Over the last few years, investing has gone from making slow, steady returns over a long period of
time to let’s follow wallstreetbets into battle and hope we don’t lose all our money. Millennials
and Gen Z have been taking on the professionals with the Gamestop Short Squeeze and the rise of
doggy coins like DogeCoin & Shiba Inu to name a few examples. Through new, cheaper platforms,
it’s easier than ever for retail investors to get into investing and given everyone has had
a lot of time on their hands more recently, the interest in investing has risen significantly.
This social media fuelled growth has pushed one particular broker into the foreground.
eToro is one of the leading brokerages in the space offering everything from currencies,
stocks, commodities and crypto for investors in over 140 different countries. But What is eToro,
what sets eToro apart from its competitors and what is their story?
Here’s How It Happened.
Firstly what is eToro? Well they’re a world leading brokerage platform, but perhaps they’re
more well known as the brokerage that people use for social trading, being able to copy other
investing influencers whenever they place trades. The idea is that new users join the platform and
learn from the more experienced traders. They than copy identify successful investors on the
platform and copy them, with eToro able to automate this. The investing influencers,
or those who are copied, then earn perks like a monthly payment of up to 2.5% of the yearly
average amount of money invested by the copiers. eToro was founded in 2007 by 2 brothers,
Yoni & Roman Assia alongside David Ring, but back then it was known as Retail FX.
Their view was that by offering a cheaper & simpler platform, eToro could win over younger,
more tech focused investors and this is still true to this day with most new users in their
early 30s. They wanted to improve financial transparency in the market by making it much
more accessible to make investments. Retail FX focused on graphic representations of financial
instruments to make investing easier and more fun. The team then launched WebTrader to help people
trade financial instruments like currencies and commodities via CFDs. But the real change came in
2010 when the team launched OpenBook, the first online social trading platform. They knew they
were onto a good thing when they won the Finovate Europe’s Best of Show in 2011. OpenBook meant that
investors no longer had to learn, test and change their strategies but instead they could imitate
other investors on the platform who had a track record of success in the markets.
Not only could people copy, but they could also interact with successful investors,
posting status updates on what was really an investing social media platform.
By 2014, eToro took another step in the right direction, exposing its customers to Bitcoin
through CFDs and continued to expand their crypto coverage. When crypto hit the big time in 2017,
eToro was thrust into the limelight as one of the few brokerages offering everything all in
one place. This success led to eToro receiving private funding of $100mn in 2018 and they’re
using that money to continue innovating including creating crypto wallets, expanding to
US markets and investing in blockchain research. As eToro have grown, so have investing influencers
like Jay Edward Smith who is the most copied trader on the platform with around 25,000
followers and over 5mn in assets under management. During the first quarter of 2021,
eToro gained more than 3mn new users to pass 20mn global users by June of this year. This has come
in an environment where financial investing have been democratised and millions of people
have greater access to online resources coupled with a don’t care attitude towards losing money
with meme investing. Whilst this might cause a significant correction over the next few years,
it’s good for eToro who profit from the spreads on the trades. And as far as Yoni Assia is concerned,
he fully believes that copy trading is a form of the sharing economy.
And that’s how it happened.