Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies • Hacker News Board

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#221

Post by ThrustVectoring » Thu, Jan 25, 2018, 8:43 PM UTC

Retric wrote: post #133

ZitchDog wrote: post #109

Earlier quoted context omitted.

Not all crypto is bitcoin. Smart contracts could accomplish the same thing.

No, smart contracts can't make money show up from 'thin air' aka outside the system the way dividends do.

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.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#222

Post by twodave » Thu, Jan 25, 2018, 8:45 PM UTC

aarontait wrote: post #158

Anybody know if you're able to transfer your cryptocurrency on Coinbase to Robinhood? In theory, I could avoid Coinbase's fees for selling.

You already can. Just move that stuff over to GDAX (also owned by Coinbase, and free to transfer over) and place a limit sell order.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#223

Post by bdalgaard » Thu, Jan 25, 2018, 9:01 PM UTC

abrahamepton wrote: post #210

nlowell wrote: post #179

Earlier quoted context omitted.

I think Robinhood does a great job of giving young traders the experience and knowledge of what actual trading is like before they're managing really meaningful amounts of money. College kids trading $500 on Robinhood are going to become 30 year olds who have a much better sense of how markets work and how emotion affects their own trading than college kids who are just instructed to give all their savings to mutual…

Maybe, except the college kids who just give all their money to mutual funds will make more money. The day-traders won't "learn how markets work," they'll learn how to lose money by making dumb trades based on less information than their counterparties. They won't learn anything, aaaannnnyyyyything, of actual value.

Or worse, I assume a lot of beginners aren't losing money in this market which will only fuel Dunning–Kruger effect when they have "real" money.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#224

Post by GenericsMotors » Thu, Jan 25, 2018, 9:02 PM UTC

tannerwj wrote: post #36

tptacek wrote: post #30

Earlier quoted context omitted.

I put money down on a blackjack table, play a hand, win, and cash out with more money than I put in. How is that not an investment?

Because it is not luck that determines the outcome. However speculative Bitcoin is, it isn't based on luck

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.

It's not at all sustainable, though.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#225

Post by vervez » Thu, Jan 25, 2018, 9:07 PM UTC

abrahamepton wrote: post #210

nlowell wrote: post #179

Earlier quoted context omitted.

I think Robinhood does a great job of giving young traders the experience and knowledge of what actual trading is like before they're managing really meaningful amounts of money. College kids trading $500 on Robinhood are going to become 30 year olds who have a much better sense of how markets work and how emotion affects their own trading than college kids who are just instructed to give all their savings to mutual…

Maybe, except the college kids who just give all their money to mutual funds will make more money. The day-traders won't "learn how markets work," they'll learn how to lose money by making dumb trades based on less information than their counterparties. They won't learn anything, aaaannnnyyyyything, of actual value.

College kid who started trading in RH a while ago here. After reading some basic investment books from authors like Peter Lynch, Taleb, and What Jim Paul, decided to get some experience in the markets. Invested a little saved and since then made a decent return, better than if that money was in a bank. So far, I'm doing better than the large-company mutual funds after 3 years, but as I've been reading, that's probably good luck.

It's been an interesting experiment that gave me incentives to learn more about financial markets, which I otherwise would not have touched. However, I started by reading and knowing a little bit, so I won't touch crypto trading until I know more.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#226

Post by fullshark » Thu, Jan 25, 2018, 9:07 PM UTC

dawhizkid wrote: post #123

Something about Robinhood just makes me uneasy - clearly their main target market is the small retail investor who is sensitive to a $7/trade fee, but the low friction, mobile-first no fee stock trading experience they've created mostly serves to encourage bad investor behavior i.e. emotional, irrational day trading among people who can least afford it. Now they are "democratizing" margin trading (Robinhood Gold), op…

I agree somewhat but there's no better way to learn how to invest than to try outsmarting the market for a few years.

Frankly the demand is ALWAYS going to be there for these types of services. And there are people that are actually smarter than the market. Robinhood is so much better than a lot of companies that try to attract those investors (like a site that makes you pay for day trading classes for example)

I'd rather have Robinhood than an app that charges fees, seems like a win for the consumer to me.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#227

Post by ouid » Thu, Jan 25, 2018, 9:08 PM UTC

abrahamepton wrote: post #210

nlowell wrote: post #179

Earlier quoted context omitted.

I think Robinhood does a great job of giving young traders the experience and knowledge of what actual trading is like before they're managing really meaningful amounts of money. College kids trading $500 on Robinhood are going to become 30 year olds who have a much better sense of how markets work and how emotion affects their own trading than college kids who are just instructed to give all their savings to mutual…

Maybe, except the college kids who just give all their money to mutual funds will make more money. The day-traders won't "learn how markets work," they'll learn how to lose money by making dumb trades based on less information than their counterparties. They won't learn anything, aaaannnnyyyyything, of actual value.

if the premise is that you can't make money as a day trader, no matter who you are, because the stock market is essentially efficient, then they aren't making dumb trades with less information, because all information is reflected in the price. What they are doing is accumulating more risk, giving them higher odds of fluctuating out, but the expected value is the same as holding mutual funds, maybe even a little higher, since mutual funds have administrative fees, and robinhood is free.

If that is not the premise, then it's not good general advice to tell people to avoid day trading as they won't learn anything. If the market is not efficient, then return on investment is correlated with your amount of information, and they will absolutely learn things of actual value, or at least their experience with trading will contain information about the strength of their hypotheses, regardless of whether they infer that information.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#228

Post by darawk » Thu, Jan 25, 2018, 9:15 PM UTC

Retric wrote: post #189

darawk wrote: post #180

Earlier quoted context omitted.

You don't actually know much about cryptos, do you? Here, read this: 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.

I said pay out coins not create new coins. 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…

Money is just another form of token. I'm not sure why you're making this distinction between 'money' and 'tokens'. They are the same thing.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#229

Post by canistr » Thu, Jan 25, 2018, 9:15 PM UTC

banterfoil wrote: post #200

canistr wrote: post #195

So who is responsible for Robinhood's orderbook? Are they partnering with an existing exchange to fulfill market/limit orders? Are they simply paying for the trading fees on behalf of users? If Robinhood isn't posting their orderbook, why would anyone trust that there are no fees or commissions when they could bake their costs directly into the price? There's no market regulation (a la Reg NMS) for cryptocurrencies,…

> so who's to say that the user isn't getting screwed on price and allowing Robinhood to take their cut? Are you referring to market orders? I don't understand this. If I place a limit order for 1 share at $20. And the order gets filled at this price; where do you think Robinhood is taking a cut? I think the strategy you mention could be possible with market orders however.

Well for one, cryptocurrencies (at their current prices) can be divided much greater than simply "1 share". I'm saying that the price that Robinhood sets is dependent on orderbook price which they control.

Example: you buy $20 USD worth of BTC on Robinhood. They give you 0.001750 BTC.

But on other exchanges, you would have received 0.001812 BTC instead. The differing price of BTC between exchanges gives them their "commission/fee".

The lack of transparency in pricing gives them the advantage in exchange for retail consumer confusion over "zero fees".

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#230

Post by darawk » Thu, Jan 25, 2018, 9:18 PM UTC

Retric wrote: post #192

darawk wrote: post #185

Earlier quoted context omitted.

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…

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.