Robinhood Markets Inc, the company famous for creating the Robinhood trading app, has earned a valuation of over $5 billion. This comes soon after the introduction of cryptocurrency trading earlier this year. The valuation makes it one of the biggest players in the entire blockchain industry and one of America’s largest privately held technology companies.

Robinhood’s latest funding round is being led by DST Global, a Russian investment company focused on promising startups. The amount of equity being purchased gives it a total valuation of $5.6 billion – a huge amount of money for a three-year-old startup. Last year, Robinhood’s valuation was only $1.3 billion, so the current figure represents a substantial amount of growth that may be due, in part, to the recent introduction of cryptocurrency trading.

Looking at Robinhood’s Business Model

Robinhood is famous for its commission-free trades, a feature that appeals heavily to the millennial generation. The company’s millennial demographic also makes it well-suited to the cryptocurrency industry because this investment strategy is most popular with young people. Both cryptocurrency trading and equity trading will be commission free, and this raises some questions about the profitability of the business model.

Robinhood’s profitability will depend on how well it is able to convince enough traders in its massive user base to opt for upgraded levels of service such as the “Gold” subscription. Cryptocurrency trading will give the company access to an even larger pool of traders who may wish to upgrade to such services. It is expected that with time, as Robinhood traders age, they will become wealthier and more inclined to opt for more expensive services on the platform.

Image From Shutterstock