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Bitcoin can disrupt online brokers, exchanges, says Zerodha’s Nithin Kamath. Know why

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As money became more fluid and dynamic with stock trading, people aligned their financial psyche with the trends and patterns of this ever-changing field. Updates on business rises and falls are of great interest to those affected. Well-to-do people in the field usually capture people’s attention with their advice on changing paradigms.

Recently, Nithin Kamath, founder and CEO of online brokerage firm Zerodha, posted a Twitter thread, sharing his views on possible disruptions in the future of business operations. According to Kamath, the brokerage and exchange financial space can have serious cryptocurrency-induced disruption.

In his tweet, Kamath wrote, I am often asked who can disrupt new age online brokers and exchanges. I don’t think it will be a new exchange or another brokerage firm. It will most likely be a foreigner, like Crypto.

According to Kamath, the only way the brokerage and trading business could be disrupted is if someone finds a way to pay people money for trading i.e. negative brokerage, or a means by which all customers earn money.

Zerodha was the last disruption veiled as a disruption to stock trading and brokerage business when the company offered discounts and meager brokerage fees. Before Zerodha entered the trading space and financial technologies proliferated, brokers charged high commissions. Zerodha broke the paradigm and offered low margin brokerage fees, which allowed low cost trading to dominate the space. This has forced traditional brokers to lower their fees or move into other areas.

Brokers generally depend on a very limited base of traders. If traders switch to other options, it could disrupt brokerage business significantly. Kamath, in the thread, mentioned that there isn’t much left to disrupt in the brokerage and trading industry, both on price and product. However, if traders move on, it could disrupt everything.

According to Kamath, traders are looking for high leverage, longer market openings and volatility, which Crypto provides without fail, scoring overstocks. Of course, crypto trading is riskier without any fundamental information about price movements. But greed usually takes over most people over time, Kamath said in the Twitter thread.

Even though Crypto has yet to gain the desired momentum to disrupt trade and brokerage, Kamath believed India was heading to the same destination as the United States a few years ago. Crypto is what recently disrupted brokers and traded in the United States.

Kamath compared Coinbase’s Assets Under Management (AUM), which is around $ 180 billion, and Robinhood Crypto, which is around $ 11.5 billion, citing the recent crash Robinhood suffered and how people were unable to respond in a timely manner.

Zerodha recently entered the mutual fund space after obtaining SEBI’s approval in principle to create an asset management company (AMC).

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