Rollout of crypto on Freetrade


(Big Boss) #1

Hey @freetrade_team

Wanted to get your thoughts or plans on how you’re planning to introduce cryptocurrencies to the platform. So far, it’s been rather cryptic (hehe, I’m so sorry about that). Whilst I’m not a believer of cryptocurrencies, I agree that it needs to be done right and it is potentially a Millennial’s first exposure to investing.

I can envision selecting an option to open a digital wallet on the platform and the ability of trading different cryptocurrencies. I thought Revolut’s take on crypto was a bit gimmicky because your cryptocurrencies aren’t actually held in your own digital wallet and thus cannot be transferred to other wallets (you can transfer between Revolut accounts but the crypto is held at Revolut’s ledger and is more of an accounting transfer than actual token transfer) or used for real crypto transactions (which is one of the fundamentals of owning fiat or crypto).

Also, due diligence on the cryptos available to trade. I can’t recall the statistics, but a shed load of ICOs are crap or gone belly up. Stuff like OneCoin or BitConnect are Ponzi schemes, etc. Obviously, we could use best practices from Coinbase, Kraken or Gemini.

Welcome other thoughts and ideas from the community!

Cheers

PS: Doesn’t matter whether you believe in crypto or not. Having crypto on the platform is important because it increases the depth of Freetrade’s product suite and this inevitably flows down into shareholder value. :rocket:


#2

At Revolut’s recent Rev Rally this question was asked and answered with them saying they would very much like/plan to offer this additional functionality in future iterations of their crypto offering.

Also, if Coinbase reopen the GBP account in their app, then I think if FreeTrade are to compete with both Coinbase & Revolut then they should be looking to offer private wallet addresses for customers in the medium term.

Regarding coins/tokens… any of the top 20 would strike a nice balance imho.


#3

Adding a proper crypto exchange is a massive opportunity and I would love to see it soon (as both a crypto enthusiast and a shareholder). Binance recently announced $200 million quarterly profits.

We should make the Bitcoin and Ethereum ETFs available too. That’s probably quicker and easier to implement as a first step into crypto (hargreaves have them). They are more accessible too (e.g. available in SIPPs)


(James) #4

I would hate to see cryptocurrency trading within the main app.

For the same reason Freetrade is avoiding options and leveraged products, they should also avoid cryptocurrencies - which are highly speculative, volatile products that present a considerable risk to everyday investors (who should absolutely stay clear of crypto).

Cryptocurrencies are clearly purely speculative commodities, no underlying value (aside from potential use in money laundering, drug dealing, or to escape capital controls), so buying them is making a speculative gamble rather than an investment in their long-run potential.

When we buy shares, we are betting on the ability of companies to grow by improving their productivity, reaching new customers, and developing new products. When we buy crypto, we are betting that more and more people will enter the bubble.

Freetrade has said again and again that it wants to attract sensible, long-term investors. It would be very dangerous to start offering cryptos to the same people saving for retirement, trying to build a nest egg, etc.


(Calum McWhir) #5

There’s no denying it’s a divisive topic and we have some tough choices to make from a product perspective that the community will have ample input on.

A few points for the benefit of balance:

The one as yet proven use case of bitcoin (and perhaps other cryptos by proxy) is its open source and censorship-resistant ledger, meaning there is a public record of every transaction. This makes it a very poor choice of platform to perform your criminal activities on, because as soon as your addresses are linked with a fiat on-ramp there is an indelible link to the conduct.

In contrast, despite its 2018 correction BTC has outperformed the Venezuelan Bolivar over that period and helped to protect those people from hyperinflation. For them, it is a very real use case. This may not yet be of interest to developed economies but cue political instability in Spain, Italy and Greece in a big quantitive-easing mess and it’s easy to at least appreciate, if not actually buy into, the potential bitcoin has.

There’s a gold ETF in our universe - what’s your view on this? Would you be more comfortable seeing crypto in Freetrade if it was wrapped in an exchange traded vehicle (of which there are plenty and many more around the corner)?

I completely agree - we’ve built our proposition on cheap, long-term investing. I don’t think this approach should discriminate between asset classes, though. Trying to make short term profits with anything is dangerous, whether it’s the latest Silicon Valley IPO or ICO. Theories of asset allocation and diversification actually require that investors seek out opportunities that aren’t correlated, and so assigning a very small percentage of one’s portfolio to any speculative asset can have its benefits (I’ll drink to that).

I’ll happily concede that crypto as an industry is rife with fraud, volatility and complexity - but to some ‘normal’ people, so is the stock market. Freetrade’s job is to help them overcome this, and once we’re a bit further along on this mission there’s no reason why we can’t then do the same with crypto.


Glint Pay on Crowdcube
#6

I agree with @freetrade_cal’s headline - help people invest in cryptos - but would flag them as assets with particular uncertainties.

Little basis for determining a fair value yet (for the most part the distributed apps underneath these tokens haven’t really proved themselves imho), price errr distortion by the relatively small number of trading whales (maybe?), the increasing level of 51% attacks as renting mining compute gets cheaper, and so on.

Venezuela’s an interesting case. Electricity is pretty much free and the currency inflationary, so mining cryptos is popular.


(Alex Sherwood) #7

Following on from this, the reality is that people are going to trade cryptocurrencies whether Freetrade offers the service or not.

But at least Freetrade is providing a quality service with no hidden fees, high hurdles to access your money & professional support. So I’d consider this one of the safest places to invest.

There’s also an opportunity for the team to educate users about the risks of these investments, creating a well balanced portfolio etc. Something I haven’t seen other cryptocurrency trading platforms doing.

Lastly this community can play a role in guiding users who are new to this space, answering anything & everything that they might need to know.

Someone should do a good job of offering this service & I believe Freetrade can.


(Sergey) #8

Venezuelans could have bought USD to protect themselves from hyperinflation? Why buying BTC was a better choice?

I agree with this point.

Why Freetrade thinks Cryptocurrencies are better investment choice than FX, for example?

May be somebody could write a primer on cryptocurrencies vs other asset classes.

The concern is not, I believe, the choice of the asset class, but the justification of offering this asset class to the masses.

The fact that Freetrade does not offer margin accounts but offers crypto means you consider it to be less risky to invest in crypto than trade stock on margin, right?

The only benefit I can see in offering crypto is to attract people into the app by offering cryptos >> them geting hurt >> them starting to invest in traditional asset classes


#9

Venezuelans mine the btc/cryptos for free because the electricity’s free - eg https://www.bloomberg.com/news/articles/2018-05-25/free-electricity-fuels-a-crypto-mining-boom-in-caracas . They may then sell them for USD, dunno.


(Sergey) #10

Apart from those lucky ones who can mine crypto, the rest of the population will be having as much hard time buying BTC with bolivar as buying USD with bolivar


(Calum McWhir) #11

USD can be confiscated, BTC can’t.

The fact that any of them are bothering with BTC at all proves it has a use - that’s all I’m seeking to establish. A rational investment decision can therefore be made if you have the risk appetite.

It’s already really easy to get cheap exposure to currency fluctuations elsewhere, like holding multiple balances across Revolut ‘current’ accounts. As @alexs mentions above, we are focusing on where we can educate, improve and bring down costs. FX has already been done, in my view.

Let’s be clear here as there’re multiple facets of the investment process at play. Per our blog posts and other public comments, we are pro-ownership of the actual asset you are investing in with minimal (or at least fair) entry and ongoing fees. This is not the case for CFDs, spread bets and other leveraged products. These unecessarily magnify losses and gains and rack up borrowing fees, and as such promote short-termism.

This should not be confused with volatility, which happens at various times to various degrees in all markets. Volatility should only affect you negatively if you have an unnecessarily short time horizon; and this is what fuelled the ‘bubble’ last year in terms of lots of people buying without an investment rationale / understanding nor any long-term commitment and panicking then when the price dropped.

As noted above I think it then becomes a question of asset allocation, diversification and correlation. Such investment theories have made bonds and gold attractive for various strategies over the decades, and although we are at an early stage it is possible that bitcoin and others achieve the same status.


(Richard varga) #12

I couldn’t disagree more… cryptos are what got me into trading and I would be very disappointed if we couldn’t trade them here… I used crypto to buy things way before I used it to trade with and to claim they ‘have no real use’ is naive.

You say ‘when we buy shares’ but I buy shares on TA only holding for a few weeks mostly…I trade the swings in the markets and don’t really care for long term…


(Big Boss) #13

I think the debate of whether or not crypto should be regarded as a legitimate currency or market instrument should be left to market forces. Everyone and anyone is allowed to take directional positions in crypto to benefit in its success or failure. Just like how market forces determines whether a company rises in market value or gets liquidated.

I created this thread to ensure that trading crypto on Freetrade is safe, enjoyable and adheres to the original principles stated in the 2009 white paper by Satoshi. Important features I’d like to see is tight spreads and personal crypto wallets or keys. If there is a crypto transfer/payment method as well that would :exploding_head:

Crypto is happening. Whether it succeeds or fails, let the market decide. Stay safe out there.


#14

Are we any closer to knowing what Freetrade’s crypto offering will look like? Is it going to be a ETF based exposure, or will we have wallets where we own our private keys? Also, inspired from the article is the arrangement going to be custodian or non-custodian?

Just read this new blog post from Abra which sparked my question.


(Christopher) #15

Good question Theo! What would your preference be and why?

I can totally see the practical and philosophical cases for both options but I’m really interested in what the community thinks and feels about this.

@freetrade_cal provided an ace summary of Cboe’s thinking on some of the elements relating to your question here.


#16

Investor perspective: As of now, I’m expecting Freetrade’s offering to be ETF-based because this would align with the business. Furthermore, having just read @freetrade_cal summary you pointed out, the “intended audience” part excludes the layman (just like Coinbase’s equivalents do) so it’d be a unique starting point for Freetrade to offer easy-access crypto ETFs to everyday investors. This will naturally be a custodial arrangement.

User perspective: I can’t spend crypto ETFs i.e. use them to transact should in 10+ years time crypto mass adoption across merchants/consumers takes place.

P.S. it’d be illuminating if we could have a blog on Freetrade’s plans/ideas for cryptos


(Dave Smith) #17

Personally I don’t invest in Crypto, but if I did I would want my own wallet


#18

Can you expand on why? Would an ETF not suffice if your ownly purpose was investment?


(Dave Smith) #19

I guess to have control over the underlying instrument rather than trusting someone else with it


#20

This wouldn’t be unique to a crypto ETF. Do you have this view of other ETFs?