Coinbase bought GDAX. GDAX fee structure is different from Coinbase. Coinbase is geared towards consumers and they take bigger fees for buying. GDAX is geared toward professionals and take way less fees for buying and selling.
I wonder what the thinking behind the name is. It seems like a bad idea to entrust your money to a startup that is named for someone who's famous for "stealing from the rich".
I think something that rhymes with "Bells Largo" would be a good place to start!
Or if you're going for the sweet investor moneydrop, go for something like "Sharing Economy". That says "We steal from the poor and give to the rich" like no other!
I think the idea for the original product (I.e. non cypto) is that it's target the "little guy" with no commission on trades. So people feel like they're taking from the rich institutional investors.
They are launching tracking options for 16 coins and actual trading only for Bitcoin and Ethereum. So it might be a while before you see all 16 on Robinhood.
Does anyone know what happens in the event that a brokerage like robinhood fails? Are the assets insured by a federal agency or is it wiser to switch my portfolio to another broker?
> Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC) ...
> Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance.
All of the assets you have in Robinhood aren't actually held by Robinhood; they're held by Apex, which is a huge firm that many companies use. If Robinhood goes down, your assets are still with them and there'd be some reasonable way to transfer them to another brokerage.
If Apex goes down, which is vastly more unlikely, Federal SIPC insurance kicks in up to $500,000.
Exactly true for stocks, but I don't think Apex or any equities clearinghouse is clearing cryptocurrencies (exception: clearport for CME futures). So we're left guessing as to whose balance sheet holds the crypto assets.
According to all that light print at the bottom of the website, up to $500K in securities are protected... and all your crypto belongs to whoever manages to grab it, sue all you like afterwards.
It works very well for short-term trading on cryptocurrencies, still waiting to release the longer term strategy (buy and hold is honestly a great choice). We've just started revewing some of the results (since we launched last week), and we're already up stagaring amounts:
Anyone trading with a rangebound bot will have made money in the last two weeks with these stagnant prices. The heavy regret for me set in later when my rangebound bot sold Litecoin and Ethereum before they tripled.
Note: It is in Beta, and we have limited data. Thus, expect a work in progress.
Right now we need funds to continue development and add more data. So we will be charging if you don't provide feedback - so please help us improve! :)
Buy incrementally, hold. If all markets are tanking, cash to USD, wait for the blood bath to be over. Otherwise you are gambling.
Accessible crypto is going to be a disaster simply because of unregulated markets. My friends get shakey when they lose $100 in the market, this is going to be "Weak Hands: The App". Or "Taking Candy From A Baby: The App".
I had to lose ~$200k over the course of a couple months and only after then I started really getting into the swing of things and started making good money while also making it back. It took all that to realize that if I didn't day trade my yields would have been much much higher. Day trading is hard, don't do it unless you really truly know what you're doing. Reading crap about market psychology and fractals and fibonacci this and wave theory that is all trash and does not make you a trader.
Here come the 'I lost my life savings' rants by people with weak hands. Regular people + unregulated market = blood bath.
> Cryptocurrencies, stocks, ETFs, and options are now available side by side — all easily accessible in one app. Managing your investments just got even easier.
There is a dangerous theme of companies aimed at millennials that misappropriate Bitcoin (etc) as an investment, when it is just glorified currency exchange speculation. Blurring these lines obscures the real-world value created through actual investments.
blackjack tables are based on supply and demand. the margins on blackjack are ~51% in favor of house. if they don't get enough traffic, a swing could take the house. So if there isn't enough demand, than it's not financially feasible for the house to play those odds.
Correct that it's not entirely luck, at the moment its price is being propped up by Bitfinex. Whenever BTC value starts to dip below 10K USD, they just print more Tethers (USDT) and start buying up coins at above market price...and there's a new upswing.
A better question might be: How is anything an investment? If the stock market is priced efficiently, it is as much a gamble as Bitcoin. The stock market is of course not perfectly efficient, but it is likely extremely efficient relative to the knowledge of your average retail investor. Which means that buying Bitcoin or other cryptos is no more a gamble than any stock market investment with a similar volatility.
If the market is priced perfectly efficiently you will still make money because your capital is put to work. A perfectly efficient market just means you can't beat that intrinsic rate of return.
Yes, but money in the future is valued at a discount today. So even if an asset is 100% sure to be worth $100 a year from today, the market will value it at slightly less than that because there's no sense tying up $100 in capital for a year unless you get some profit in return.
True. But that is irrelevant to the original point: Cryptos are as much investments as any stock or commodity. And anyway, that future expectation of profit ought to go into risk-free treasuries unless you want to gamble on a specific, higher risk asset.
>If the stock market is priced efficiently, it is as much a gamble as Bitcoin.
Well... we're just shoving a poor definition of investment off onto a poor definition of gamble. If potential drawdown could be considered part of the risk of 'investing' )or 'gambling') then Bitcoin is definitely more of a gamble.
I also think the stock market is not "investing" but think it's safer to invest.
1. There's more government regulation and less manipulation.
2. New money is constantly flowing in, via 401K's and pensions. Most people aren't even aware they're invested in the stock market.
3. The government cares so much about the stock market doing good. Look at how Trump brags about the booming market. If it goes in a funk, the government will think of ways to prop it back up.
That said, without any of those 3 things, stocks are just as a gamble as bitcoin.
People say "past is not a predictor/indicator of the present", yet they love to say "stocks return 7-8% annually, and you should just invest in an index to enjoy such returns". Why? That's such as a huge assumption that everyone takes for granted.
> If it goes in a funk, the government will think of ways to prop it back up
I don't disagree with the second statement. I guess what you're saying is that there is manipulation (talking about government intervention in this case) but overwhelmingly in the "right" direction?
Sure, yeah, the market is systematically manipulated to my benefit, and those manipulations are done in a largely transparent manner. That makes it a more attractive investment target than a market which is not.
Yep. No argument from me there. Most mainstream stocks are safer investments than cryptos, along a number of axes (volatility, counterparty risk, regulatory risk, etc..). But cryptos are still very much investments.
> People say "past is not a predictor/indicator of the present", yet they love to say "stocks return 7-8% annually, and you should just invest in an index to enjoy such returns". Why? That's such as a huge assumption that everyone takes for granted.
Well, you're leaving out something something about the company putting your money to use to increase efficiency or output something something and something something about dividends from the proceeds, none of which you have with cryptocurrencies. (Though it may be disputable whether those are truly the reasons behind the historical returns of stocks and thus good reasons to expect it to continue, even if you wouldn't guarantee the exact numbers, or if those are simply motivated reasons that may or may not be reliable future indicators...)
Other than the IPO, when you buy stock you aren’t providing capital for companies to use though, right? and most companies do not pay dividends at all.
This is a common misconception. Companies often raise capital by selling more stock, and by buying stock you increase the amount they are able to charge.
What separates investing from gambling is the expected return for everyone is greater than zero.
AKA buy stock at 100$ and sell it at 100$ does not mean you broke even. You could have gotten 10$ in dividends. Now that positive may be small and some people may lose money, but that's allowed as long as the expected returns end up positive.
Bitcoin's can't have a net positive return because they only way to add money into the system is via coin buyers. Further because of transaction costs it's inherently negative sum.
What about stocks with no dividends (which constitutes the vast majority)? By your definition, only dividend investing and rental property investing is true investing.
I'm not disagreeing with you. In fact I almost agree with you, but your argument fails for most stocks.
Stocks with no dividends have some probability of paying a dividend (or doing a buyback) in the future. If you could prove that a company will never pay a dividend or do a buyback then its value would be zero.
this is turning to a very insane argument.. So if Buffet signs a iron clad legal contract that says no dividends ever for the duration of his company, it means the stock is worth 0?
If the dividend-less companies are profitable, then you can still expect the increased value to get returned to you through stock buybacks, or an eventual dividend or acquisition of the company in the future.
First of all, yes they can. Proof of stake coins pay dividends. Second of all, dividends from companies don't show up 'from thin air'. They show up from the economic activity of the company. Which is facilitated by their capital investments. Just like staking in cryptos.
Lets say I Buy '1,000' tokens including a 10 token payment for a transaction fee for 1$. Now A had 1,000 tokens and now has 1$, I have 990 tokens and another group get's 10 tokens. But, notice that other person(s) got tokens not money.
If I got to keep 1,000 tokens or someone else get's those 10 tokens nothing changes because nobody who has tokens got any money. The only way people with tokens get money is if they sell some number of tokens minus a fee to someone else. It does not matter of all 10 tokens go to a miner, or miners get 5 tokens an 5 go to 'investors' or what not.
It's still a (edit: negative sum game) and contracts don't change anything about this.
Bitcoins and USD may both be tokens, but they are not the same token. The same is true of say WoW gold and ISK (EVE Onlines money). I can farm WoW gold all day, that does not turn into ISK unless someone is selling ISK.
Smart contracts absolutely can, just like regular contracts can. A bank granting a line of credit backed by future sales unsold gas station inventory is money showing up from 'thin air'. Move that to a smart contract and you've got money - that is, a promise to deliver future real value - getting generated.
Try and write a loan on Etherium via a smart contract.
I apply, get eth, cashing out by selling it to someone else, then get hit by a buss or just ignore you.
Now, in what way can the system enforce that loan?
If you can get the eth from someone that gave me money then they are not going to give me money in the first place. If you say, sue someone in the real world that's fine. But, the smart contract did not actually do anything. If you say I need to put up eth as collateral then you did not give me a loan.
I don't know much about ETH, but would it be possible to write a contract using an escrow concept? I.e., there would be a wallet that eventually would pay out to one party in one circumstance, and to some other party in some other circumstance. (If you want to get complicated, it could even blend payouts among multiple parties.) We wouldn't have to trust you not to get hit by a bus, because the value wouldn't be in your wallet.
If they went to the work of creating digital contracts and didn't consider escrow, that seems to be a fairly significant omission.
Ah, ok, I think now I better understand the point you made above. I can accept that value per se is only created by one or more parties, but the coin itself can make it easier for them to do so profitably.
If I buy a lump of gold, and attempt to sell it to someone else later at a higher price, that is pure speculation. Gold is gold is gold. That lump of gold is going to be the same lump of gold a year from now or a hundred years from now. You might as well have buried the money in a backyard for all the change of affected in the world.
If I take that same money and invest it in a business -- the business is going to take that money and create something new. Hopefully what it creates will be worth more than what you invested, but in any case your investment has changed the world in some way.
I think a cryptocurrency is probably something in between that, because your 'investment' is actually ultimately going to miners who will expand the network, so you are actually building something new in a sense by investing in cryptocurrency. However I'm not sure that building the bitcoin network out is a net positive for the world.
> If I take that same money and invest it in a business -- the business is going to take that money and create something new.
Only if you're buying at the IPO. Most of the time, you're just buying stock from another person and the company gets zilch. The service you're providing to the company is just better information about its ability to raise additional capital from selling equity.
For some cryptocurrencies, you are providing a service to the miners by adding liquidity and pricing information, but given the volume trading on crypto exchanges, there is simply not enough currency being mined for even a tiny fraction of it to be going directly to miners as a counterparty. For a currency like Ripple, that is completely pre-mined, you don't even have that.
The company is also a shareholder and can pay out dividends or buy back stock to increase the price. One pays you directly, and the other increases your stake by diluting the pool of outstanding shares. Both are direct results of actions taken by the corporation, and both create something new: cash and equity, respectively.
I have trouble seeing what this has to do with my comment, which was specifically on the notion that investing money by buying a company's stock somehow helps the company, which is true only in the very narrow sense that I indicated.
Which would change nothing as gold is not an investment.
Also, if you 1 one bitcoin you can only sell less than 1 bitcoin from transaction fees. Remember, someone needs to spend real money maintain servers and that money is constantly being removed from the coin ecosystem.
Untrue. You can sell someone the private key to your wallet. That's free. If you're not going to classify commodities or real estate as investments, then sure, I guess bitcoin isn't an investment. But it's as much an investment as any commodity or real estate is.
real estate pays a dividend in the form of use of that land.
If I own a house I get to use the house today and still have a house tomorrow. With a field I could grow crops and then still have a field next year.
Commodities are an interesting 3rd thing. But, closer to buying something from a wholesaler than an investment as they represent actual goods (ie Oil) that will be sent somewhere. Think of it like this, if you buy coffee contract you get coffee which can be sold off. However it's a physical thing and it's got a physical expiration date, if you keep it in a pile somewhere for 10 years you end up with dirt.
Bitcoin provides a service though - a service that has demonstrable economic utility. Specifically: international value transfer. There are existing mechanisms for this (western union, swift) and they have costs. The sum of those costs is a reasonable way to think about Bitcoin's theoretical value by substitution, because it costs bitcoin to move bitcoin. And therefore if Bitcoin were to replace all other intl. value transfer mechanisms, the sum of those two sets of costs should be comparable.
Owning bitcoins don't facilitate these transactions by third party's. The service can create value but don't let the name of the service be confused with the coins.
You could speculate that the utility created will increase the value of the coins you hold. However, unlike mining there is no connection between buying a coin and enabling other people to do these transactions.
Some cryptocurrencies generate the equivalent of "dividends", especially those based on Proof of Stake systems. For example, holding Neo generates Gas equivalent to a 3-6% annual return[0], and Stellar (given free to HN readers a few years back[1]) has "inflation" equivalent to around 1% annual return[2], to name two that Robinhood will be listing.
So are Berkshire Hathaway shares not investments, because you need to sell them to end up with money? What about a savings account with compound interest, or an ETF with automatic dividend reinvestment - do they not count as investments either, because you have to do something with them to get money out?
Don't forget that investing in the stock market is still something of a gamble, because the return for everyone is not guaranteed to be greater than zero - a company can go bust leaving the shareholders with nothing.
Berkshire Hathaway is something of an exception as the vast majority of successful company's pay dividends. Clearly, buying a single stock is risky. But if you buy a basket of stocks and those stocks pay dividends then the only way to lose money is for the socks to be worth significantly less money when you sell them thus making it a positive sum game.
PS: Berkshire Hathaway still returns money to shareholders via stock buybacks. Which preform similar functions the difference is simply related to taxes. They can and are likely to at some point issue dividends.
The difference is that with investing, you have a reasonable indication where your investment will end up in the future. Chances are, in 10 years Walmart is still going to be profitable and continue to pay out dividends. There's no telling what will happen to Bitcoin in the next week, let alone the next year, so it's a gamble to put your money in Bitcoin.
Do you not see how you are contradicting yourself?
"Chances are" alone, is an assumption. How is that any different from your speculation on Bitcoin. The only difference is longevity of the window period, otherwise it's the same principle.
There is always going to be some degree of uncertainty with any action. Just because a meteor can fall on your head if you walk outside doesn't make it a gamble to do so. There's a fine line between investing and gambling, but the extreme ends of the spectrum should be obvious.
I'd argue that the difference between investing and gambling is that gambling has known negative expected value, whereas investing is uncertain. If it is not known that the outcome of a gamble has negative EV, then a reasonable case can be made that it is an investment.
stocks give you ownership in productive companies. those companies on average go up in value and produce profits which they throw off as dividends (or re-invest to increase their market-cap).
so one difference then is that stocks have a justification for their returns given the variance you experience.
I would tend to subscribe to a similar view and think that no, gold is not really an investment. A hedge, a gamble perhaps. An investment is something that (hopefully) enables useful work and productive endeavour.
Putting money into a company in return for a share of ownership is an investment. A lot of stock market shenanigans are little more than gambling. Gold and crypto-currencies for the most part are speculation.
Although it's not always clear with ICOs if any form of ownership is conferred or what the relationship might be between future profits and token gains.
But yes, in principle.
--edit-- to be clear, I'm not trying to say one class of thing is better than the others, just that to me the words have different meanings.
"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."
-Ben Graham, from chapter 1 of The Intelligent Investor
If the stock market is perfectly efficient, standard financial theory says that equity has a positive expected return (relative to the risk free asset).
Imagine a raffle where tickets cost $1. After the winner is drawn, the house agrees to buy back the first few losing tickets for $0.99, the next few for $0.98, and so on until they work down to $0. The players don't stand to lose everything in a moment, but it's still pretty clearly gambling.
When you put money into blackjack you're not buying an asset. A crypto coin is an asset that can be held. Just like a share of a company, or a dollar itself.
yes but it's a bad analogy because the odds are known and if you don't win the lotto the ticket is worth nothing. all bitcoins are equally valuable ( fungibility ).
But all cryptocurrencies are not equally valuable, and there's no reason to think that all of any given crypto won't eventually equally be worth (arbitrarily close to) $0.
I can imagine a lottery where usually nobody wins anything but every now and then everyone who bought a ticket wins collectively. It's still a lottery.
With stocks, for example, I can make a prediction about a company's future performance, buy or short accordingly, and expect that if I am correct I will profit.
I may be wrong about my prediction, but if I am correct then I've got far better than chance odds of also being correct about the future price of the asset.
Without making any further predictions about the state of the world I can equally easily imagine the price of Bitcoin in 5 years being $100 or $100,000. Neither price feels "wrong" the way it would if, say, Google's stock price rose or dropped by an order of magnitude without the company changing anything.
A bitcoin is as real as anything else. It's ones and zeros stored in a distributed ledger on computers around the world. I'm sorry you're having trouble predicting the price, look up supply and demand. Either way it doesn't make it any less real.
I don't dispute that a Bitcoin is a real, discrete thing. What I'm arguing is that it's a self-contained thing. The price of a Bitcoin is not anchored to anything outside the Bitcoin ecosystem.
With other assets, there's a clear causal arrow leading from outside the system back in. If Google the company performs better, Google the stock will overwhelmingly tend to perform better. If Google the company folds, Google the stock will overwhelmingly tend toward being worthless. The asset is a proxy for something that isn't the asset.
Bitcoin doesn't appear to work the same way. There's no obvious not-Bitcoin that demand for Bitcoin is a function of. It's a proxy for itself, after a fashion. That doesn't mean it has no value, but it does feel uncomfortably self-referential when compared to almost any traditional asset class.
Crypto's value is derived from its usefulness as a currency. It has many advantages over current fiat systems. You can expect if it's practical adoption expands then it's value will go up.
Company has assets that can be liquidated. Even if people decide a company has no value there's still assets that can be liquidated to provide capital back to shareholders. If people decide a crypto is worthless, its worthless.
Bitcoin isn't backed by an asset. It's not really backed by anything other than people's expectation that it is worth something now (and it will be worth more in the future).
This is true even for the miners, since they would not build out infrastructure and burn energy if bitcoin was worth zero.
If you asked that question to Warren Buffett, he would probably point you to Benjamin Graham's distinction between investment and speculation:
"An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."
Investing connotes some kind of exchange for rights, usually equity. When you invest in say APPL, you are buying a stake of the company. Bitcoin, like the $US or € doesn't make anything. Bitcoin is not an investment, you're just speculating that it's exchange value will rise.
There are different definitions of ‘investment’. One is forgoing present consumption in the hope of increased ability-to-consume in the future. Another is purchasing a productive asset.
I think when he said " real-world value created through actual investments " - the underlying idea behind an investment is that you provide capital to someone who is trying to build a business that will hypothetically provide jobs and value to society. Putting money into something and taking more money out is a bastardization of the term in that interpretation. That is simply not the case here - this has simply been a mass wealth re-distribution event. People are basically printing and trading pokemon cards at this point.
Providing capital to someone does not only occur in the IPO stage. I'm not even sure how to go about refuting that statement; that's... not how finance works anywhere on the planet.
People do trade stocks with the expectation of stocks rising or falling in varying periods. People also hold stocks for long terms and then sell them afterwards. Just like cryptocurrencies!
However - it's just not the same. A share in a company has evolved and subjected to regulation for hundreds of years. An IPO is a highly regulated legal process involving investment banks and many lawyers (and that is how it should be - so that we don't have con artists running ICOs). It is sold by a company that generally provides jobs and services to society. It represents an actual piece of ownership in that company - if you have enough shares, you impact how that company is run. There are many other points I could make differentiating the two comparisons entirely.
First, let's ignore cryptos because I'm talking about IPO's only (albeit the thread is about cryptos)
"Providing capital to someone does not only occur in the IPO stage. I'm not even sure how to go about refuting that statement; that's... not how finance works anywhere on the planet."
First, I provided that statement in the context of the parent comment. In the equities market, providing capital occurs only in IPOs, not in the secondary market. When you buy Apple stock, you typically are exchanging money with another person who is selling it. You are not providing capital to Apple.
Second, you could've gone about refuting my statement by providing a counter-example. It's that easy. Otherwise you're simply just trying to put me down, and make me look like an idiot, without explaining why.
Yes, Apple is not receiving any money if there is a share transaction between two investors (duh?). However, providing capital to public companies or does not only occur in IPOs (edit: even if we restrict that with the clause: in an "equities market").
You're right, I could have provided a counter argument. However, at the same time, you should not make such an absurd, unqualified assertion that other people who lack knowledge and are reading these forums may read and assume to be true.
I don't think they are making the market themselves, but my understanding is they are paid for order flow from those who do. I can only imagine the data is worth quite a bit too, assuming their EULA allows them to sell it.
I was expecting a new cryptographic library and/or algorithm, and was looking forward to 33 highly technical comments about how it compared to ECDSA or something.
Just because the title is technically accurate, doesn't mean it's useful. An ideal headline should accurately and succinctly communicate the contents of the page it links to.
Robinhood seems to be pulling in a lot of different directions and there's all these "early access" features that never seem to actually, well, launch.
I've now signed up for:
* Web access (otherwise it's mobile-only)
* Options trading
* And now, cryptocurrency trading (because why not)
and I haven't gotten access to any of them yet, even though Robinhood for web has been in "early access" for quite awhile now.
So I signed up for this, but I have very little faith that I'll get access any time soon (even with the vague promise of early February).
I'm really confused about why web access hasn't launched yet? Would think that is the easiest of them all and entirely in their own fate. Options and crypto seem like much more complicated endeavors but a website, ffs.
people will not spend more money trading on a website. not having one is an inconvenience. options and crypto are more places for people to put their money
I blame Apple. No, really. When Robinhood first launched it was intentionally targeted at iOS users, hence the almost automatic focus of building an app vice a mobile friendly progressive web app. Then the push to target Android users - but since "we do apps" is already the corporate mindset, the next thing is not a web page, but yet another app. Eventually they get around to the web.
A company I left a few years ago went down the same path.
I remember being in a startup that promised features before they could deliver, and how it was a symptom of shoddy business practices in general. So when I consider the fact that I have a decent amount of money tied up in Robinhood, and I see them promising features without delivering, I get uneasy.
Otherwise it's a great product. I'm really only writing this in the hope that a Robinhood person catches eye on this comment and takes it to heart.
As a very happy user of Robinhood financial, this really does look exciting. If you’ve not used robinhood, and have a little interest in investing, I’ve found their simple interface to be very nice to use relative to the more heavy weight options I’ve had experience with (etrade, schwab, fidelity).
I didn’t see how their crypto offering would allow me to transfer my wallet from Coinbase to them, do I create a new wallet, and then send money from one to another? If so it’s unfortunate that I’d need to incur transaction fees to onboard.
The main draw for me is no commission fees on virtually any stock or ETF.
Although I did just try to buy SPXH (S&P500 + Volatility Hedge) and for some mysterious reason it was "not available for trading on Robinhood", even though it's an ETF with a not-miniscule AUM ($50M). I pinged their support about this, and it took them over a week to get back to me to ask what type of security SPXH is.
$50M is a minuscule AUM for any ETF, especially one meant for trading (volatility hedged vehicles are not good for buy and hold). Institutional investors, Hedge funds, etc will not touch such an illiquid fund.
It will be interesting to see how they allow people to fund their accounts. With their traditional investments, they have to follow tradional rules with respect to credit. But a more "accessible" and leveraged model like Coinbase, would be a stark departure from their normal modes of operation.
Wooo this is awesome! Robinhood gets it :) I already use Robinhood for trading, so this would be a one stop shop. Plus the fact that it integrates with TurboTax means there's zero work to pay taxes on trades. Keeping track of the taxes is my biggest hassle trading crypto.
I think the feature makes lots of sense for Robinhood from a business perspective, but I cannot see the majority of Robinhood users fully understanding the risks of buying cryptocurrencies as an investment. It feels similar penny stocks and late-90s tech IPOs in that the price is driven primarily by uncertainty/unknowability in outcome and hype from recent returns.
Also I'm curious if Robinhood Gold (Robinhood's version of margin accounts) will work here, letting people easily borrow money to buy cryptocurrencies. This seems particularly dangerous for a product targeting small/layman investor.
I agree that margin trading on Cryptocurrencies is extremely risky and not fully understood by the majority of people doing it. I am very anxious to see what will happen in the long term since so many people hopped on the bandwagon in the past 2 months and I believe a quite large portion of them went into credit card debt to do it. I have been telling people I know personally that I thought Coinbase allowing the use of credit cards to purchase was asinine, and I am curious to see what will happen.
Capitol One is now blocking all coinbase transactions, and Chase is now running them as cash advances, so the credit card companies are aware. I think there may be a large amount of CC defaults due to cryptocurrency "investors" realizing they are in over their heads in the coming months.
(Pure speculation warning) I was wondering why they were taking so long to put out their options trading and web UI. I wonder if this had something to do with it.
I found it useful, it's a good start. Perhaps if you had more context about the toolset you would not find the lack of documentation the thing to comment on. Also, there are better ways to engage in communication than leading with negativity.
I'm disappointed in Robinhood. They've done great work making equity investment approachable to people who are traditionally alienated by it. Their mission, "[...] to democratize the American financial system." caries fantastic social value and generates a lot of good will for them.
Entering cryptocurrencies IMO runs counter to that mission. It's a cash grab which will expose their users to poorly-understood risks and will likely not put anyone on a more stable financial footing.
> It's a cash grab which will expose their users to poorly-understood risks and will likely not put anyone on a more stable financial footing.
That's already the case. Their entire user-base is comprised of naive stock market investors. If they really wanted to bring about a more stable financial footing for their users they would just offer dressed-up ETFs.
Or they want to offer their customers a no-fee way of buying cryptocurrencies as easily as stocks? I think this is a great move by them. There's no question that a growing number of investors are demanding access to Bitcoin and Ethereum.
Don't use it if you don't want to. But literally millions of American citizens are getting into crypto right now (looking at Coinbase's numbers). And if this is an emerging area, I don't see any problems with them coming in.
I feel most negative comments on this thread are from folks who missed the crypto train last year and are just bitter and trash any new development in this area.
My point is that things like Bitfinex are far, far from being mainstream consumer iPhone apps. Combined with the massive credit bubble we are in (any warm body with a 600+ credit score can easily get tens of thousands of dollars in credit cards within an hour right now), this is precisely how speculative bubbles run out of control and crash the economy.
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[ 3.2 ms ] story [ 291 ms ] threadEvey piece of this pie is sweet, so we will probably see more serious legit US-based players on this market of casual crypto trading for housewives.
Or if you're going for the sweet investor moneydrop, go for something like "Sharing Economy". That says "We steal from the poor and give to the rich" like no other!
[I remember the UK National Lottery being described as a "tax on stupidity"]
http://www.pewtrusts.org/en/research-and-analysis/fact-sheet...
"annual percentage rates averaging 391 percent." (That's not a typo)
"Average borrowers earn about $30,000 per year"
"Most borrowers pay more in fees than they originally received in credit "
"each year, spending $9 billion on loan fees. "
Robinhood, by not having fees, takes the stock market from the rich and opens it up to everyone else. IMO it's a great name.
> Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC) ...
> Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance.
If Apex goes down, which is vastly more unlikely, Federal SIPC insurance kicks in up to $500,000.
https://news.ycombinator.com/item?id=16119362
https://projectpiglet.com/
It works very well for short-term trading on cryptocurrencies, still waiting to release the longer term strategy (buy and hold is honestly a great choice). We've just started revewing some of the results (since we launched last week), and we're already up stagaring amounts:
https://blog.projectpiglet.com/2018/01/30-weekly-returns-usi...
Not to say it'll always be that way...
It doesn't have that same issue you describe.
Right now we need funds to continue development and add more data. So we will be charging if you don't provide feedback - so please help us improve! :)
Accessible crypto is going to be a disaster simply because of unregulated markets. My friends get shakey when they lose $100 in the market, this is going to be "Weak Hands: The App". Or "Taking Candy From A Baby: The App".
I had to lose ~$200k over the course of a couple months and only after then I started really getting into the swing of things and started making good money while also making it back. It took all that to realize that if I didn't day trade my yields would have been much much higher. Day trading is hard, don't do it unless you really truly know what you're doing. Reading crap about market psychology and fractals and fibonacci this and wave theory that is all trash and does not make you a trader.
Here come the 'I lost my life savings' rants by people with weak hands. Regular people + unregulated market = blood bath.
Might not always be possible if the exchange closes, has liquidity issues, etc.
It is certainly not advisable to expect to get any of your money back from a crypto exchange. Play with what you’re willing to lose.
reads crap about Tether propping up bitcoin price, without audits despite claims of USDT backed by USD
immediately realize you're regular people and invest nothing in cryptocurrencies
> Cryptocurrencies, stocks, ETFs, and options are now available side by side — all easily accessible in one app. Managing your investments just got even easier.
There is a dangerous theme of companies aimed at millennials that misappropriate Bitcoin (etc) as an investment, when it is just glorified currency exchange speculation. Blurring these lines obscures the real-world value created through actual investments.
The supply is mostly a function of time, as defined by the blockchain's algorithms.
The demand is a function of what, exactly?
Still looks mostly like luck to me.
demand is a function of greed.
It's not at all sustainable, though.
And it's worth noting that people do invest in currency. It is not merely an exchange vehicle.
Well... we're just shoving a poor definition of investment off onto a poor definition of gamble. If potential drawdown could be considered part of the risk of 'investing' )or 'gambling') then Bitcoin is definitely more of a gamble.
1. There's more government regulation and less manipulation.
2. New money is constantly flowing in, via 401K's and pensions. Most people aren't even aware they're invested in the stock market.
3. The government cares so much about the stock market doing good. Look at how Trump brags about the booming market. If it goes in a funk, the government will think of ways to prop it back up.
That said, without any of those 3 things, stocks are just as a gamble as bitcoin.
People say "past is not a predictor/indicator of the present", yet they love to say "stocks return 7-8% annually, and you should just invest in an index to enjoy such returns". Why? That's such as a huge assumption that everyone takes for granted.
> If it goes in a funk, the government will think of ways to prop it back up
I don't disagree with the second statement. I guess what you're saying is that there is manipulation (talking about government intervention in this case) but overwhelmingly in the "right" direction?
Well, you're leaving out something something about the company putting your money to use to increase efficiency or output something something and something something about dividends from the proceeds, none of which you have with cryptocurrencies. (Though it may be disputable whether those are truly the reasons behind the historical returns of stocks and thus good reasons to expect it to continue, even if you wouldn't guarantee the exact numbers, or if those are simply motivated reasons that may or may not be reliable future indicators...)
AKA buy stock at 100$ and sell it at 100$ does not mean you broke even. You could have gotten 10$ in dividends. Now that positive may be small and some people may lose money, but that's allowed as long as the expected returns end up positive.
Bitcoin's can't have a net positive return because they only way to add money into the system is via coin buyers. Further because of transaction costs it's inherently negative sum.
I'm not disagreeing with you. In fact I almost agree with you, but your argument fails for most stocks.
If every year your coin splits so now you have 2 coins then 4 etc no money was added. I can have 10^1000 in a database, but that's not new value.
https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ
Staking doesn't produce new coins. It pays dividends from transaction fees. I.e. actual economic activity.
Lets say I Buy '1,000' tokens including a 10 token payment for a transaction fee for 1$. Now A had 1,000 tokens and now has 1$, I have 990 tokens and another group get's 10 tokens. But, notice that other person(s) got tokens not money.
If I got to keep 1,000 tokens or someone else get's those 10 tokens nothing changes because nobody who has tokens got any money. The only way people with tokens get money is if they sell some number of tokens minus a fee to someone else. It does not matter of all 10 tokens go to a miner, or miners get 5 tokens an 5 go to 'investors' or what not.
It's still a (edit: negative sum game) and contracts don't change anything about this.
I apply, get eth, cashing out by selling it to someone else, then get hit by a buss or just ignore you.
Now, in what way can the system enforce that loan?
If you can get the eth from someone that gave me money then they are not going to give me money in the first place. If you say, sue someone in the real world that's fine. But, the smart contract did not actually do anything. If you say I need to put up eth as collateral then you did not give me a loan.
If they went to the work of creating digital contracts and didn't consider escrow, that seems to be a fairly significant omission.
Escrow accounts are fine if I am doing contracting work, but that are not a loan.
https://i.imgur.com/AltAcnB.jpg
Keep in mind this graph is logarithmic in scale.
If I take that same money and invest it in a business -- the business is going to take that money and create something new. Hopefully what it creates will be worth more than what you invested, but in any case your investment has changed the world in some way.
I think a cryptocurrency is probably something in between that, because your 'investment' is actually ultimately going to miners who will expand the network, so you are actually building something new in a sense by investing in cryptocurrency. However I'm not sure that building the bitcoin network out is a net positive for the world.
Only if you're buying at the IPO. Most of the time, you're just buying stock from another person and the company gets zilch. The service you're providing to the company is just better information about its ability to raise additional capital from selling equity.
For some cryptocurrencies, you are providing a service to the miners by adding liquidity and pricing information, but given the volume trading on crypto exchanges, there is simply not enough currency being mined for even a tiny fraction of it to be going directly to miners as a counterparty. For a currency like Ripple, that is completely pre-mined, you don't even have that.
However, over a long enough timeframe storage fees eat up the entire value of gold stored thus it's not a long term investment.
Also, if you 1 one bitcoin you can only sell less than 1 bitcoin from transaction fees. Remember, someone needs to spend real money maintain servers and that money is constantly being removed from the coin ecosystem.
If I own a house I get to use the house today and still have a house tomorrow. With a field I could grow crops and then still have a field next year.
Commodities are an interesting 3rd thing. But, closer to buying something from a wholesaler than an investment as they represent actual goods (ie Oil) that will be sent somewhere. Think of it like this, if you buy coffee contract you get coffee which can be sold off. However it's a physical thing and it's got a physical expiration date, if you keep it in a pile somewhere for 10 years you end up with dirt.
You could speculate that the utility created will increase the value of the coins you hold. However, unlike mining there is no connection between buying a coin and enabling other people to do these transactions.
gambol: A playful skipping or frolicking about.
[0] https://www.neotogas.com/
[1] https://news.ycombinator.com/item?id=16109292
[2] https://lumenaut.net/#faq
The only way money enters the system is for someone to buy a coin, so having more tokens in no way makes something an investment.
Don't forget that investing in the stock market is still something of a gamble, because the return for everyone is not guaranteed to be greater than zero - a company can go bust leaving the shareholders with nothing.
PS: Berkshire Hathaway still returns money to shareholders via stock buybacks. Which preform similar functions the difference is simply related to taxes. They can and are likely to at some point issue dividends.
"Chances are" alone, is an assumption. How is that any different from your speculation on Bitcoin. The only difference is longevity of the window period, otherwise it's the same principle.
so one difference then is that stocks have a justification for their returns given the variance you experience.
Putting money into a company in return for a share of ownership is an investment. A lot of stock market shenanigans are little more than gambling. Gold and crypto-currencies for the most part are speculation.
Although it's not always clear with ICOs if any form of ownership is conferred or what the relationship might be between future profits and token gains.
But yes, in principle.
--edit-- to be clear, I'm not trying to say one class of thing is better than the others, just that to me the words have different meanings.
-Ben Graham, from chapter 1 of The Intelligent Investor
In (spot) market movements, your value goes down as the market declines, but you don't stand to lose everything in a moment.
I can imagine a lottery where usually nobody wins anything but every now and then everyone who bought a ticket wins collectively. It's still a lottery.
With stocks, for example, I can make a prediction about a company's future performance, buy or short accordingly, and expect that if I am correct I will profit.
I may be wrong about my prediction, but if I am correct then I've got far better than chance odds of also being correct about the future price of the asset.
Without making any further predictions about the state of the world I can equally easily imagine the price of Bitcoin in 5 years being $100 or $100,000. Neither price feels "wrong" the way it would if, say, Google's stock price rose or dropped by an order of magnitude without the company changing anything.
With other assets, there's a clear causal arrow leading from outside the system back in. If Google the company performs better, Google the stock will overwhelmingly tend to perform better. If Google the company folds, Google the stock will overwhelmingly tend toward being worthless. The asset is a proxy for something that isn't the asset.
Bitcoin doesn't appear to work the same way. There's no obvious not-Bitcoin that demand for Bitcoin is a function of. It's a proxy for itself, after a fashion. That doesn't mean it has no value, but it does feel uncomfortably self-referential when compared to almost any traditional asset class.
This is true even for the miners, since they would not build out infrastructure and burn energy if bitcoin was worth zero.
It's backed by hash rate, which secures the blockchain.
Even time I think I should play another hand, some new technology gets invented that makes more money for the players in the game.
Even some of the scammy non-blackjack games that people keep making, which act like blackjack (and the players also keep making money).
But there is no way i will ever take part in blackjack because gambling is wrong and stupid.
"An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."
http://buffettpedia.com/2017/08/investment-versus-speculatio...
By definition one: yes, by two: no.
It's just betting that the value will change arbitrarily (or through manipulation).
The stock market is a secondary market with people trading stocks, not providing capital.
Providing capital to someone does not only occur in the IPO stage. I'm not even sure how to go about refuting that statement; that's... not how finance works anywhere on the planet.
People do trade stocks with the expectation of stocks rising or falling in varying periods. People also hold stocks for long terms and then sell them afterwards. Just like cryptocurrencies!
However - it's just not the same. A share in a company has evolved and subjected to regulation for hundreds of years. An IPO is a highly regulated legal process involving investment banks and many lawyers (and that is how it should be - so that we don't have con artists running ICOs). It is sold by a company that generally provides jobs and services to society. It represents an actual piece of ownership in that company - if you have enough shares, you impact how that company is run. There are many other points I could make differentiating the two comparisons entirely.
"Providing capital to someone does not only occur in the IPO stage. I'm not even sure how to go about refuting that statement; that's... not how finance works anywhere on the planet."
First, I provided that statement in the context of the parent comment. In the equities market, providing capital occurs only in IPOs, not in the secondary market. When you buy Apple stock, you typically are exchanging money with another person who is selling it. You are not providing capital to Apple.
Second, you could've gone about refuting my statement by providing a counter-example. It's that easy. Otherwise you're simply just trying to put me down, and make me look like an idiot, without explaining why.
Yes, Apple is not receiving any money if there is a share transaction between two investors (duh?). However, providing capital to public companies or does not only occur in IPOs (edit: even if we restrict that with the clause: in an "equities market").
You're right, I could have provided a counter argument. However, at the same time, you should not make such an absurd, unqualified assertion that other people who lack knowledge and are reading these forums may read and assume to be true.
so why not provide an actual counterexample that actually adds value? You still have a chance.
https://en.wikipedia.org/wiki/Investment_(macroeconomics)
This sentence explains everything about the world we now live in.
Can someone change the title to better match the web page? "Crypto" is a bit confusing without "currency".
Title is perfectly accurate.
I suppose I should've known better.
Unfortunately this will be another case of literally/figuratively.
Robinhood seems to be pulling in a lot of different directions and there's all these "early access" features that never seem to actually, well, launch.
I've now signed up for:
* Web access (otherwise it's mobile-only)
* Options trading
* And now, cryptocurrency trading (because why not)
and I haven't gotten access to any of them yet, even though Robinhood for web has been in "early access" for quite awhile now.
So I signed up for this, but I have very little faith that I'll get access any time soon (even with the vague promise of early February).
A company I left a few years ago went down the same path.
Otherwise it's a great product. I'm really only writing this in the hope that a Robinhood person catches eye on this comment and takes it to heart.
I didn’t see how their crypto offering would allow me to transfer my wallet from Coinbase to them, do I create a new wallet, and then send money from one to another? If so it’s unfortunate that I’d need to incur transaction fees to onboard.
Although I did just try to buy SPXH (S&P500 + Volatility Hedge) and for some mysterious reason it was "not available for trading on Robinhood", even though it's an ETF with a not-miniscule AUM ($50M). I pinged their support about this, and it took them over a week to get back to me to ask what type of security SPXH is.
Hey Robinhood if you're reading I'd like
BTC, ETH, LTC, XMR, DOGE, XRP, XLM, XEM
Also I'm curious if Robinhood Gold (Robinhood's version of margin accounts) will work here, letting people easily borrow money to buy cryptocurrencies. This seems particularly dangerous for a product targeting small/layman investor.
Capitol One is now blocking all coinbase transactions, and Chase is now running them as cash advances, so the credit card companies are aware. I think there may be a large amount of CC defaults due to cryptocurrency "investors" realizing they are in over their heads in the coming months.
Entering cryptocurrencies IMO runs counter to that mission. It's a cash grab which will expose their users to poorly-understood risks and will likely not put anyone on a more stable financial footing.
That's already the case. Their entire user-base is comprised of naive stock market investors. If they really wanted to bring about a more stable financial footing for their users they would just offer dressed-up ETFs.
I feel most negative comments on this thread are from folks who missed the crypto train last year and are just bitter and trash any new development in this area.
Seems a bit pointless unless you're strictly interested in day trading and don't actually care about crypto.
If this is true, that means these are cash settled and they might not actually be backed by any assets. That idea is scary and I would avoid it.