Square was founded by Twitter co-founder Jack Dorsey and since launching in 2009, it’s been one of the leading companies for payments with merchants.
Big goal was making tools, so anyone can do credit, debit and digital payments easily with their phone or iPad.
Jack Dorsey just resigned as CEO to Twitter and made the move to rebrand the company to “Block”, to make some emphasis on crypto and blockchain as their future.
Obvious comparison is Facebook which changed their company name to Meta after 17 years.
That made sense though.
Instagram/WhatsApp, now have more total users than Facebook.
They bought VR company Oculus for 2 billion in 2014.
They plan on selling 25 million oculus sets by 2024.
Square is a much different situation, because they only really have one core product, with merchant transactions.
The biggest competitor they have is PayPal which raised the market cap of Bitcoin/Crypto heavily, when they announced in the last year that PayPal would accept Bitcoin and work with it.
Square likely wants to get some hype off this, but here’s why I just don’t see it working.
The biggest companies in crypto are Crypto.com, Coinbase, Gemini, Kraken & Circle.
What they all have in common are they are involved in the actual investment side of crypto and not payment processing.
Bitcoin has a user base, which 99% of them are their for investment and not actual use of it as a currency.
Many places have tried to accept bitcoin, but very few businesses to do it, like Microsoft, Whole Foods, Overstock and Etsy ever noticed any noticeable sales from it.
13% of the public owns some form of crypto, but not one company to accept it sees over 1% of sales coming from it.
Reasons are the following.
That’s not why people buy it.
People are buying crypto/bitcoin to make money off selling it. They aren’t buying it with cash, paying extra fees, going through a process and doing all that to just buy milk with it.
Tax issues
If someone buys bitcoin and it goes up in price, if they purchase something with it, there still could be an argued tax to pay on capital gains. This is kind of a gray area, but the IRS is making paperwork clearer that people can’t just go buy $1,000 of crypto, have the price go up to $10,000 and go on a shopping spree with no taxes on the gains.
This makes the mobile payments side harder, because people could realistically purchase someone for $500 and that liquidation of asset might lead to a higher tax bill.
Which we’ve not seen this come up much, but if it was ever noticed seriously, give the government a week and it’s cracked down on.
Fees
If bitcoin’s price was falling rapidly, it’d be likely people would liquidate by buying goods to get out.
This puts a situation for payment processors, where they’d need to sell the crypto/bitcoin quickly, but the buy side shrinks rapidly.
This would likely put some increased fees on the merchant and risk of the systems being shut down on them all together.
And the final reason that I’d call this a dumb move for Square is history.
There have been dozens of businesses to try and do merchant level transactions in crypto.
No one really blew up and it’s kind of a scattered market, where 99% of users just want to hold until they sell for more.
For Square becoming Block, they are rebranding to a market which is a graveyard of other businesses and likely a small market waiting if they succeed.
They went from having the universally known brand name of Square to just being crypto company number 615.