Cobinhood | A Closer Look at the Zero Trading Fee Cryptocurrency Exchange

In my previous Cobinhood post, they were just starting their ICO crowdsale. Cobinhood’s ICO ends on October 22, 2017 and I thought this would be a great time to take a closer look at their value proposition and discuss their tagline claim: Zero Trading Fee Cryptocurrency Exchange.

Cobinhood is primarily is an exchange platform that will eliminate several problems that plague current exchanges. The current problems are:

• High Trading Fees;
• High Trading Latency; and
• Security Breaches.

In addition, Cobinhood will offer a other services:

• ICO underwriting (along with full ICO viability research)
• ICO Spark Program blockchain integration assistance;
• Cold Storage; and
• Deposit Insurance for online wallet.

With ICO underwriting, Cobinhood can list customer ICO tokens immediately after a crowdsale on their exchange, which solves low liquidity issues that many ICO companies have on secondary markets.

As you can see, Cobinhood will offer a variety of services – some that I don’t think are offered at all or under one roof. I like the zero fee trading as well cold storage option and deposit insurance, but lets focus on the zero fees in the next section.

How does Cobinhood make money without charging fees?

Probably the most interesting question that I have (and I’m sure everyone is curious about) is how does Cobinhood plan to make money if they don’t plan to charge trading fees? The answer is simple and I’ll summarize their FAQ answer in the next paragraph.

Cobinhood plans to generate the majority of their revenue from their ICO underwriting services by charging a 5% underwriting fee (the percentage is subject to change depending on different ICO projects).

In other words, Cobinhood has shifted the cost of using their services from the exchange users (you and me) to their ICO customers. This is a great deal for us, but a lot hinges upon being able to entice companies to use their ICO services. Part of their plan is to grant discounts on margin loan interest fees by 50% as well as a rate discount if a company has multiple ICO plans.

I imagine that capturing ICO business will be easy if Cobinhood knocks it out of the park on the exchange side. Being able to market that Cobinhood is a major exchange, will make it an easy choice for companies to want to use their ICO underwriting service in order to offer the coin/token to as big portion of the cryptocurrency investment/trading community as they can, as all ICO companies reserve a percentage of their offering for themselves to fund various initiatives. Cobinhood is no different as they reserved a portion of their ICO distribution for product development, legal, operations, marketing, and security and compliance.

CONCLUSION

A lot of focus is on the zero fee, but I think that if Cobinhood can prove impervious to security breaches then security might be their biggest value proposition for customers in the future. I rather pay a small trader fee for maintaining security of the exchange then wish for zero fees. Although delivering on both promises gives Cobinhood the best chance at proving that their model works.

It’s also important to note that Cobinhood tokens (COB) are not used for fees on their exchange as Binance Coin is used on the Binance exchange to get a discount on trading fees. COB will be allow holders to obtain ICO coins/tokens that go through Cobinhood at a reduced and/or significantly low rate rate. If Cobinhood means that COB hodlers can exchange for ICOs then I can see where the growth of the ICO market will likely see an increase for the price of COB as well. Essentially Cobinhood hopes that COB becomes a currency to purchase ICOs much like Bitcoin and Ethereum are used. The added benefit will be the immediate link to an exchange, but the downside would be that COB can not be used outside of Cobinhood.

Given the above, Cobinhood’s value proposition for COB is worth consideration. At the very least, trading on the exchange at no cost is definitely enticing. I plan to use it as every little bit that I can save means that much more that I can purchase.

I hope this post answers some of the biggest questions a person might have if they were looking for information about Cobinhood or COB token benefits.

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Traversing the Cryptosphere,
@Kryptonaut