Blockchain was a red-hot technology in 2021-2022, with VC investments skyrocketing from $4.2B in 2020 to $25.3B in 2021 (a 500%+ increase) and further to $29.4B in 2022, before cooling off with a 65% drop to $10.1B in 2023 (source: Pitchbook). At Fabrica Ventures, we couldn’t miss the opportunity to participate and made a small investment in ConsenSys, a prominent player focused on developing Ethereum-based applications and infrastructure within the blockchain ecosystem.
Blockchain has remained in the twilight zone until early this week when Stripe, the $70B payments giant, announced a bold $1.1B acquisition of Bridge—a young, two-and-a-half-year-old, San Francisco-based startup valued at $100 million in a 2023 Series A round, specializing in stablecoin-powered payments. Bridge’s staggering 90x revenue multiple makes this the largest-ever crypto acquisition, and thus the crypto industry is buzzing.
Bridge generates revenue by charging transaction fees (0.1% to 0.25%) based on its payments volume, which reached an annualized $5B as of August. Its services allow companies to convert dollars or euros into blockchain-based stablecoins and use these for international payments to workers or suppliers. Stablecoins, unlike Bitcoin, are pegged to traditional currencies, providing a stable value that simplifies payments. Bridge positions its offerings as a streamlined alternative to traditional international payments, which involve the SWIFT network and correspondent banks.
Despite its blockchain approach, Bridge still relies heavily on the conventional financial system. It receives client funds in a U.S. bank account, then purchases stablecoins from providers like Circle and Tether to transfer to contractors and suppliers. Recipients then convert stablecoins into local currencies through Bridge’s network of local crypto services.
Although the process sounds complex, stablecoin advocates argue that it offers a faster and cheaper alternative for cross-border payments than traditional methods.
Conclusion
While Bridge’s stablecoin-based model might seem intricate, it could still represent a faster, more cost-effective solution than traditional cross-border payment methods.
To be seen…