One of the biggest gripes in the current crypto space, especially with the most popular Bitcoin being at the helm, is the expensive fees that are part and parcel of trading. Robinhood, however, took the whole scaling issue and flipped it on its head simply by offering zero-fees.
It is a bold move by the mobile trading app, and the one that immediately challenges the hegemony of the major exchanges that currently rule the crypto space, such as Coinbase.
Coinbase and other major exchanges are not fully decentralized, and they are using their power to hold a monopoly over the space. So, when a company like Robinhood comes in, using equally centralized methods, but methods that take away this power from those at the top, perhaps this is a revolutionary idea.
Zero-fees are certainly enticing
Currently, users on Coinbase, are facing fees ranging from 0.1 percent to as high as four percent per transaction. Firstly, this is not something that Bitcoin promised when it came into existence, it was never meant to be expensive to use. However, because it became so with the network getting bust, there has to be a solution to attract those not willing to pay.
Robinhood has gone straight for this problem, and made it zero-fee, even though it will essentially be a ‘loss leader’ meaning they will not be making money off of this feature. Robinhood are more interested in growing their crypto community base, and by growing their base, they will also be taking users away from those who are profiting from the fees.
It has certainly worked in getting the hype up for cryptocurrencies as it was reported that just days after the announcement, their waiting list had swelled to over a million people who signed up for early access. If all these people on the list become clients, it will add more than 30 percent to the company’s overall user base of more than three mln.
Take from the rich
Currency, even though the crypto space is supposed to be fully decentralized and free market, the way in which the major exchanges operate cannot be described as fully decentralized. Users are essentially trading with the exchange as they keep a liquid stock of crypto coins in order to make the payments, collecting their fees. This sounds much like a central bank in many regards.
Because of this centralized nature, the exchanges can set fees and other regulations, which again sounds like a bank. And, with this control, and this hegemony over the exchange marketplaces like Coinbase have a full monopoly. However, Robinhood, while still acting as a centralized exchange, is offering something that other exchanges can’t and as such, is promising to break their control and hegemony.
Not solving the Blockchain issue
It’s only in the future when we might or might not witness the success of Robinhood and how its users above profits approach will affect the mainstream exchanges and their hold. By breaking down one of the core problems of Blockchain and taking on the fees themselves, Robinhood declares a noble mission. However, they aren’t fixing the true scaling issue.
Still, with a host of investors entering with no technical know-how of the crypto economy, being told they don’t have to pay extra fees is as good as it gets.
Cointelegraph.com is author of this content, TheBitcoinNews.com is is not responsible for the content of external sites.
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