Note: “This analysis is an adaptation from the work of Mati Greenspan, Senior Market Analyst at eToro
- Facebook acquires Chainspace – an expert in smart contracts platform scalability
- Facebook has roughly 40 employees led by top FB exec David Marcus in its blockchain team
- Investors make key investments at reasonable valuations in bear markets
Facebook and its blockchain dream
Well, the street is excited with a piece of news that Facebook has progressed ahead with its blockchain dream. According to the recent news flow coming in from the social media giant’s headquarters is that Facebook has acquired Chainspace – a specialized company that excels in smart contract platform scalability. While the tech giant is still to make an official announcement according to sources close to this development say, that the acquisition of Chainspace’s team, a move is known in Silicon Valley as an acqui-hire, is the clearest sign yet of Facebook’s ambition to be a big player in the nascent blockchain industry.
As of now, Facebook has roughly 40 employees led by top FB exec David Marcus in their new blockchain team. What they’re working on or how it will be rolled out is still very much a mystery as the behemoth company is holding their cards very close to their chests. What might not be obvious is the unbelievable deal they’re getting due to the bear market. The company was trying to raise less than $4 million when Zuck’s offer came along. No doubt that during the bull market of 2017 valuation could have been ten times higher as we’ll explore below.
Bottom fishing in cryptoshpere – where investors acquire stake at a reasonable valuation
As most of the world’s greatest investors will tell that the best time to make a great investment is when prices are low, Facebook has just proved it right with the acquisition of Chainspace at dirt-cheap valuations. And it’s not just Facebook, Kraken too acquired Crypto Facilities which despite being a nine-figure deal, is perceived to be a discounted buy. Another perfect example of discounted prices is Circle. The crypto startup has raised millions with the help of Goldman Sachs and others…
Usually, the bear market is a time when smaller businesses get tested but it’s also a time for consolidation for the larger players. Over the past couple of months, several projects have closed and downsize already with the latest among them being Canadian exchange Coinsquare. While everyone has their view about the bottom, it’s just a sign of the times. In any traditional market, this is the sort of place where value investors step in. Certainly, this emerging technology is risky. However, for larger players looking to make long term investments in this space at advantageous valuations, now could be an excellent time.
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Mati Greenspan is the Senior Market Analyst at eToro, a global social trading and investment platform. Mati is a licensed portfolio manager in the European Union and his main focus is on macroeconomic analysis, portfolio diversification and cryptocurrencies. Follow him on Twitter at @matigreenspan