28th April 2023 > > Robinhood.

tl;dr

Robinhood is providing a fiat on-ramp directly into the decentralised world, a very exciting development.

Market Snap (at time of writing)

Market Wrap

With the 30-handle clearly in sight I note that perpetual futures funding rates are squarely back to neutral, suggesting the sceptics no longer believe they can win the psychological battle for that price point. This is likely due to the disappointing US GDP figures suggesting a nasty combination of high inflation, and stagnation.

Such a scenario should result in some hard political decisions to improve productivity, and a reining in of government spending. There is zero evidence to suggest either of those things will happen anywhere in the Western world. The frightening prospect of a return to QE (quantitative easing) to massage the GDP growth figures higher looms ever larger.

Curious Cryptos’ Commentary – Robinhood

Robinhood is an online trading app for stocks and cryptos. It shot to fame in 2021 as the conduit for an army of retail investors who organised themselves on reddit to collectively buy up GameStop shares which had been heavily shorted by a variety of hedge funds.

The resultant short squeeze cost those hedge funds millions of dollars. Some commentators viewed this as a positive event (hedge funds generally do not get good press, but I would argue that they are a key element in making capital markets behave more efficiently) without thinking through the consequences for that army of retail investors. Most could be described as relatively inexperienced at investing in stocks, and few would have taken advantage of the short squeeze. The fall in prices once a squeeze is done and dusted is as rapid as the increase during the squeeze. Few of those involved would have been financially better off at the end of the process, and many would have lost a lot of money.

Robinhood’s key selling point is the ability to invest for as little as $1 with commission free trades. With 23 million users and $75bn AUM (assets under management) Robinhood has provided a convenient fiat on-ramp into cryptos within a centralised world with a non-insured custodial solution.

…

Robinhood has announced the launch of Robinhood Connect:

https://blog.robinhood.com/news/2023/4/27/introducing-robinhood-connect-simplifying-access-to-web-3

Johann Kerbrat, GM of Robinhood Crypto, explains:

“Crypto and Web3 have the potential to change the future of the financial system for the better, but we recognize there are still significant hurdles preventing broader adoption. Our conviction in the future of Web3 remains strong, and we’ve continued to build new products that put the accessibility and usability of crypto front and center for customers, positioning Robinhood as the lowest cost, easiest to use on-ramp to crypto.”

This could be a game-changer for dApps (decentralised apps).

Until now, the fiat on-ramp into the decentralised world would usually involve a fiat to crypto trade on a centralised exchange such as Binance or Coinbase. Those cryptos would have to be transferred to an online wallet such as MetaMask (preferably paired with a Ledger Nano X) before an individual could interact with any dApps.

Robinhood Connect can be integrated directly into dApps providing a seamless fiat on-ramp.

Why do we care?

Robinhood are only doing this as they believe they have significant demand for such a service from a potentially enlarged client base. Me for example – before this news I had no desire to open a Robinhood account. Now, it is my first task of today once this missive has been sent.

As the press release explains:

“With lower barriers to entry, crypto presents an opportunity for those who have been historically left behind by the traditional financial system, and it has the potential to help reduce the wealth gap. With better education, a more intuitive user experience, and through products like Robinhood Connect, we will introduce more people to the world of crypto, making it easier for customers to navigate and start their Web3 journey.“

Crypto adoption is happening right here, right now.