While Coinbase, Binance, and other giant crypto exchanges have made a name for themselves and dominated the market, a new model is slowly taking root. The zero-fee trading model was advanced by Robinhood, and now a new entrant is seeking to snatch the crown. Voyager, backed by some renowned tech investors including an Uber co-founder, will offer at least 15 cryptos to trade on its platform, giving it an edge over Robinhood which only offers five. It will also aggregate the prices of cryptos from at least ten different crypto exchanges, giving its users access to the best possible price.
Seizing the Opportunity
Having begun offering zero-fee crypto trading earlier in the year, Robinhood has enjoyed relative success especially since it hasn’t had any major competition. This is all about to change, according to Voyager’s CEO, Stephen Ehrlich. Speaking to Fortune, Ehrlich expressed confidence that his platform will become a household name in the industry, especially as it offers extra features that Robinhood doesn’t. One of them is the large number of cryptos listed, with Voyager offering at least 15. The usual suspects such as Bitcoin, Ethereum, Bitcoin Cash and Litecoin will be listed, Ehrlich revealed. The full list is yet to be drawn, but he stated that the company is leaning towards listing the controversial XRP.
Voyager’s superiority will go beyond the number of coins offered, as it will act as a price aggregator. The prices will be pooled from ten leading crypto exchanges and three market makers. Ehrlich believes this will give Voyager’s users the ability to execute their buy and sell orders at a better price than their peers who use a single exchange.
Ehrlich will bring his experience with individual and professional investors from his days in the equity market at Lightspeed Financial. Lightspeed is a brokerage firm that Ehrlich co-founded and which deals with electronic trading platforms. Cryptos haven’t been adopted by the masses yet in the United States, and there is a vast opportunity which has yet to be exploited, he said.
Voyager will roll out gradually in the US as it secures the required state licenses, with the requirements varying between states. It has already secured approvals from regulators in a number of states including California, Montana, New Hampshire, Missouri and Massachusetts. In some states such as New York, its applications are pending. It plans on securing the operating approvals of at least 40 states. A beta test will begin this week, with the release of its mobile app slated for October.
Oscar Salazar, Uber’s founding architect and CTO, is also among the founders. He is the company’s main tech advisor as well as one of the few early investors in the company. Another investor associated with Uber, Philip Eytan, is also an investor in the company. Eytan was one of the earliest investors in Uber. Voyager has only raised money from friends and family, the Fortune report noted.
Robinhood made headlines when it announced that it would begin to offer crypto trading on its zero-fee trading app. With its stock trading app being very popular among millennials, the move was viewed as genius for the company, as it would tap into a huge market of young investors who hadn’t traded cryptos before. Recently, the company added support for Litecoin and Bitcoin Cash. Robinhood has described its mission as dethroning Coinbase as the go-to place to buy cryptos in the US, and although that may be years away, the entry of new players like Voyager will make the race for domination even more fascinating.
Some comment on the business model would be helpful. I have learned that the most expensive products and services are the “free” ones. How do they make their money and who is paying?
Since it is a centralized exchange a reasonable business strategy would be to make their money, like traditional CFD brokers, on the spread between sell and buy.
eToro also aggregates pricing information from top exchanges so that is no USP IMO.They have a huge, dynamic, spread and are reeling in veritable boulders of cash every single day.