Why Did Blockchain NEO Lose Out on $170 million Bid for BitTorrent?

When it comes to digital innovations, competition is high. Tron founder Justin Sun purchased the much sought after BitTorrent platform for a whopping $126 million in July 2018. The file sharing service was purchased by the blockchain start-up as one of the biggest tech trade-offs in recent years. But reports surfaced that Sun wasn’t even the highest bidder – with some reports stating he was willing to inch towards $140 million. NEO, the blockchain project worth $1.5 million had their eyes on BitTorrent – and were prepared to shelve out a massive $170 million for the platform. But what happened, what is it and should you buy NEO?

What is NEO?

NEO Global Capital, the venture firm that controls NEO, reportedly made a much higher offer than Justin Sun, yet missed out on claiming the file-sharing service. The NEO platform is a blockchain cryptocurrency designed to build a scalable network of decentralized applications. The major player is the NEO token, which can be used in exchange to pay for transaction fees generated by the network apps. NEO focuses on smart contracts, digital identity, and digital assets and is suggested to have a $1.5 billion market capitalization (slightly lower than the $1.6 billion that Tron reported). NEO is even called by some the ‘Ethereum of China’, due to its hold on the market there as an alternative cryptocurrency.

What Happened in the Bidding Process for BitTorrent?

When Sun left blockchain start-up Ripple he began work towards the controversial Tron. Some suspected that he opted to buy the BitTorrent platform for the access to its user base. Indeed, BitTorrent offers a service that would be used by such a wide audience that may also be the audience needed to allow blockchain technology to take off in mainstream popularity. Sun approached the capital firm that guarded BitTorrent’s equity in 2017, with a bid to buy a controlling stake – not the company outright. By approaching the company that owned 99% of the company’s preferred stock – worth $1.85 each – he aimed to pretty much own the company with his $90 million to $100 million offer. David Chao, who looked after the stock with DCM, insisted that Sun also purchased the common stock so as not to leave the common stockholders short. Shortly after, NGC approached with a bid of $115 million for all preferred stock and $55 million for all common stock.

Neo and Tron Square Up as Competitors

Tron and NEO look to square up to one another in other ways. The pair look to make blockchain technology more scalable and faster. The technology already represents the forefront of the next stage in the blockchain revolution, so whoever capitalizes on the solution first will stand to gain a huge advantage as the technology erupts in popularity. Both are also hot on the heels of Ethereum (ETH), the second biggest blockchain. Eventually, BitTorrent decided to opt for Justin Sun’s deal – mainly due to the nullification clause NGC applied if the deal wasn’t formalised within six months. This move likely gave Sun a preferable position to BitTorrent, despite the greater amount of money being offered by NEO. NEO continues to push forwards with it’s decentralized apps and is forging ahead as a formidable name in blockchain, despite its lack of BitTorrent. The cryptocurrency is definitely still an investment prospect, and the money they were prepared to spend on BitTorrent shows how committed they are to the future of blockchain.

Blockchain cryptocurrency is the forefront of the future of technology and the market still has room for manoeuvre. The competition is heating up between companies attempting to bring blockchain fully to the mainstream, despite the popularity of existing blockchain systems. The bidding war between NEO and Tron for BitTorrent shows that every blockchain company is dedicated to ensuring blockchain is solidified in our digital future.

Featured image source: Flickr