How Abra Uses Bitcoin to Bring Stock Investing to the Unbanked

It’s been only a month since Abra publicly launched its investment product. But the company has already received an “overwhelmingly positive” response from the public, showcasing the strong consumer demand for convenient and affordable investing solutions. It has also demonstrated how Bitcoin can be used effectively to help financially underserved populations access financial markets, Bill Barhydt, CEO and founder of Abra, told Bitcoin Magazine. 

“We opened our waitlist in February and only just launched the product for general availability to Abra international customers at the end of May, so it’s only been live for a few weeks,” said Barhydt. “In just a few weeks, we have nearly 14,000 equity wallets in the system from 154 countries around the globe and growing.” 

Striving to provide the unbanked with powerful yet affordable financial services, cryptocurrency wallet and exchange app Abra launched a new product earlier this year that allows users to purchase stocks and exchange-traded funds (ETFs) using bitcoin directly through the app. The key differentiator for Abra’s investing offering, Barhydt said, is its fractional investing capability which allows users to get started with as little as $5. 

“Most of our users have been historically shut out of financial markets, either due to their ability to access the market or afford the more popular stocks that trade at hundreds or even thousands of dollars per share,” he said. “In order to build wealth, more people need a stake in ownership of financial assets and assets that protect against inflation while compounding wealth. Yet, across the globe, access to investing in financial assets is not universal. While over half of Americans invest in the stock market, only 2 percent of Mexicans do, for example.”

Building Adoption on Bitcoin 

The launch of Abra’s investment capabilities was “a pivotal milestone, not only toward our overall mission of democratizing access to financial services, but also how the industry will view investing and cryptocurrency as the new protocol for money in the future,” said Barhydt. “The fact that this is all built on Bitcoin is, we believe, one of the best applications for cryptocurrency mass adoption … We have users from Venezuela, Argentina, Turkey, Mexico, Spain and more that are now given that opportunity to diversify and grow their wealth.” 

Abra’s investing product uses bitcoin to give users the ability to gain synthetic exposure to the price movements of traditional assets including stocks, commodities, indexes and ETFs, via crypto-collateralized contracts. 

Crypto-collateralized contracts peg the value of the desired asset of investment to bitcoin held in the contract. This means that if the price of the underlying asset goes up, the amount of bitcoin in the contract will go up to reflect the movement and vice versa, basically creating a synthetic asset on the back end. 

Abra uses the same process for cryptocurrency and fiat currency trading. 

Investing Trends

 Since launching its investing offering last month, Abra has already witnessed several investing trends emerge. In particular, investors are very bullish on technology and “overwhelmingly love Tesla,” Barhydt said, which currently stands as the number one stock pick on Abra globally, with a median investment 191 percent higher than average. South Africa is the leading investor location, followed by France, Argentina, Austria and the Philippines. 

Amazon, Apple, Google and Alibaba are other favored investment assets. 

Among the main advantages of the Abra investing product, users cited accessibility to financial markets, especially U.S. equities; affordability, with the possibility to buy fractional shares of stocks; and control, referring to the fact that Abra uses a non-custodial model where users maintain control of their underlying cryptocurrencies at all times. 

“User feedback tells us that accessibility is the biggest pain point Abra is solving for them — either the difficulty of accessing the stock market in their country or the bureaucracy around obtaining a brokerage account,” said Barhydt. “Abra believes in financial inclusion, both from the standpoint of making finance simple and straightforward and in giving access to public markets to people that have traditionally been left out. Cryptocurrency technology, such as Bitcoin, can serve as a new platform to solve these problems of access and trust.”

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