What do football teams and cryptocurrency exchanges have in common? Football, a sport with strong emotive connotations, also, an industry riddled with money and finance. Cryptocurrency exchanges, a place of strong emotive exchange in an industry, riddled with money and finance. Plus, it’s easy for them both to get celebrity endorsement. Brave New Coin have posted an article today, titled: ‘Why distressed digital exchanges are ideal takeover targets’ and it got me thinking. See the article for yourself, here- https://bravenewcoin.com/news/why-distressed-digital-exchanges-are-ideal-takeover-targets/ The article points out numerous examples of failing cryptocurrency exchanges that have taken hits from hacks and cybercrime, resulting in the loss of millions of dollars. A notable example includes Coincheck, the victim of a $500Million hack a few months back, recently acquired by Japanese firm Monex. Why on earth would anybody want to buy a failing company, that lost such a large amount of money in a hack, just a few months ago? Similarly, why would anybody want to buy out a football team that is failing? Okay so football teams don’t really get hacked but often they do fail as a result of financial pressure, caused by failing to meet objectives and win games. Winning generates income, without the income then a lot of the time, the fans, or customers start to cry out for new ownership, new management and fresh faces, similar to the same way a cryptocurrency exchange does, when it’s failing. As Akhtar argues in the Brave New Coin article:
“Another reason distressed exchanges appear as great takeover candidates after a hack is because of the reputational damage done to the incumbent management team. In the case of Coincheck, for example, its CEO admitted to astounding security lapses — revealing that the half-a-billion dollars’ worth of stolen XEM was sitting in a hot wallet at the time it was lifted — in addition to admitting that the hot wallet in question wasn’t even using multi-signature authentication. Such incompetence leaves shareholders and customers alike looking for the reassurance that new management might bring, along with a strong brand name (in the case of Monex, for example) to win users back.”Even a failing exchange has an infrastructure and a customer base, ready to reimagine and ready to reinvigorate. I see it like this, in both instances. Imagine wanting to paint a picture, but not knowing much about painting. Meanwhile, an expert has started a picture, created a following and then just happened to lose their pencil half way through, all’s you need to do is fill in the blanks and there, you have a perfect painting. You can compensate the artist for their efforts but, eventually make a greater profit for the finished piece. That’s the logic that I think drives firms that want to buy cryptocurrency exchanges and football teams. You never know, maybe one day a football team will buy out a cryptocurrency exchange, wouldn’t that be interesting. This is a bit novel, I’ll admit, but I am trying to highlight exactly why it is a lucrative opportunity and not complete nonsensical madness buying out a failing cryptocurrency exchange, as unfortunately many critics do exist and like to pass pessimism over acquisitions such as the recent move by Monex.