The Sphinx of Wall Street: Goldman-backed Circle Acquires Major Crypto Exchange Poloniex
Poloniex, a US-based global cryptocurrency exchange founded in 2014, has announced a partnership with Circle, a financial-services firm that is focused on cryptocurrencies. The funnest fact: Circle is backed by Goldman Sachs. The acquisition gives Goldman more than a front-row seat to cryptocurrencies, effectively evaporating hot air from the FUD bubble and eliminating lingering doubt that Wall Street wants in.
“Looking to the future, we are excited to work with Circle to localize our product in more geographies, to explore options for fiat connectivity across major world currencies, and to continue providing our users with access to innovative token projects that extend cryptocurrency protocols to new use cases,” writes the Poloniex team.
Their new partner, the market maker middleman Circle, was founded in October 2013 as a peer-to-peer payments solution company. Circle started focusing on cryptocurrencies in 2016, after four rounds of venture capital funding totaling over $135 million, including $50 million from Goldman. Their business model, with services like Circle Pay, aims to service consumers who want to convert dollars to Bitcoin, and then access their accounts through a mobile app to spend Bitcoin on the fly, wherever retailers accept it. They’re working to integrate cryptocurrencies into everyday pocketbooks, wallets and purses, allowing for the mammoth kind of growth Bitcoin hodlers dream about.
But there’s another side to Circle. Their service Circle Invest provides liquidity, expanding a thorny trend to turn the peer-to-peer ethos of the burgeoning cryptocurrency market into a Wall Street-style vehicle for deep pockets that can game the playground. It’s the massive liquidity plus the promise of huge profits from rapidly swinging valuations that make cryptocurrencies risky but also appealing as an asset class to Wall Street investors.
Speaking to Forbes, one of Circle’s chief traders noted, “When things start to get really out of whack really fast, that tends to be good for us.”
Circle Trade, their upcoming app to rival Coinbase and Robinhood Crypto, is slated to entice more young and old traders who are trying to enter the market with a seamless and easy-on-the eye UI that demystifies crypto trading.
Circle’s acquisition of Poloniex belies the notion that banks will roll over and die as cryptocurrencies continue to establish a shadow economy favored by Millennials, or the idea that the banks and governments will kill cryptos. It also indicates that despite all the tepid talk about Bitcoin and cryptos being too volatile to be an asset class, banks will jump in with their biggest investors in tow. And volatility is what Circle navigates best.
But the real value of Circle is the long-range vision to lift altcoins. The team envisions a new economy that is digital, tokenized, efficient and meaningful.
“In the coming years, we expect to grow the Poloniex platform beyond its current incarnation as an exchange for only crypto assets. We envision a robust multi-sided distributed marketplace that can host tokens which represent everything of value: physical goods, fundraising and equity, real estate, creative productions such as works of art, music and literature, service leases and time-based rentals, credit, futures, and more.
We believe that the contractual rules around exchange for anything and everything will become increasingly represented in distributed global software, rely on inconvertible distributed shared memory in the form of distributed ledgers, and benefit from the services of global multidimensional marketplaces such as Circle Poloniex. The future of the global economy is open, shared, inclusive, far more evenly distributed, and powerful not only for a few chosen gatekeepers, but for all who will connect.”
If the team at Circle can articulate their vision, they’ll help usher in a radically different financial world and global economy, where a number of ICOs and tokenized projects will grow substantially to service niche industries, solve specific problems, offer “smart contract” solutions, eliminate traditional banking inefficiencies, target a new type of consumer and gain merit.