Crumbs is a technology startup that aims to simplify cryptocurrency investments. It is exclusively targeting those that cannot afford to invest large chunks of their income. Since most people either lack the motivation to save up or do not have enough money to get started immediately, Crumbs intends to make the process painless with automated purchases.
With cryptocurrency popularity spilling over to the mainstream, companies are now trying to change the way new investors participate in the market. When bitcoin, the world’s first cryptocurrency, was released in 2009, about the only way to procure the digital currency was to mine it with the help of a computer’s processing power.
Over time, users began exchanging cryptocurrency with each other, giving rise to the first decentralized and peer-to-peer economy. Today, however, one can purchase tokens in a multitude of ways, with perhaps the most common option being through a digital currency exchange such as Coinbase.
Even though platforms like Coinbase and Bitfinex allow individuals to purchase as much cryptocurrency as they want to, most new investors cannot allocate large amounts of savings at a time. To solve this problem, most veteran cryptocurrency users recommend the dollar cost averaging (DCA) investment strategy. Investopedia defines DCA as a technique “of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of price.”
Dollar cost averaging allows investors to amass a sizable chunk of crypto over time, while also escaping the effects of volatility. However, even DCA comes with its own set of limitations. For instance, investors have to diligently and manually trade their fiat for cryptocurrency every day, week or month. The entire process, including adding funds to a digital currency exchange, and potentially even placing market orders, can be somewhat daunting for any investor new to the crypto ecosystem.
Investing in Crypto with Crumbs
Publicly launched on September 28, Crumbs is a new investment platform that takes most of the hard work out of regular cryptocurrency purchases. Similar to the dollar-cost averaging strategy, Crumbs does not require its users to purchase large amounts of cryptocurrency at one time. Instead of making routine purchases, however, the app allows users to turn their every day, ‘spare change’ into cryptocurrency.
The Crumbs application, available on Android and iOS, is where most of this conversion takes place and has been designed specifically for those new to cryptocurrency. Once installed, users will be asked to link their credit or debit card. From that point on, any purchase made using the related cards will be rounded up to the nearest dollar and record it as a “Round Up balance.”
Once the user’s Round Up progress bar exceeds $5, Crumbs will automatically purchase an equivalent amount of cryptocurrency from their bank account. Users will also be able to choose which digital currencies they want their portfolio to consist of.
Again, since the entire process is automated, no manual intervention or supervision is required. However, Crumbs has stated that the round-up process may take 3 to 5 business days to complete. Nevertheless, a user can open the application from time to time and check on the status of their portfolio.
The application also lets users set a roundup multiplier, which will enable crypto purchases at shorter intervals. Consider a situation, for instance, where a user has set their multiplier at 4x. The roundup balance for the next transaction they perform using their linked card will then be quadrupled. In short, on an example purchase of $3.75, they will be contributing $1 to their crypto portfolio. Crumbs also have a “Round Up Snooze” feature which allows users to pause the automated investment process temporarily.
Fees and Manual Cryptocurrency Purchases
While rounding up transaction balances is the biggest draw of the Crumbs platform, that is not the only thing it can do. Like most other cryptocurrency trading apps, users can also deposit fiat and manually purchase digital tokens to add to their portfolio.
Alternatively, the app also allows a ‘recurring buy’ to be set up. With this feature, a digital currency purchase can be automatically made every week. For now, the maximum amount that can be set here is $100. Crumbs boasts a ‘$0 monthly fee’ structure, where users can sign up for free and only have to pay a small commission on every trade.
More importantly, though, Crumbs has a variable fee structure depending on how crypto purchases and sales are performed. Users that enable the round-up feature will be charged $0.05 per transaction, which corresponds to a one percent fee on $5. For recurring buys, the fee is also set at $0.05 per transaction. Since the user can decide any denomination for their weekly purchases, the fee is lesser than one percent for any value above $5.
However, manual cryptocurrency purchases have a fixed fee of two percent per transaction. While this may be rather inconsequential for smaller purchases, the amount can start ballooning pretty quickly if one were to buy large amounts of cryptocurrency.
For that reason, most people would instead only use the app for its primary functionality. Nevertheless, some other crypto apps are also known to charge a similarly hefty commission. Coinbase, for instance, charges anywhere between 1.5 to 4 percent per cryptocurrency purchase.
Competition and Expansion
Crumbs is not the only company that is attempting to change the way the general public perceives cryptocurrency investing.
Earlier this year, stock trading app Robinhood announced that it would be launching a no-frills platform dedicated to cryptocurrency trading. Unlike other trading services, Robinhood does not charge its users any fees for purchasing and selling cryptocurrency. Co-founder Vlad Tenev said:
“We’re planning to operate this business on a break-even basis, and we don’t plan to profit from it for the foreseeable future. The value of Robinhood Crypto is in growing our customer base and better serving our existing customers.”
Crumbs is currently available to residents of 34 U.S. states. When we reached out to the company to ask whether it was planning on a global release, they responded positively. “We are working diligently to expand to into markets like Europe, Korea, Australia, New Zealand, Canada and elsewhere,” said the spokesperson.
Since its release, Robinhood has added Ethereum Classic and expanded to almost 20 states in the US. While the Robinhood team is still working on making the app available in more regions, users that can currently access it will perhaps find it to be a worthy competitor to Crumbs, at least for manual purchases.
Crumbs will also offer more advanced trading tools in the future. The company spokesperson said:
“Yes – We are working on building out a more elaborate price tracking feature which displays candlesticks, volume, and offers a detailed overview of that assets metrics.” Additionally, when asked about support for other digital currencies, they said, “We are working on an asset framework to allow us to continue to add additional coins.”
However, a common limitation affecting both Crumbs and Robinhood is that they don’t allow users to withdraw tokens from their cryptocurrency portfolio. Any coins purchased on the apps reside within the customer’s accounts and cannot be used to pay for goods and services. To most people, this approach would seem confusing as most cryptocurrencies are designed to be used. Nevertheless, Crumbs and Robinhood are both meant to be investment tools and are not prioritizing crypto withdrawals.