Crypto mergers and acquisitions are a hot topic in the world of finance. But what do you need to know?
What’s a crypto merger?
A crypto merge is when two or more cryptocurrencies are combined into one. This can happen for many reasons. However, it usually happens when the blockchain technology powering both cryptocurrencies is similar, and combining them will create a stronger blockchain.
Sometimes, one cryptocurrency will buy another, but that’s usually referred to as an acquisition, not a merge.
What does this mean for you?
Crypto merges don’t happen often—only about 15 percent of crypto merges since 2017 have happened since 2019. However, when they do happen, it could mean that your cryptocurrency has gained strength. It also means that your cryptocurrency will be less likely to fail over time. This is because it is able to support itself through multiple blockchains or transaction types.
If you’re invested in a particular cryptocurrency, keep an eye out for news announcements about mergers or acquisitions involving your currency. It could be good news!
If you’re a crypto enthusiast, then chances are you’ve heard of some of the exciting news that’s been coming out lately about crypto mergers and acquisitions.
But what exactly is a merger? Or an acquisition? And how do they affect the crypto community at large?Â
Read also: What You Need To Know About Crypto Tax Reporting
Let’s take a look.
What is an acquisition?
When one company buys another company, it’s called an acquisition (or takeover). An acquisition isn’t easy. It can take months or even years to complete, especially if the acquired company is large.Â
Acquisitions can be made for many reasons:
- To acquire a competitor,
- To gain access to that company’s patent or intellectual property,
- The acquiring company wants to expand into a new market and thinks that buying up a smaller competitor will help them get there faster.Â
And sometimes there’s no reason at all! Acquisitions can happen because of certain factors like
- The economy,
- Government regulations,
- An opportune time to make an acquisition.
Crypto acquisition and Mergers.
A recent example of a crypto merger is the acquisition of BitTorrent—a file-sharing service—by Tron, a blockchain company that’s known for its high speed and low cost. The CEO of Tron, Justin Sun, spent months courting the founder of BitTorrent, Bram Cohen. The two agreed on a $140M price tag, which included both cash and an undisclosed amount of Tron’s tokens.
This isn’t the first crypto-acquisition to receive widespread press attention. According to crypto news outlet Coin telegraph, Circle made waves in 2018 when it acquired Poloniex for $400M. The Poloniex team was able to strengthen its presence in the US market with Circle’s help.
Moreover, mergers and acquisitions in the crypto world went up to 5000 % in 2021. The number of merges was three times more than those of previous years. A lot of the mergers took place in the USA with an average price of $180 million.
When it comes to acquistions , Galaxy Digital acquired BitGo at a price of 1.2 million.BitGo is a digital asset trust and security company while Galaxy is a crypto asset manager. The acquisition makes Galaxy Digital the leading full-service platform for companies who wish to access the crypto economy.
Coinbase also joined in the merger and acquisitions by getting a hold of Israel based company. Coinbase acquired BRD a crypto wallet company that had developed more secure ways to transfer crypto tokens.” BRDs expertise in self custody crypto wallets, will be invaluable in our goal of enabling more people to safely and securely access the decentralized world of crypto.” read a statement from a Coinbase spokesman.
Parting shot
Crypto-mergers and acquisitions? They’re a thing. Mergers and acquisitions are a huge part of the crypto world, and they’re not slowing down any time soon. From stock splits to buyouts, it can be hard to keep track of which crypto companies have been acquired by another and which ones have merged.
