Read this post in German, French, Spanish, Italian, or Polish.
At Bitpanda, we believe in transparency. With Bitpanda Stocks, we offer commission-free fractional stock investing*, anytime, 24/7. Based on this, you could rightfully ask “if there are no commissions, how do you guys actually make money?”. The short answer is: through spreads. Let’s take a closer look together.
What is a spread?
When acquiring a certain asset, a spread is the difference between the purchase price (ask) and termination price (bid) of an asset. In other words, an ask is the price at which a user is willing to invest and a bid is the price at which a user is willing to terminate. Based on this difference, Bitpanda takes a small profit after each transaction. The exact amount of these spreads may change when the market is moving really fast. Still, we will try to keep the spreads as tight as possible.
Generally speaking, each transaction contributes a small amount to Bitpanda’s overall earnings. However, we, as a company, are fortunate enough to have more than 2 million users who trust our services, which means that all those tiny contributions add up. Or, in other words: We make money through the sheer size of our user base despite charging no commissions and offering Bitpanda Stocks with really tight spreads.
How Bitpanda earns money through spreads
Let’s say that you want to invest €10 in a company you like. When you decide on a specific stock, you are securing the full €10 worth of that specific asset of Bitpanda Stocks. However, the applicable rate to your investment is a little higher than the latest market price.
As an example, let’s say that you have invested in a fractional stock of 1 unit of “Famous Company” via Bitpanda Stocks. Assuming that the latest market price for this 1 unit was €9.99, you would have paid €10 for the same 1 unit via Bitpanda Stocks. You notice that you have secured the full one unit of Famous Company, but there is a gap between the €9.99 market price and the €10 which you paid. This small difference is the spread that Bitpanda earns after each transaction.
Tighten the spread even more with BEST
BEST (Bitpanda Ecosystem Token) is Bitpanda’s own cryptocurrency, which offers many advantages to its holders, such as BEST Rewards, exclusive VIP levels and lower trading premiums when using BEST for paying trading premiums.
As we don’t charge any commissions or trading premiums for Bitpanda Stocks, we’re happy to let you know that the benefits of BEST still apply to Bitpanda Stocks. Remember when we talked about what a spread is in our case? BEST holders will have the option to tighten the spread (price difference) by using BEST even more.
As you can see, Bitpanda Stocks is easy and convenient to use and you can now choose from big-name stocks and invest in fractional stocks and ETFs*, anytime, with tight spreads and zero commissions.
*"Bitpanda Stocks" is a new product from Bitpanda and allows you to invest in fractional shares/ETFs. "Bitpanda Stocks" are not shares, but a contract that allows you to participate in the price movements of certain shares, including any dividend distributions. It is neither tradable on stock exchanges nor on other trading venues, but can be resold to Bitpanda at any time under the conditions set out in the general terms and conditions and the contract. Further details on this product, the issuer and the relevant risks are available in the prospectus at bitpanda.com.