Robinhood has made huge waves in the world of investing by being able to offer commission free trading with stocks for the past couple years, and recently added option and margin trading capabilities to their platform. The millennials generation has taken to their services pretty strongly. An announcement was made that they will be adding crypto currency trading to their platform as well now, a capability their millennial clientele is sure to love!

The first big question many ask is how can they run a legal american brokerage firm without charging any fees. And this is a good question. Their is a legitimate way they have been doing it for the past several years successfully. As people trade stocks, options, and now crypto. Their is often a few dollars left over that wasn't able to buy a full share of a stock, or the investor is just not invested into anything with their cash at a given moment. Robinhood has this money with custodians earnings interest that goes to their accounts to fund development and compliance as needed. This is similar to how many payment and wage processors like Paychex and ADP work. When an employer rights a check, the employee may not cash that check for a few days, weeks, months, or longer. During this time ADP, Paychex and companies like it store the cash from the employer safely in an interest bearing account that goes to their revenues not the employee or the employer. Robin hood uses a similar concept earning interest on non-invested cash as they hold your money safely in interest bearing accounts.

However, Robinhood executives have said they don't plan to make much money from this feature in the near term. My experience in crypto tells me otherwise. Many traders in crypto do just that, trade, buy and sell as prices rise and fall, constantly going in and out of coins seeking profits. So at any given time Robinhood crypto traders will likely have cash available for Robihood to earn interest on. While their is also a large amount of people that buy all into crypto and then HODL. Since crypto currencies are highly divisible down to the penny, executives of the exchange would not expect to make much interest from these sorts of investors.

The legitimacy of Robinhood is provable, and it goes without saying a no fee crypto trader will be a huge hit with enthusiasts. Another exchange was trying to do this the past few months by the name Cobinhood, since their ability to float non invested cash and earn interest on it is much lesser due to the divisibility of crypto I never was able to legitimize and conceptualize how they can stay in business without fraudulent practices. (Not making an accusation here, but I am not gonna blindly trust an exchange with my funds) Also, since entering the crypto ecosystem Robinhood has issued a cease and desist to Cobinhood for using their likeness to draw business, so we may see a change of name and practices from Cobinhood or they will shut their doors all together.

Particulars of the Robinhood exchange

• Will only trade Bitcoin and Ethereum
• Will be available sometime in February in select states that they have received licenses for. ( California, Massachusetts, Missouri, Montana, and New Hampshire)
• You can track prices and create alerts for several coins with out any trading capabilities. (Coins include: Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Ripple, Ethereum Classic, Zcash, Monero, Dash, Stellar, Qtum, Bitcoin Gold, OmiseGo, NEO, Lisk, and Dogecoin)
• Robinhood allows instant transfers from linked bank accounts up to $1000, and more for paid Gold member accounts, No waiting for ACH transfers and no paying for wire transfers.

Not excited yet, read below because this part is a first for any crypto exchange!!!

In professional stock trading world you are not buying and selling from other clients in your brokerage platform like you do with GDAX buying and selling from other GDAX users or any of the other exchanges. You are letting the brokerage submit your order to any one of several markets, to execute at the best prices. This allows some high frequency traders to select which exchange to buy or sell from and arbitrage from different exchanges that have different prices in stocks which is hidden from the average investor. Allowing them to make profit off of small price difference between different exchanges. Some crypto traders are familiar with this process as well. Currently it would require to buy in one exchange transfer the coin to a different wallet and sell in that exchange, which can take too much time loosing your ability to profit. Or they can have balances in two different exchanges and regularly re-balance the accounts as needed.

The groundbreaking thing Robinhood is doing in crypto will be to function like a traditional brokerage and have access to several markets with different prices allowing you to always get the best price available by trading through them. So essentially with Robinhood you will have access to trade on several exchanges and always buy at the cheapest price and sell at the highest price.

This is a huge factor that has been missing in the crypto ecosystem and is necessary for it to grow into mature markets. This part has me the most excited for Robinhood crypto, and once my option approval goes through with them I will be moving money to their brokerage, and am encouraging others to use this exchange much more actively from now on.