Circle, the cryptocurrency-focused financial service firm just announced that it will be purchasing one of the biggest cryptocurrency exchanges in the world, Poloniex. The acquisition was valued at around $400 million, according to data provided by Fortune. The price tag is fairly justified, considering that the US-based exchange used to be one of the biggest exchanges out there – recording up to $152 million in trade volume every day – and is most certainly one of the oldest.
Circle’s Unorthodox Business Road Map
Circle (full name Circle Internet Financial Limited) is an interesting business venture. The Boston-based company started out in 2013 as a platform that allowed people to purchase Bitcoins without having to know anything technical about it. In Circle’s own words, they wanted to be the “PayPal of Bitcoin”.
However, shortly after that, after the first Bitcoin boom died down, Circle pivoted – this time targeting peer-to-peer, social payment services. Their direct competitors changed from Coinbase to Venmo as they ventured into the world of digital payments. Gone were the words “blockchain” and “Bitcoin”, vanished without a trace from their official website.
In an interview with TechCrunch, co-founder and CEO Jeremy Allaire clarified the seemingly nebulous stance of the company.
“We never thought of ourselves as a Bitcoin startup. The media certainly classified us that way because we were involved with the technology. From the day we founded the company three years ago we’ve focused on trying to build a new consumer finance company. And one that makes money work the way the Internet works.”
Recently, in 2016, Circle jumped back into the cryptocurrency business and founded Circle Trade.
Circle Trade
Circle also runs Circle Trade, one of the biggest “over-the-counter” trading desks for cryptocurrencies. According to Investopedia, over-the-counter refer to stocks that trade via a dealer network as opposed to on a centralized exchange, and in the case of Circle Trade, they act as an intermediary between institutional investors, or whales, as some would put it.
How does Circle Trade make money? Well, believe it or not, that would depend on the market volatility – the more volatile the market is, the more money they make.
“When things start to get really out of whack really fast, that tends to be good for us,” explains Dan, who is Circle’s South Shore of Boston Chief Trader.
Thanks to the wild fluctuations in the crypto market recently, it is not surprising that Circle Trade is one of the most profitable companies in the cryptocurrency space. In fact, according to statistics by Fortune, Circle Trade manages transactions of up to $2 billion every month and in the last three months alone, generated over $60 million in revenue.
Now, by purchasing Poloniex, Circle will be launching it hand in hand with Circle Invest, a user-friendly investment app for beginners to start purchasing cryptocurrencies.
Fortune also reports that Circle is developing a protocol named Centre that allows users to seamlessly interoperate between Alipay, PayPal, and Circle. For all existing Poloniex users, Circle assures that the transition process will be smooth.