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Robinhood - Launching a Cryptocurrency Wallet

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Robinhood recently started offering free cryptocurrency trading but now it seems they are looking to offer a cryptocurrency wallet. They certainly are being proactive and trying to get 'first mover advantage' in this area. I think Robinhood has a valuation of around $5 billion plus. This offering could provide Robinhood customers with a more secure way of storing their digital assets. From memory, it was involved in a Series D fund-raising sometime last month and it raised over $360 million. This gives it the firepower to take on rivals operating in this crypto space.

I think Revolut are also trying to get into this space as the new generation want digital banking, digital currencies and digital store of their assets meaning digital paperwork.

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I must admit I don’t get robinhoods business model... altho also to be fair over never googled it either. 

I assume they can offer commission free trades by only offering passive limit orders on stocks which trade on exchanges which offer kick backs or free passive orders (the maker / taker model which works so well when needing liquidity, in the same way as gdax offer free commissions on limit orders). 

Theyre doing something right if they have a mcap of $5b! 

Yeh Revolut have a crypto offering but it’s more like an UNleveraged CFD as you can’t deposit or withdraw, just track the price of underlying. I think Monzo are looking at it too.

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@247trader, Robinhood has a pretty simple business model on the face of it though I am sure if you look under the bonnet then it will get more complex. It is a FinTech company that wants to lets its customers trade shares for free. Sounds great but for me there is nearly always a catch or cost down the road. I accept on the face of it it does seem to have an advantage of lower costs than its competitors as it has no physical footprint. It makes most of its revenues by routing orders through high frequency trading firms. This seems very risky to me. When you tell most people that Robinhood is offering free trading of shares then most will think there will be some sort of cost later on. 

I think what Robinhood are most probably doing is selling orders which they receive from customers (offering them free dealing charges) to the high frequency trading firms. I think these firms will make a lot of money in this process as will Robinhood and the customers save dealing charges so everyone is happy or are they?

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Interesting so you think the HFT’s are basically paying for liquidity to front run effectively...? 

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@Caseynotes,

I see you have an interest in Robinhood based on the new thread you have started. This is a very interesting space. I accept I may have a bias towards Freetrade as I have an equity stake in that company and am a shareholder in it but I am honest enough to accept that it seems Freetrade is likely to have been inspired by Robinhood and what they have done in the US. 

Have a look at Freetrade as it is certainly trying to have a go in the UK. 

Freetrade, the UK challenger stockbroker, completes $15M Series A

https://techcrunch.com/2019/10/31/freetrade-series-a/

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