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Western Union, whose business model of money transfer could be under threat from bitcoin, is one of the new investors in Digital Currency Group (DCG).
Western Union, Investments, Barry Silbert, Digital Currency Group
Western Union, whose business model of money transfer could be under threat from bitcoin, is one of the new investors in Digital Currency Group (DCG). DCG is an investment firm focusing on the bitcoin/blockchain technology space.
Could this herald changing times?
Digital Currency Group was set up in October 2015 to focus on investments in the nascent bitcoin and blockchain technology space. Its portfolio of investments includes 70 companies across 22 countries.
It has 3 subsidiaries – Genesis, Grayscale and CoinDesk. The CEO and Founder of DCG is Barry Silbert, who had earlier founded SecondMarket.
Digital Currency Group has announced that it has added new investors, including Western Union, HCM International Company, Gibraltar Ventures, OMERS Ventures, Horizon Kinetics, Kingsbridge Wealth Management, and Wood Investment Partners.
HCM International Company is the investing arm of the Taiwanese group FoxConn, while Gibraltar Ventures is the investing arm of Prudential.
The wide range of investors shows that companies across the world recognize the potential of the blockchain as a disruptor.
DCG also added Glenn Hutchins and Lawrence Lenihan to its Board. Glenn Hutchins is the Chairman of North Island and is also a director of AT&T and Nasdaq Inc.
Dr. Lawrence H. Summers and Gavin Andresen have joined DCG as senior advisers. Dr. Summers was the Secretary of the Treasury for President Clinton. Gavin Andresen is one of the developers of the bitcoin protocol and the chief scientist of the Bitcoin Foundation.
DCG feels that these advisers will be critical in increasing adoption of blockchain technology and reaching a broad set of end-users.
On the Company's blog (DCG Insights), Barry Silbert writes:
“We are honored to have the support of so many fantastic investors and advisers and the trust of our portfolio companies and subsidiaries who are looking to us for not just capital, but an opportunity to leverage our insights and engage with our broad network. The DCG family continues to grow, and we are excited to continue supporting and building meaningful businesses in the digital currency and distributed ledger space.”
The amount invested by Western Union in DCG has not been disclosed.
Western Union is one of the largest money transmitters in the world, with over 500,000 agent locations spread across 200 countries. For small amounts in the range of $50, the transfer charges levied by money transmitters could be as high as 10%.
This business model is being challenged by new entrants who use Bitcoin's blockchain as the backbone for transferring value, thereby driving down costs.
Investments made by companies like Western Union in companies using blockchain technology act as a hedge – if blockchain technology picks up, the value of these investments would rise although Western Union's enterprise value would fall.
If blockchain technology begins to dominate, Western Union could also look at acquiring successful fintech companies and integrating them, to remain relevant in this changing world.
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