Hostile Takeovers are Coming to a Blockchain Near You
Why well-funded Crypto projects will unseat the incumbents
Mergers and acquisitions are things which leave traditional bankers frothing at the mouth. The salivate at the thought of all the money that can be made. The excitement of the chase, the opportunity to see their names in lights.
This is made all the more exciting when the company you want to acquire doesn’t welcome your advances. Instead of inviting the seduction, they batten down the hatches and mobilise their heavies to repel the unworthy suitor. As such, the hostile takeover has become a pop culture myth.
Stories of successes on both sides of the line become War Stories which inform future battles. The precedent set in these dictate the way future battles are fought. The participants wear the Scars proudly for all to see.
M&A deals are a fascinating topic in and of themselves
But what about when it involves the blockchain?
Could it even happen, and if so how? A blockchain is obviously a public ledger detailing the historical transactions on a blockchain, how can this be acquired, muted or deleted? The fact that there is a historical trail begs the question of how that could ever be muted or the value contained within eroded?
What follows might be somewhat Sci-Fi in the assumptions it makes, but the basis of it is grounded within the typical happenstances of the current economic model. I think it is fair to assume that tricks and methodologies that are applicable now will be equally as effective in a new economic paradigm. Ultimately, the physics of the markets are the same even if transactions occur over different exchange mediums.
How a Blockchain acquisition could occur
Blockchain A could incentivize the holders of coins in Blockchain B to dump them in exchange for new coins in the Blockchain A, at a discounted rate
A hostile takeover which boosts the value of the acquirers market share. This would effectively let companies acquire competing Blockchains users, expanding the size of the acquiring blockchain by creating significantly more nodes in the system.
This would work by eliminating competition, particularly for blockchains undertaking similar proof of work or proof of service mining algorithms.
The above works for both hostile takeovers or mergers. Only the terms for mergers would be far more clear. Holders of the coins in the two seperate blockchains would forfeit their tokens for a new SuperCoin in the newly combined blockchain. This would use smart contracts to distribute the correct volume of coins to each of the two sets of coin holders at the correct rates.
Another method could be a Trojan Horse
Where a large number of users infiltrate a coin, buying up assets with view to a 51% attack on the Blockchain. If that could be achieved the Blockchain would be forced to conform to the expectation of the new majority stakeholders. From there, they would be able to merge with any Blockchain of their preference.
Increasingly this will become reality
And unlike traditional stocks where the majority rules, individuals could make the decision which bests supports their economic interests. To participate they don’t need a whole blockchain to transition through the merger. Acquiring blockchains could incentive’s a small number of holders in the target blockchain to transfer to their system effectively burning coin in the first blockchain while significantly reducing the chains mining power.
Unlike forks, mergers and acquisitions can occur one by one. Every holder has the choice of what to do with their coins.
Think of each coin as a target for acquisition. Imagine each individual as an entity who can join a new conglomerate
A blockchain can be significantly weakened by picking off a few users at a time. The effect of this would be to cause others to be less certain in the allocation of computing power to the upkeep of that Blockchain. Once that occurs the whole system falls like a house of cards.
This is the problem with Cryptos over traditional fiat company. This is the problem with ICO’s over traditional Stocks and Shares.
Crypto Warfare will become big business
The easiest way to exponentially increase hash power is through acquisition or merger. The network effects would become enormous. Blockchain mergers will be marked by redistribution of power to individuals. You own the coin, and the blockchain is where the value can be harnessed or influenced, you can vote with your feet.
Simultaneously you can weaken competitors by strengthening yourself.
That is revolutionary
That is where the current economic model fails
Now if you don’t believe in a blockchain and you’d prefer to merge with another you can — the only caveat being you have to do it on your own.
One coin at a time, one person converted, one miner transferred.
That’s power and influence personified in an army of individuals
The is the dream of decentralized control.