Do not get confused with Robin Hood the heroic outlaw in English folklore who, according to legend, was a highly skilled archer and swordsman!
In fact, here we’re talking about Robinhood the popular stock trading app. Developed in 2013 by Stanford University students Vlad Tenev and Baiju Bhatt, Robinhood’s streamlined structure is meant to make trading stocks and ETFs simple, fast by virtue of its instant deposits, and, most importantly free of charges. As a matter of fact, Robinhood never charges any fees for buying or selling stocks and ETFs.
The stock trading app became the latest platform to sign onto the cryptocurrency craze at the end of January. Back then, it announced that its users will be able to view latest prices, news and set alerts for 16 cryptocurrencies.
“We believe that cryptocurrencies have the potential to fundamentally reorganize the way money works from the ground up putting power previously held by financial institutions, directly into the hands of people,” the company wrote in a blogpost announcing the service. Robinhood’s co-founder Vlad Tenev told Techcrunch that it was planning to operate its cryptocurrency business on a break even basis to attract more customers to its platform.
Here’s how Robinhood’s crypto trading service works. The app, when receiving an order, provides users with an estimated price. Afterwards, it trawls through multiple trading venues and exchanges in order find the lowest price that is closest to the price that had been already offered to the user. The app has also made provisions to account for volatility in cryptocurrency markets. It puts a “collar” around the estimated price and notifies users when a particular coin reaches the buy or sell order price.
Recently, the San Francisco-based company introduced cryptocurrency trading services on its platform to customers in five different states – California, Massachusetts, Missouri, Montana, and New Hampshire.
The company made the announcement in a blog post in February. It also announced a new feature called Robinhood Feed for the app’s users to track cryptocurrency news and discuss their price fluctuations and swings. The new feature is available to select users right away, and Robinhood plans to expand its feed based on comments and feedback from its own users.
While announcing plans to launch crypto trading services, the company’s co-founder: Vlad Tenev, told CNBC that cryptocurrencies had become the “first foray into investing and financial services to a large number of people.”
“Now it’s become more and more clear that bitcoin is an investing asset,” he said. That decision proved to be a wise one after Robinhood Crypto set a record of sorts by garnering a waitlist of 1 million within five days of launch.
Robinhood’s invasion into cryptocurrencies is motivated by customer acquisition rather than profits. “We view this as an opportunity to expand our customer base and give our customers more access to functionality,” said Tenev.
And, similar to its stock trading platform, Robinhood plans to offer zero-commission trading services for cryptocurrency trading.
The company’s fee-free service contributed in attracting a brand new class of amateur traders. It has also simplified stock trading and increased the number of people trading in crypto, which will definitely boost investor confidence.