Square’s Surprising Move Takes the Bitcoin Revolution Into a New Dimension
Jack Dorsey continues to show how much he believes in Bitcoin.
MicroStrategy, and its CEO Michael J. Saylor, have been the talk of the Bitcoin world since the beginning of August 2020. Michael J. Saylor’s announcement that MicroStrategy is making Bitcoin its primary treasury reserve asset has indeed made a lot of noise.
Seeing a Nasdaq-listed company the size of MicroStrategy fully embrace Bitcoin was a sobering thought for even the most serious opponents of Bitcoin.
In September 2020, MicroStrategy confirmed that its strategy with Bitcoin was well-considered by making an additional $150 million purchase of Bitcoin. At the time of this writing, MicroStrategy holds 38,250 BTC purchased for a total of $425 million, including transaction fees.
That’s huge when you consider that this represents just over 2.5% of the Bitcoin circulating supply.
Square invests 1% of its balance sheet in Bitcoin
On Thursday, October 8, 2020, Square became the second major public company to make a similar move. Indeed, the company founded and directed by Jack Dorsey announced that it has bought for $50 million of Bitcoins on the spot market, which allows Square to hold today 4,709 BTC.
This move amounts to placing 1% of Square’s balance sheet in Bitcoin.
As a strong supporter of Bitcoin, Jack Dorsey is obviously no stranger to this strategic choice which he supported with all his might. This did not only make happy people on Square’s board of directors, but his opinion has finally convinced the other members.
As a reminder, Square is already strongly involved in the Bitcoin world through its CashApp application that allows retail investors to easily and quickly buy Bitcoin from their smartphones.
The last few months have allowed CashApp to generate huge profits due to the ever-increasing number of investors in the Bitcoin world. For Square, it, therefore, seemed logical to show his confidence in Bitcoin with such a move.
Square’s investment is far more important to the Bitcoin world than MicroStrategy’s investment
At first glance, Square’s move strongly resembled the one made by MicroStrategy. However, on closer inspection, Square’s motivations are different, and more importantly, much more important to the Bitcoin revolution.
Michael J. Saylor explained that he has studied all the options available to MicroStrategy in terms of long-term investment for their cash reserves. His study finally made him realize that Bitcoin was the asset that had the most potential to appreciate in value because of Bitcoin’s incredible qualities as a store of value.
In his public announcement, Square puts forward much deeper motivations explaining:
“Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose.”
While Square talks about cryptocurrency in the broadest sense, Jack Dorsey later confirmed that the company will invest only in Bitcoin.
Square CFO, Amrita Ahuja, made a point of adding:
“We believe that bitcoin has the potential to be a more ubiquitous currency in the future. For a company that is building products based on a more inclusive future, this investment is a step on that journey.”
Square’s decision comes as no surprise
The decisions of Paul Tudor Jones or Michael J. Saylor to opt for Bitcoin may have come as a surprise. The decision of the company headed by Jack Dorsey is not surprising.
The founder of Twitter is a strong supporter of Bitcoin, for which he has often taken a public stand in the past. Seeing him transcribe this strategy to Square’s level is therefore totally logical.
Jack Dorsey explained at the beginning of September 2020 that he sees Bitcoin as capable of being the native currency of the Internet in the future. Seeing Square invest in Bitcoin is totally in line with the mission that the company has set for itself.
Square is an important entry point into the Bitcoin world for new investors via CashApp. The company also supports the development of Bitcoin and related open-source initiatives through Square Crypto.
Square wants to show the way to other companies
Through its purchase, Square clearly wants to lead the way with Bitcoin.
This is confirmed by the tweet published by Jack Dorsey a few hours after Square’s purchase:
Jack Dorsey gave his 4.7 million followers access to a white-paper detailing Square’s investment in Bitcoin.
I advise you to read this white-paper which will serve as a model for many other companies and individuals wishing to enter the Bitcoin world. That’s why Square has made it open-source as it is specified:
“We’ve chosen to open source this documentation in order to clearly articulate the process behind the execution of our purchase as others consider similar moves.”
Of course, this document explains first of all why Square has invested 50 million dollars in Bitcoin :
“We view bitcoin as an instrument of global economic empowerment; it is a way for individuals around the world to participate in a global monetary system and secure their own financial future. This investment is an important step in furthering our mission.”
The process followed by Square is then detailed in 4 steps:
Finally, the white-paper concludes with the traditional: “NOT INVESTMENT ADVICE”.
Square is a highly respected company in the Tech world that has been enjoying increasing success since its IPO in 2015. Its market cap exceeded $80 billion in the summer of 2020.
With this move, Square is positioning itself a little more as a leading player in the Bitcoin world. A player that will lead the way that many other major American companies will follow in the months and years to come. Investing 1% of its assets in Bitcoin will become the norm in the future.
By also supporting the open-source movement around Bitcoin, by making it more accessible to as many people as possible via CashApp, while opening up access to software patents in the cryptocurrency world via the Crypto Open Patent Alliance (COPA), Square will really take Bitcoin to a new dimension.
The Bitcoin revolution is on the move, and Square expects to be one of the driving forces behind this revolution in the future.