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Should Robinhood Mirror Coinbase for Maximum Profits?

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Robinhood mirror coinbase

Robinhood and Coinbase are two of the big names in cryptocurrency trading. In particular, these are the companies that crypto-trading newbies often find first. There are pros and cons to each. However, one of the biggest benefits of Coinbase in comparison to Robinhood is that it offers a wallet that allows for easy withdrawal of funds. Should Robinhood mirror Coinbase for maximum profits moving forward?

What Is Robinhood?

Robinhood is a “commission-free stock trading and investing app.” The app is popular among new investors interested in learning about stock trading for the first time. In particular, it appeals to people who want a quick-and-easy mobile solution to investing. Robinhood, as you can tell, emphasizes stock trading. However, you can also trade cryptocurrency through the Robinhood app.

What Is Coinbase?

Coinbase is “the easiest place to buy and sell cryptocurrency.” This is a mobile app solution for people who are interested in trading cryptocurrency. Coinbase launched in 2012. Initially, it was a Bitcoin trading app. However, today you can trade numerous forms of cryptocurrency through this app. Additionally, you can learn about different cryptocurrencies through their news sections.

Robinhood Vs. Coinbase

The primary difference between Robinhood and Coinbase is their emphasis. Robinhood emphasizes stock trading, although it offers cryptocurrency trading as well. Coinbase emphasizes, and in fact focuses entirely on, cryptocurrency. Therefore, if you’re interested in both stocks and crypto, then you might feel drawn to Robinhood. In contrast, if you want to learn about cryptocurrency and maximize investing there then you’d likely choose Coinbase. Since Robinhood does have that stocks edge, should Robinhood mirror Coinbase in terms of cryptocurrency then it might eventually be the better options.

Other Major Differences: Pros and Cons

Here are some of the other major differences between Robinhood and Coinbase:

  • Robinhood has a very limited number of cryptocurrencies. In contrast, Coinbase has dozens.
  • Furthermore, Coinbase allows you to trade your cryptocurrency. You can buy, sell, send, receive, and exchange money easily through the app. Additionally, you can easily transfer your funds to multiple accounts. In contrast, Robinhood only allows you to purchase altcoins, which you then must sell to cash out to an external account. Transaction options are minimal.
  • Coinbase has a lot of opportunities to help you learn more about cryptocurrency. In fact, you can earn cryptocurrency by watching videos on the platform to learn. Robinhood also has some learning tools. In fact, this is one of the ways that Robinhood mirrors Coinbase today. However, you’ll learn more about stocks than cryptocurrency.
  • Robinhood charges no commission fees. In contrast, Coinbase has arguably high fees.
  • Coinbase is a more global app. It supports use from people in over 100 countries. Robinhood, on the other hand, is for people in the United States.
  • If you’re interested in investing in gold then you can do so through Robinhood. Unfortunately, you can’t do that through Coinbase.

Should Robinhood Mirror Coinbase for Maximum Profits?

As you can see, there are similarities and differences between Robinhood and Coinbase. Both are digital apps that allow you to learn about and trade cryptocurrency. However, Robinhood has fewer cryptocurrency options whereas Coinbase is a leader in crypto trading for newbies and more advanced traders alike. On the other hand, Robinhood offers the opportunity to trade stocks and invest in gold.

Should Robinhood mirror Coinbase to maximize profits moving forward? If Robinhood were to keep, or even expand upon, their own strengths (stocks, particularly) as well as adopting Coinbase’s strengths in cryptocurrency, then it could certainly make it a forerunner in the market again. After all, Robinhood offers commission-free trading. Therefore, they could easily compete with Coinbase in terms of people interested in cryptocurrency trading if they offer both more cryptocurrencies and easier trading/selling within the app.

But, Is It That Simple?

It sounds fairly simple, of course. If Robinhood can compete with Coinbase in cryptocurrency while retaining its strong base in stock trading, then the company should profit. However, business is never quite that simple. What would it take in terms of investment and technology in order for Robinhood to make those changes? Would they truly be able to compete with Coinbase in terms of cryptocurrency? Or, instead, would they end up losing their edge in their own strengths while failing to take over the cryptotrading market?

One of the things that any company should keep in mind is that they’re on their own path. It’s all too easy to give in to the pressure to make everyone happy. When you see your competitors doing well in a specific area, of course you want to press forward in that same area. However, if that’s not your true strength, then it rarely works out. Whether or not Robinhood makes changes that make it more similar to Coinbase really depends on the company’s own values, mission, and plans for the future. It’s not a simple decision.

I’m New to Cryptocurrency, Should I Try Robinhood or Coinbase?

As of right now, there are similarities and differences to Robinhood and Coinbase. Should Robinhood mirror Coinbase in the future then it may be tougher to choose between the two. But as it stands, a newbie investor can easily consider a few key factors to choose between one or the other:

  • If you really want to learn about cryptocurrency, then you should choose Coinbase.
  • Moreover, if you want to have the most options available to you in terms of cryptocurrencies, then you should choose Coinbase.
  • However, if you’re just dipping a toe in the water and only plan to invest in major cryptocurrencies such as Bitcoin and Ethereum, then you might want to consider using Robinhood. After all, it’s commission-free.
  • Furthermore, if you want to combine stock trading and gold investing with cryptocurrency investments then you should choose Robinhood.

Of course, you could always download both apps. Then you could invest a little in each to see which one feels right for you.

What is your opinion? Should Robinhood mirror Coinbase for maximum profits?

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Here’s How RobinHood Is Changing How We Invest

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Robinhood has been struggling a little bit during the pandemic. Nevertheless, this is a tool that has done well for a lot of people. It’s changing the way that we invest. It’s making investing more accessible for a lot of people. Moreover, despite the problems, there are things about the investing platform that could offer benefits during and after COVID-19.

Robinhood Was Immediately Popular

Robinhood is a stock trading app. When it launched just five years ago, a lot of people in the industry failed to pay it immediate attention. Perhaps they thought, “oh, this is just another fintech app.” But the app ended up taking off like wildfire.

According to senior investing reporter John Divine, more than 100,000 people signed up for the Robinhood app in the first month after launch. By 2018, the app had more than four million users, surpassing E-Trade. There are now more than six million people using the site to trade stocks.

Biggest Change: Trading Doesn’t Have to Cost Fees

The number one way that Robinhood changed how we invest is through the elimination of trading costs. Commissions were common in the old days of trading stocks. Even in the 21st century, when stock trading went online, companies charged fees for trading. However, Robinhood has proven that a business model exists without trading costs.

Tracing the history of trading costs, Divine reports that a single trade would typically cost:

  • Hundreds of dollars until the early 1970s
  • $70 in the mid-late 1970s and into the 1980s
  • $20 or less in the 1990s
  • $5 – $8 in 2014 if you used the least costly online brokers

Robinhood changed everything by creating an app that allows you to trade stocks without paying a per-trade fee. Others in the industry took notice when Robinhood began to succeed. Existing brokers eliminated their own trading fees. New apps popped up offering no-fee trading. But that wasn’t all that Robinhood brought to the table.

Robinhood Adds a Social Aspect to Trading

The other big thing that Robinhood did differently was to combine stock trading – normally a solo experience – with the popularity of social media and social networking. As a Robinhood trader, you could invite others to use your link or personal code to sign up for an account. In return, you yourself would get a free stock. This was certainly part of the reason that Robinhood grew so fast; the company used the power of social media and incentivized referrals to grow the business.

Other Things Robinhood Got Right

Here are some of the other game changers that Robinhood has gotten right:

  • No account minimums, which means that stock trading becomes very accessible for many more people
  • Penny stocks, which have been popular for investing during the coronavirus pandemic; while this isn’t a game-changer per se, they’ve really gained attention for how well they’ve implemented them into their platform
  • “Cryptotrading and margin buying” (according to John Divine) who also importantly points out that all of this makes investing “frictionless, cheap and accessible.”

Robinhood: The Downside

Robinhood has been particularly controversial lately after a young investor died by suicide reportedly following a glitch in the system that caused him to think he lost hundreds of thousands of dollars. Although that’s an extreme example, it reflects a potential downside to Robinhood’s innovation and popularity. That downside is that the app is particularly popular with very young investors who often don’t know what they’re doing and sometimes this does lead to actual large losses.

The New York Times shares the sad tale of someone who took out credit card loans to fund his Robinhood account and ended up deep in debt. They say:

“one-click trading, easy access to complex investment products, and features like falling confetti and emoji-filled phone notifications that made it feel like a game.”

That gamification that makes the app so fun and easy can also be misleading. Some users might not feel like they’re spending real money. As a result, they can make terrible life decisions as exemplified in this article. The article argues that Robinhood’s approach, which relies heavily on that social media and gaming feeling of the app, leads people to make the riskiest investments and to do so more quickly than on other platforms.

Where Will Robinhood Go From Here?

That said, online trading and investing via app is probably here to stay, with or without Robinhood. These mistakes might just be part of the learning curve. Young investors may be more prone to risk-taking anyway, and Robinhood just makes it easier to do. Will the app continue to use push notifications and other tools drawn from the world of social media to encourage activity from investors? Only time will tell.

John Divine predicts that things could go one of two ways for Robinhood. One path is that the bigger companies that have been around longer are going to end up surviving by adapting Robinhood’s tools to their own. Investing businesses have already started eliminating their fees in response to Robinhood’s success. All other things being equal, people might opt to invest with the company that’s been around longer rather than the “new kid on the block” especially in the wake of controversy.

On the other hand, Robinhood might continue to innovate. If they can do that, then they might be able to continue to outshine and outpace the older companies in the world of investing. Of course, simply eliminating trading fees won’t move the needle in the future. That changed the game. It changed the industry. It changed our expectations of investing. However, as more and more companies take that approach, Robinhood doesn’t stand out for it as much.

Their niche might be in pushing forward with the tech aspect of fintech. They might do best to keep pushing the envelope with social media aspects of investing. But whether or not that’s the route that they will go, and if they’ll succeed should they choose to do so, will be up to the test of time.

Do you use Robinhood to invest? What’s your favorite part of it? What do you think that they could do better? 

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