Stripe Makes $1.1 Billion Acquisition of Bridge
Stripe has acquired Bridge for $1.1 billion. Let me explain why this company is worth paying attention to, even if you may have never heard of it before.
Firstly, Stripe is heavily investing in the stablecoin space:
– Stripe’s co-founder demonstrated earlier this year how to accept stablecoins on Solana via Phantom.
– They have launched payment and collection features for cryptocurrencies, meaning any US merchant can accept stablecoins like USDC and settle in USD.
Even during bear markets, the trading volume of stablecoins continues to rise, and with the support of efficient blockchains like Solana/Base, they have confidence in the adaptability of stablecoins in the market.
These words will become iconic in financial history:
“Stablecoins are the room-temperature superconductors of financial services.”
Why did Stripe choose stablecoins?
Currently, Stripe is just a payment gateway that relies on networks like Visa and Mastercard:
– It charges an additional 1-3% transaction fee.
– It relies on banks and local partners.
– It has a low authorization rate.
Stablecoins can eliminate all intermediaries and allow Stripe to control the entire technology stack.
However, in order for Stripe to control the stablecoin technology stack, they need to build:
– On/Off ramps (conversion between fiat and cryptocurrencies).
– Stablecoin issuance (e.g. Tether’s annual profit of $10 billion).
– Complex stablecoin infrastructure (involving over 20 blockchains and over 10 stablecoins).
They can spend years building these or achieve them directly through acquisition.
Introducing Bridge
Bridge was founded in 2022 by two successful entrepreneurs (previously acquired by Square), with the founding team including @zcabrams, former Chief Product Officer at Brex, and Sean, an engineer at Airbnb.
Their vision is to create various types of stablecoin APIs.
Initially, they operated by helping businesses accept stablecoin payments and establish stablecoin infrastructure (similar to Stripe’s approach in traditional finance).
In 2023, they secured an undisclosed seed funding round (estimated at around $18 million, led by Sequoia).
In the past two and a half years, they have developed the following APIs:
– Bridging (conversion between on/off ramps, such as converting USDC on Solana to USD).
– Issuance (minting stablecoins and investing reserves).
They have facilitated over $5 billion in transactions for clients including:
– Stablecoin fintech applications like @getdolarapp (virtual accounts provided by Leeds Bank).
– Global financial operations such as @SpaceX and the US government.
– Payment services like @scale_AI paying their contractors.
They support various on/off ramps and cryptocurrency cards operations.
Who are their competitors?
There are many!
– @ZeroHashX (larger scale but lacking reputation).
– @Brale_xyz and @Paxos (stablecoin issuance; Paxos assisted in issuing PayPal’s PYUSD).
– @CoinflowLabs
– Any providers offering on/off ramps and stablecoin infrastructure.
Why choose Bridge?
Priority on APIs; integration with Stripe’s technology stack.
Acquiring potential competitors (e.g. integrating stablecoin fintech companies with Bridge, planning to disrupt Stripe).
Offering complementary products (e.g. treasury services with stablecoin issuance, BaaS with cryptocurrency acceptance).
Shared investors: Sequoia and tech founders in San Francisco.
Having a concise social media username: @stablecoin.
Thanks to @gizmothegizzer for the contribution.
So, why spend $1.1 billion?
Mainly because of the strong team – the founders have leadership or work experience at top startups like Airbnb, Brex, Coinbase, and Square – they are the best choice to lead “Stripe Crypto Infrastructure.”
Licenses, products, market attractiveness, and customer base.
I speculate that this deal will be primarily equity-based rather than cash-based.
From a strategic perspective, acquiring Bridge helps Stripe:
– Compete faster with crypto-friendly giants like BlackRock, Revolut, and PayPal.
– Achieve 24/7 global operations and break through limitations of localized payment systems (Stripe faced significant challenges when expanding into long-tail markets like Asia and Latin America).
Stripe’s next steps? My guess:
– Continue to support on/off ramps and acceptance of cryptocurrencies while mastering Bridge’s APIs.
– Deepen the development of stablecoin infrastructure (enabling global fintech companies to launch stablecoins, maybe even issuing their own stablecoin, STUSD, to fully control the entire ecosystem).
– Become an advocate for stablecoin payments, enabling every convenience store to accept stablecoins.
As a stablecoin enthusiast, I believe this is great news for the cryptocurrency market:
– It is the largest cryptocurrency acquisition to date (expect more M&A activities).
– It is also Stripe’s largest acquisition (demonstrating their grand vision for cryptocurrencies).
– Will this become a historic great acquisition like Instagram, truly boosting the internet’s GDP?
This article was collaboratively translated from: https://deepdao.substack.com/p/stripe-acquires-bridge
