Shares of digital currency investor Newnote Financial, have soared more than 25% this week on a leap in the company’s small market volume after management announced Monday that it had made an investment in Coinbase rival Coinpayments.
Newnote, which has a market capitalization of C$4.5 million and is freely traded on the Canadian stock exchange, appears to have become itself the target of hungry altcoin investors who approved of the Coinpayments’ investment and snapped up the shares right after the deal was announced.
In many ways Newnote is a natural investment option for altcoin investors, since while it is the same market size in value as many of the smaller digital currencies on offer today, its capital is being administered with the goal that it gets tied up in the most compelling investment opportunities in the industry, making it a high-return, but fundamentally more diversified investment than, for instance, a mass-purchase of monacoin.
Altcoin Markets Appear More Promising v. Bitcoin
Newnote acquired 20% of Coinpayments for a total investment of C$325,000 in cash and securities. Coinpayments got C$100,000 in cash and C$225,000 in securities at the point of the deal, which subsequently went up to C$340,000 as a result of the bump in Newnote’s share price post-announcement.
In addition 600,000 Newnote warrants were awarded to Coinpayments, priced at $1.00 per share. The warrants will exercise once the share price of Newnote goes above C$1, at which point Coinpayments can convert them into shares which it is free to sell on the stock exchange. Including the warrants, Newnote committed a minimum of C$1.025 million to Coinpayments.
The investment is tiny compared to those of rivals Coinbase and Bitpay however. In December last year, Coinbase raised $25 million in a Series B round led by Andreessen Horowitz while in May 2014 BitPay raised $30 million in Series A funding in what became the largest-ever financing round for a bitcoin company.
Howvever, Coinpayments is not deterred as its focus is on capuring the rising number of non-bitcoin digital currency investors who are looking for safe and user-friendly wallet facilities with a single standardization. Coinpayments offers wallets and exchange facilities for over 50 different digital currencies and is the third largest payment processor in the industry after Coinbase and Bitpay.
Coinpayment’s most-used facilities are for Bitcoin, Litecoin, Dogecoin, Peercoin, Omnicoin, Darkcoin, Maxcoin, where users can store, exchange and use these smaller coins’ values for making everyday purchases at brand-name stores.
Coinpayments CEO Alex Alexandrov will be joining Newnote as a technical advisor. “This deal with Newnote is in the best interests of our customers and the emerging peer-to-peer payment marketplace as a whole,” he told the press in a statement.