorbitant fees and they’re hard to use,” said Tenev. They generate their revenue by charging commissions which “I think it’s fair to say that our goal is to build the best product on the market, where users can have all of their investments in one place.” He added. The Robinhood model charges users a subscription fee so they can do crypto trading using the money they borrow from the platform itself. Besides, they create additional income from the interest they earn on users’ money stored in their accounts. This way they have been able to undercut the traditional alternatives in the cryptocurrency market.
By choosing to diversify into cryptocurrency from the financial services market where they have been since 2013 and introducing a new concept, Robinhood’s ingenuity is attracting lots of new investors into crypto space. Robinhood started with a trusted customer base that was using their applications to trade ETFs, stocks and other options.
There are all chances that a good number of their customers migrated to take up their digital assets because the company’s target audience is young non-accredited investors are more likely to respond to the lure of cryptocurrencies. Robinhood’s App made it easier and economical for prospective investors to familiarize themselves with digital currencies. This groundbreaking innovation has led to the widespread adoption that cryptocurrency always needed but lacked.
How Robinhood’s Crypto Works
The features of Robinhood’s cryptocurrency platform can be availed together with the other standard Robinhood features. The Stocks, cryptocurrencies, ETFs, and others are all found and accessed through a single App. Users can buy securities after buying digital currencies and then track them all from the same place. The Rallying call of Robinhood Crypto is easy to access to your funds: you have the power to invest in any asset you desire even while on the move. You catch any major news and don’t have to miss out on any trending crypto deal.
Users can track news and prices of the leading cryptocurrencies like Bitcoin, Litecoin, Ethereum, Ripple and several other leading coins. The company has no plans to alter the no-commission structure as soon as they are operating on a break-even basis. The company’s focus on growing their customer base and continuing to increase efficiency is bringing a huge return on investment.
If you are wondering whether Robinhood is making any money, you in for a surprise; the company doesn’t run a charity. The company has a net worth of $5.6 million that is investors’ money put in a single pool and they earn an interest from such an enormous capital pool. Robinhood runs a premium subscription known as Robinhood Gold Premium Tier with prices ranging from $6 to $200 monthly where borrowers may borrow from $1000 to $50,000.
Robinhood users may transfer a maximum of $1000 from their connected bank accounts but Gold Premium members can transfer larger amounts; additional funds move slower. This has enabled smaller traders to avoid those annoying delays associated with other platforms that often make them miss out on lower prices when they intend to buy up. The company’s crypto section is designed with a 24-hour trading window unlike the traditional day and night themes denoting when markets open and close.
The 2nd Most Valuable Startup
The Robinhood App which boasts over 4 million users on their crypto platform is marked by Fortune as the second most valuable startup; their $5.6 billion revenue base is a four-time increase from where they were one year ago. The platform is available in at least 12 states and more are likely to follow suit. Robinhood CEO, Baaiju Bhatt told Fortune they were planning to offer 16 different cryptocurrencies. He noted that they are the only registered dealer/broker with SEC that’s trading securities and cryptocurrencies.
Robinhood has trained its eye towards arch rivals like Coinbase and they are already battling with leading Wall Street institutions like Goldman Sachs that are testing the cryptocurrency waters. The decision to run on a no-commission basis has pleased many who believed the high fees were slowing down cryptocurrency adoption. Many pundits argue that blockchain eliminated expensive middlemen and the exchanges that are charging fees are doing just that.
Robinhood’s no-commission crypto trading method seems to toe the original line intended by the creators of the blockchain. The company has further legitimized the cryptocurrency market by putting digital currencies alongside the conventional equities on one App. This has encouraged crypto trading and more companies are likely to experiment with the no-commission crypto trading method if they will compete. Baiju Bhatt has told Fortune “We expect by the end of the year to be either the largest or one of the largest crypto platforms out there.” He further said, “But we also really feel we’ll have the absolute best experience for investing in crypto as well—from having a large variety of coins available to a more favorable cost structure—mainly no commissions—to just quality of a product.”