Can Robinhood Give Coinbase a Run for Its Money?
Robinhood launched its commission-free cryptocurrency exchange last week, allowing users in five states to buy and sell bitcoin and ethereum, and officially giving Coinbase a run for its money.
While Coinbase is by no means the only cryptocurrency exchange, its consumer-facing application is one of the most user-friendly and accessible — which has translated into a healthy user base of 13 million at last report.
That’s up from 5.5 million users at the end of January 2017. Currently, Coinbase users pay 1 to 4% fees on every transaction. If an investor moves $3,000 dollars, that could translate into $120 wiped out in fees. But with the announcement and now roll out of its commission-free product, Robinhood Crypto, Robinhood Markets Inc. is gaining ground.
Last April, according to Bloomberg, Robinhood had a user base of 2 million. That number grew to 3 million by November and has now surpassed 4 million as users have signed up for early access to Robinhood Crypto.
Fintech co-founder Vlad Tenev told Techcrunch last month that the service will be commision-free to prioritize user growth. Seeing as half a million people signed up for early access to Robinhood Crypto in just one day, the tactic looks to be working.
As Robinhood rolls out the new service to more states — Robinhood founders have said they intend to see the product live in a majority of states by midyear — it will be interesting to see how Coinbase’ user base fares or whether the exchange will make an adjustment to its fees.
Last fall, UK-based digital challenger bank Revolut, another trending fintech company whose user base just surpassed 1.3 million—up from 1 million customers in November— added the capability for users to buy and sell cryptocurrency, too. The functionality was touted as a fast and easy way for consumers to get cryptocurrency exposure. And it can be. But Revolut charges users an average exchange fee, and then marks that up by an additional 1.5%.
The Revolut debit card, though, does effectively allow users to spend cryptocurrencies at merchant check-outs, automatically exchanging the digital assets whenever a user’s account doesn’t have enough fiat currency to cover the transaction.
Interestingly, this cohort of fintechs were all founded around the same time. Coinbase in 2012 and Robinhood and Revolut both the year following, with Revolut as a mobile-first challenger bank, Robinhood as a stab at democratizing stock trading and Coinbase as a digital currency exchange, but each of their business models increasingly seem to be blending into one another.
Keeping with its mission, Robinhood co-founder and CEO Vlad Tenev told CoinDesk that Robinhood recognizes cryptocurrencies “as part of a diversified and balanced portfolio.”
It doesn’t hurt to attract its target audience and familiarize them with Robinhood’s additional—and monetized—investing features. For now, starting with California, Massachusetts, Missouri, Montana and New Hampshire.
