Disney In Talks To Acquire The Owner Of Crypto Exchanges Bitstamp And Korbit (#GotBitcoin?)
The Walt Disney Co. is in talks to acquire South Korea’s NXC Corp., the majority owner of bitcoin exchanges Bitstamp and Korbit. Disney In Talks To Acquire The Owner Of Crypto Exchanges Bitstamp And Korbit (#GotBitcoin?)
As reported by Dailyhold, Disney’s interest is highly unlikely in cryptocurrency but instead in Nexon, 47% owned by NXC and South Korea’s largest game developer and second-largest online games publisher globally. Nexon offers more than 80 mobile gaming titles, including a number of titles licensed from Electronic Arts Inc.
NXC Chairman Jung-ju Kim is selling the 98.6% stake that he and his wife hold in the company. A report by The Korea Herald April 17 claimed that the sale price for NXC comes in at 15 trillion won ($13.2 billion). Although there are multiple companies interested in buying the shares, including Tencent, Kakao, Bain Capital, MBK Partners and KKR, Disney is claimed to be the front runner.
NXC’s ownership of Bitstamp comes via its Belgian investment arm NXMH, which acquired the cryptocurrency exchange for as much as $400 million in October. Bitstamp is notable as being the longest running bitcoin exchange, established in 2011. The company’s stake in Korbit comes via a 65% stake owned directly via Nexon.
Although it’s unlikely that Disney would be interested in Bitstamp and Korbit, it’s not the beyond the realm of possibility that it may retain both should the acquisition proceed. Disney first took an interest in cryptocurrencies and blockchain a few years back, creating and backing an open-source platform called Dragonchain that offered an initial coin offering in 2017. Dragonchain and its DRGN token are still around today, but suffice it to say it wasn’t a huge success.
Should Disney acquire NXC, it will be a small deal compared with its acquisition of 21st Century Fox Inc. for $71.3 billion in March.
Smaller Crypto Exchanges Must Partner To Survive
In the dog-eat-dog world of cryptocurrency exchanges, smaller startups that don’t attract the volume of megaliths like Binance, Coinbase and Kraken must band together to survive turbulent market cycles.
The Swedish cryptocurrency exchange Safello, founded in 2013, is one such startup. According to CEO Frank Schuil, the company went from processing roughly 500 orders a month in August 2018 to 14,000 monthly orders in October 2019 by partnering with a variety of wallets, including BlueWallet and Edge, as well as the bitcoin-friendly browser Opera. This included a widget that let European users with a bank identity number bypass the lengthy onboarding process.
“We want to do one thing really well, which is to take away the hard parts of our market. Right now we’re basically an on- and off-ramp,” Schuil said. “We want to expand on hyperlocalization to help us and our partners see better conversion rates.”
Likewise, Edge founder Paul Puey said the industry reminds him of Internet Service Providers (ISPs) in the ‘90s. He said he expects a shakeout in 2020, as more companies succumb to market volatility and risky business models. He expects exchanges to become more akin to infrastructure providers for mass users, rather than front-end products.
“Some of the early companies that had the most visibility were literally the ISPs,” he said. “But they suffered from a few common challenges, like [exchanges] today. They were super regional. They couldn’t scale globally. They had a heavy regulatory burden.”
Edge, a San Diego-based startup originally found in 2013 as Airbitz, has partnered with the incumbent Israeli exchange Bits of Gold, the lightning-friendly brokerage Moonpay and several other startups. From the users’ perspective, they may not even need to create an exchange account or enter personal information for small purchases, depending on the jurisdiction. Puey is one of the rare Californian entrepreneurs who has paid his staff in bitcoin for years, now encompassing a team of 12.
Both Edge and Safello have each raised nearly $3 million in venture capital so far and opted not to seek larger raises like Coinbase did during the 2017-2018 market cycle.
“If we want to build the best business we can be, we need to learn how to be profitable in a bear market,” Schuil said.
BlueWallet co-founder Nuno Coelho agreed, adding: “Our point of view is that the ecosystem is still too early to try to go too big. There’s still a lot of infrastructure that needs to be built.”
Coelho said his wallet startup noticed an increased percentage of downloads from European bitcoiners since integrating with Safello this autumn. Meanwhile, his team is already busy working on an integration with BTCPay Server, an open source payment processing project, and a partnership with Hodl Hodl.
From Puey’s point of view, such startup models allow teams to build out a “broader product” despite limited engineering resources. According to their founders, both Edge and Safello were profitable in 2019. BlueWallet, a much younger company, is bootstrapping and currently seeking its first funding round.
“A company that tries to do all-in-one will fundamentally have a poorer product, just like AOL when they tried to do everything from ecommerce to actual ISP connectivity to being the browser. That product eventually failed,” Puey said. “So I think partnerships are the way to go in any new industry.”
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