Square has made a big bet on crypto, with the US fintech giant buying nearly 5,000 bitcoins on the potential it will eventually be the “ubiquitous currency”.
The San Francisco tech company, which offers software and hardware payment products, announced it had bought 4,709 bitcoins for nearly $70 million ($US50 million) late last week.
Announcing the news, Square chief financial officer Amrita Ahuja said that the cryptocurrency has the “potential to be a more ubiquitous currency in the future”.
“As it grows in adoption, we intend to learn and participate in a disciplined way,” Ahuja said. “For a company that is building products based on a more inclusive future, this investment is a step on that journey.
“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.”
Square paid an average of $US10,617 for each bitcoin it acquired.
The company said the purchase represented 1 per cent of Square’s total assets as at the end of the second quarter of 2020.
The price of bitcoin has jumped to more than $US10,000 this year after hitting just over $US7,000 at the start of the year.
The price of bitcoin also jumped by more than 5 percent after Square announced it had bought $US50 million worth of the cryptocurrency, hitting more than $US11,000 by the end of last week.
It’s not the first time Square has shown strong support for cryptocurrency.
In 2018 it incorporated the ability to buy and sell bitcoin into its Cash app, and in the following year launched Square Crypto, an internal team focused on open-sourced work in the cryptocurrency space.
Square’s founder and CEO Jack Dorsey, also the CEO of Twitter, is a big fan of bitcoin and cryptocurrency.
In 2018 he predicted that a cryptocurrency will become the world’s “single currency” at some point in the future, and that using digital currencies would help Square and other companies enter new markets.
“If we were able to use it as a currency today, we could release our apps in every app store around the world instead of the five we’re in,” Dorsey said in 2018.
Dorsey is also a significant personal investor in bitcoin. Just last month Dorsey said that bitcoin is “probably the best” native currency of the internet.
“The internet is something that is consensus-driven and is built by everyone, and anyone can change the course of it,” Dorsey told Reuters.
“Bitcoin has the same patterns, it was built on the internet. Anyone with a great idea can add to it.”
Bitcoin has seen strong growth this year in light of the ongoing COVID-19 pandemic, with the cryptocurrency reaching two-year highs in June and setting trading volumes, with levels tripling from April to May.
Another prominent backer of bitcoin is tech bigwig John McAfee, who last year predicted that the price of bitcoin would rise to $US1 million by the end of 2020. This looks unlikely though with the price of bitcoin currently hovering around $US11,000 with only two months left in 2020.
“This is the new paradigm,” McAfee said. “We will all be our own bank and I promise you there will be chaos within governments, regulatory bodies, and financial institutions as they try and find their way through this minefield of technology.”
McAfee was arrested in Spain last week and is awaiting extradition to the US to face charges of tax evasion and fraud.