Robinhood announced this afternoon that the app is adding support for bitcoin transactions on the Lightning Network. Revealed today at the Bitcoin conference in Miami, the online broker also announced that it has activated its crypto wallet for two million eligible customers.
While not as momentous a reveal as the headline development of last year’s conference – that El Salvador was declaring Bitcoin as legal tender – this is still good news for the crypto industry at large, if a bit predictable. Robinhood’s influence was clear to see during the GameStop saga in January 2021, when their decision to prevent customers buying GameStop shares caused mutiny on the Internet. Their user base boasts 17.9 million active monthly users. Once the darling of the retail world – their name Robinhood felt particularly apt – it soon came across as unfortunately ironic, as their dramatic villainous turn during the meme-hysteria would have made any WWE wrestler proud.
Quite simply, this is a move Robinhood had to make. Their mission to offer easy access to investments for retail customers has been severely restrained by their lack of reliable crypto infrastructure. It speaks to the growing relevance of cryptocurrency within the investment sphere, as clamours for the app to offer digital products ultimately became too loud to ignore.
Of course, Robinhood will need more than this to solve their problems. Going public last summer at $38 per share, the stock quickly popped to $55 within a few days. Since then, however, it’s been all downhill, and the stock now trades at $11.96 – down nearly 80% from the all-time high.
Ouch, chart via Yahoo Finance
While Robinhood had previously offered crypto products in a limited capacity, the roll-out of a full wallet feature now offers complete self-custody, allowing customers to actually buy the cryptocurrencies and transfer them in and out of the Robinhood ecosystem at will.
For example, were a customer to purchase a Cristiano Ronaldo jersey on the island of Madeira in Portugal, they can now send over bitcoins from their Robinhood crypto wallet in order to complete the purchase. This, of course, is partially made possible by another announcement from Miami this afternoon – that Bitcoin has become legal tender on the sunny island of Madeira, famous being the hometown of a rather good footballer by the name of Cristiano Ronaldo.
Robinhood had previously announced that nearly 10 million customers had traded crypto on their app last year, so this will no doubt come as a long overdue bonus to those same users. Although it should be caveated that the move originally is only for 2 million “eligible” users – this excludes residents of New York, Hawaii and Nevada, where regulatory hurdles have slowed the roll-out.
Previously, the beta roll-out meant only a very limited number of users could shift around bitcoin, ether and dogecoin. With bitcoin being the top recurring buy on the app, according to Chief Product Office Aparna Chennapragada, this is bound to appease users, although the share price was unimpressed, down 3% at time of writing. As for Bitcoin, it represents just a little more adoption, while the Lightning Network in particular continues to gain credibility. “For the larger community this is a fantastic way” to cheaply transact in Bitcoin, Chennapragada said.
Outside of Bitcoin, however, Robinhood still have a long way to go. For crypto enthusiasts, the inability of the new wallet to sync with ERC-20 tokens is bound to frustrate. No access to NFTs (the bulk of which are on Ethereum), nor airdrops and forks are further problems that have yet to be solved. Staking is also not possible and the cap on outbound transfers is $5,000.
If Robinhood really want to appease their users and focus on getting that share price back towards where it once was, it will need to do more than simply offer the Lightning Network. There are too many competitors in the space for retail investors to be satisfied with such limited ability to transact in crypto.
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