When the news broke last week that Circle would be acquiring Poloniex, it was met with mixed reviews. The purists screamed “keep it decentralized!” And the optimists screamed “mass adoption is coming!"
But why? We'll get there.
Poloniex launched in January 2014, on the eve of the Mt. Gox meltdown. From the rubble of that highly publicized disaster, the US-based exchange emerged as the top choice for cryptocurrency traders.
In the last couple years, it has seen it’s market share of cryptocurrency volume slowly decrease. Exchanges are growing like weeds, and with more advanced and/or user-friendly exchanges like Bitfinex, Bitstamp, Coinbase, Bittrex, etc., users are moving on.
Circle has taken it’s own strange road through the cryptocurrency landscape. It was initially launched in 2013 in hopes of becoming the the gateway of entry into bitcoin for new users. An idea that would take a few more years to come to fruition with another company in the form of Coinbase.
An identity crisis occurred for much of the next four years as it literally came full circle to another peer-to-peer payment platform, Circle Pay. Navigating the ever changing cryptocurrency ecosystem isn’t easy so it’s commendable to see a company traverse it for so long while also changing it’s focus multiple times.
Top News! Circle acquires Poloniex!
Quite the revelation for an industry that is still recovering from the bull/bear rollercoaster that was the past three months. The price tag also raised a few eyebrows: $400 million. According to this Fortune piece written about Circle, reportedly they were bringing in about $60 million in revenue every 3 months. So where did the money bags come from?
Did we forget to mention that one of their top executives is Paul Camp, former executive at JP Morgan Chase? Did we also forget to mention that one of Circle’s top investors is Goldman Sachs. If your stomach just turned a little, it means you understand the implications.
When a crypto company, backed by one of the world’s largest banks and has at least one ex-banker in it’s C-Suite, spends almost a half-billion dollars, you better believe it raises some red flags.
Adoption
But can this be the sign that the big money is seeing the value of cryptocurrency? It’s possible. I would love nothing more than this be a signal of “acceptance” by the rich and powerful. It would change the entire conversation about cryptocurrency.
More money flowing in would hopefully result in more stable markets. Since conglomerates own the world, the same company that owns a bank that’s invested probably owns a media outlet. Perhaps that would even produce some pro-crypto coverage.
I’m personally surprised corporations aren’t more open to crypto. What digital currency is to fiat currency, corporations are to governments. Governments are limited by their borders. Corporations, like crypto, have no borders. They also wield significant power over governments through lobbying and donations (probably some brides too).
Another aspect of this acquisition is it’s potential threat to Coinbase. By far the most accessible exchange for new investors, Coinbase (and GDax) fueled the inflated run during the last quarter of 2017. Circle, with banker backing and an established exchange that is theirs to rebrand, could launch the next generation, user-friendly gateway into cryptocurrency.
Circle X. If the rumors are true, the plan is to turn this exchange into a catch all for investors. Not just offering cryptocurrencies, but traditional equities as well. A one-stop shop for a beginner investor who wants to explore trading on their own terms.
If this sounds familiar, it’s because the phone app Robinhood that just recently rebranded has begun this process. Like Ray Kroc with McDonald’s, see its’ potential, borrow the idea, make a ton of money. Simple.
Sabotage
It’s important to remember however, that the mainstream media is historically not a friend to cryptocurrency. They deride it, they belittle it, and most importantly, they are fickle in their opinions of it. It’s not their fault you see, they are just chasing views and ratings.
In doing so, they feed into the fears laid down over the years by reminding us of our failures. Just recently, Yahoo!’s lead story on their website was about Mt. Gox. Four years later and they won’t let us forget about it.
“Just another Tuesday,” floods Discord chats and Twitter feeds when something bad happens. For those of us in cryptocurrency, we know the risks. We live with them everyday. In an unregulated, relatively repercussion-free environment, we know there are those who look at us as digital piggy banks. Just waiting to be cracked open.
Currently, when you tell the average person you invest in cryptocurrency, they tend to wince.
“Just make sure you turn it into real money as quickly as possible” is a common qualifier by those who are concerned with your decision-making. What they are really trying to say is, “You made a terrible decision and you should get out now before you lose all your money.”
That perspective is a direct reflection of the information they have access to. Unless Grandma is cruising reddit forums and twitter feeds, there is a good chance she’s getting her information from CBS Nightly News. A literal call and response strategy to discourage new investors who are curious about digital currency.
Could Circle’s acquisition be the Trojan Horse that brings the entire industry to it’s knees? Perhaps the powers that be see that their outside attacks aren’t stopping the growth. Crypto continues to spread like a virus that’s causing them to lose money.
Corporations see making money as a zero-sum game. If they aren’t the one’s making money, then they’re losing money. Governments see tax revenue slipping through their fingers. Another deadly sin.
Their mission, if they choose to accept it, is to tear the empire down from the inside. Fund a platform. Fund an acquisition. Acquire more. Manipulate the markets. Cause the majority of investors to lose money. Scare them into exiting back into fiat-based investments. Maintain the power dynamic of a centralized financial system. Rinse and repeat.
Circle. Poloniex. Circle X. This is just a domino being pushed over in the dark. Only time will reveal in which direction the rest are falling.