Source: Live Bitcoin News, originally published on .
Robinhood, the trading platform, is on a roll, amassing over 4 million users. The company’s co-CEO, Vlad Tenev, said that they are quite happy making no money at all on cryptocurrency trading.
There are plenty of options for those seeking to trade cryptocurrencies. One negative aspect of trading is dealing with fees, which invariably add up. However, trading platform Robinhood is offering free cryptocurrency trading, and the company is quite happy not making any money off such trades.
At the beginning of this year, Robinhood shook up the cryptocurrency space by offering free trading on its platform for Bitcoin and Ethereum. The program has paid off in spades since then. Immediately after the launch of free cryptocurrency trading, the platform added 200,000 new customers per day.
Robinhood has ridden the crypto wave to amazing success. The company now boasts 4 million accounts, putting it ahead of previous fintech leader E*Trade. In addition, the company is now worth $5.6 billion.
Crypto a Loss Leader
While it seems that Robinhood is living up to its namesake, there’s a reason behind the fee-free madness. Essentially, the platform is using cryptocurrency as a loss leader.
Robinhood co-CEO Vlad Tenev told Fortune:
We don’t intend to make very much money on it at all for the foreseeable future. We intend to operate it as a breakeven business.
The company is using Bitcoin and Ethereum trading to serve as a gateway for users to start trading more traditional assets. These other assets have a much higher profit margin than cryptocurrency.
Tenev goes on to say:
The thinking behind that is what we’re really doing is building an ecosystem. Right now the products are investing products, so crypto slots in very nicely alongside the 10,000 plus other instruments that people can trade.
This is a pretty smart ploy, especially as the market cap for cryptocurrency is far smaller than that of traditional assets. Using a hot new commodity to lure new customers in and then exposing them to other, more profitable, trading opportunities is a surefire plan for success.
Robinhood has no plans on stopping any time soon. They plan on eventually expanding their services to compete with banks. Tenev notes:
I think it doesn’t stop with just investing products. Customers are getting ripped off across the board in financial services.
Cryptocurrency enthusiasts are already pleased with the fee-free trading for Bitcoin and Ethereum. The good news for them is that Robinhood is planning on adding more coins in the future, but they’re making sure to do their due diligence first.
Do you use Robinhood for trading cryptocurrencies? Let us know in the comments below.
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