As is the case in traditional business, the cryptocurrency marketplace is a dog-eat-dog competition where only the strong survive. Unfortunately, this creates hundreds of failed projects and millions of dollars in lost value. Can buyouts help transfer that value back into Bitcoin and other major market players?
The Benefits of Buyouts
Not every start-up business can find the success it needs to stay afloat, and even well-established companies go bankrupt. When this happens, buyouts from other companies may help salvage the remains and provide a slew of benefits — and the same applies to the cryptocurrency space.
For starters, sometimes a company has begun development on a very promising new product or piece of technology, only to have it languish away as the team dwindles and the well runs dry. If a larger business comes in and incorporates the new product or technology into its existing business model, both parties benefit — as does the consumer.
Likewise, some promising cryptocurrencies or blockchain-powered projects have interesting ideas, but internal issues or a lack of funding prevents the realization of their final product. If another blockchain company could buy out the failed project, the benefits would not be lost to the jungle that is the cryptocurrency marketplace.
Another advantage would be the reduction of competition in a space which is supersaturated with the same ideas. Nowhere is this more prevalent than in the cryptocurrency space, where literally thousands of companies are vying for dominance in the same handful of categories — such as currency, privacy coins, smart contract platforms, decentralized exchanges, etc. In this case, having a smaller company get bought out by a larger company provides the latter with an increased scale of economics, while nullifying the need for a price war and allowing more time and effort to go towards expansion.
Furthermore, successful buyouts do away with duplicate products and businesses offering essentially the same service — effectively cleaning up the clutter. Again, the cryptocurrency marketplace today is the very definition of clutter, especially once one ventures outside the 50 largest projects. Buyouts in cluttered environments, in turn, work to increase profits, as the dominant company is able to offer their products at better price points.
Can Buyouts Work in the Cryptocurrency Market?
Buyouts aren’t really a thing in the cryptocurrency space — but one company aims to clean up the clutter and revolutionize the way business is done in the blockchain marketplace.
CoinJanitor aims to reduce cryptocurrency market dilution and restore lost value to broader cryptocurrency economy by providing holders, community members, and creators of failed coins a buyout.
In essence, CoinJanitor offers everyone involved in a failed project the opportunity to join a successful project with a network effect that the projects they created or supported failed to achieve by implementing a systematic burn of the coins being bought out.
The process includes manual swaps for CoinJanitor tokens (JAN), in which dead coin holders prove they own a certain amount of coins on an address or several addresses and provide a corresponding Ethereum address for the JAN tokens they will receive. Once they send their coins to CoinJanitor’s burn address, they will receive their reimbursement in JAN. The rate of said swap will always be pre-determined and kept at the same price for each and every buyout participants — ensuring fairness and parity throughout the whole process.
Of course, such a process must be underpinned by a functional blockchain that performs as it was intended originally because setting up a burn address and getting the transactions requires new blocks and mining on the chain. This means that CoinJanitor will have to activate the otherwise dead chain and start mining on it, as a coin burn on a dead chain is impossible. Afterward, CoinJanitor will ensure the blockchain is effectively deactivated — so that no future incentives to re-activate it will exist.
With a CoinJanitor buyout, everyone wins. Users receive the chance to get value back from the failed coins that can no longer be sold while joining a growing community. Project creators get the chance to help lead a newly created community and put their failed efforts to good use, while the cryptocurrency market as a whole benefits from both an effective culling and the transfer of otherwise-lost value into Bitcoin and other viable cryptocurrencies.
To learn more about CoinJanitor or participate in the upcoming ICO, check out the project’s official website here.
What do you think of buyouts in the cryptocurrency space? Do you think CoinJanitor can help clean up the mess that is the blockchain market? Let us know in the comments below!
Images courtesy of CoinJanitor