The story of Jack Dorsey leaving Twitter for the second time has more than one side to it – there are four of them, all equal length.
Square inc (NYSE:SQ) is expected to again be the tech guru’s focal point of attention, likely with a particular emphasis on Bitcoin and cryptocurrency.
Bitcoin uber-bull Dorsey reportedly had a difference of enthusiasm with Twitter chief financial officer Ned Segal who earlier this month cautioned against the social media group owning the “too volatile” cryptocurrency.
At Square, Dorsey’s finance chief Amrita Ahuja revealed a very different opinion earlier this year, saying there’s a case ‘for every balance sheet to have Bitcoin on it’.
Square is, of course, at its core still a fintech start-up. It is led by Dorsey and via its Cash-app business facilitates a significant share of the US Bitcoin market, so - Ahuja would say that, wouldn’t she.
CashApp - a counterpoint to Square’s SME point of sale and payment platform – handles peer-to-peer payments between individuals, and also hosts a suite of banking and investment features, but, revenue generation has skewed significantly to Bitcoin and crypto in recent times.
During the first quarter, some 70% of Square’s revenues came from Bitcoin transactions and it highlighted that in January the platform enabled 1mln ‘first time’ Bitcoin buyers, though the rate of growth inevitably slowed.
By the third quarter Square had US$1.82bn of bitcoin revenue, shy of analyst forecasts for US$2.6bn as the three-month period saw softer price volatility which translated into fewer transactions for the platform.
For context, the group’s Q3 revenue was overall up to US$3.84bn year-on-year from US$3.03bn but that was a long way short of Wall Street expectations for US$4.39bn.
It came partially due to one-off Covid impacts including a drop off in debt card payments and the petering out of US government stimulus payments.
CashApp now has some 40mln monthly active users most of which (those that can’t include teenagers between 13 and 17) have access to Bitcoin trading.
By design or by happenstance Square appears to be an ideally positioned vehicle for Dorsey’s crypto aspirations.
Just this month, Dorsey said Square aims to make Bitcoin the “native currency of the internet” as the fintech rattled off details of multiple ongoing projects in crypto and ‘Web 3.0’.
For the uninitiated, Web 3.0 is yet another piece of Silicon Valley jargon which puts into a basket cryptocurrency, blockchain, metaverses and decentralised technologies.
Square is working on a ‘hardware wallet’ (basically a memory device that will physically store crypto accounts), a sustainable crypto-mining venture and potentially some form of NFT-based music royalties solution via Jay-Z founded streaming platform Tidal, which was acquired by Square for US$297mln in March.
Alongside Square, CashApp and those ventures, a new business unit called TBD was also launched.
By November, more had been determined and communicated around what exactly TBD would be as Square published a whitepaper.
The plan for TBD is to create a new crypto exchange that it is, itself, decentralised.
For those that care about such things, it also went someway to reveal what was behind the pun – the new fintech platform is referred to as a tbDEX – which, whilst not explicitly defined in the whitepaper, appears to stand for ‘Trust Based Decentralised exchange’.
“The tbDEX protocol facilitates decentralized networks of exchange between assets by providing a framework for establishing social trust, utilizing decentralized identity (DID) and verifiable credentials (VCs) to establish the provenance of identity in the real world,” the whitepaper said.
That’s a lot of deep-cut fintech buzzwords, and, the long form description perhaps explains the concept more clearly.
“The current state of Bitcoin and other crypto technologies is still beyond the reach of everyday people. For instance, gaining access to your first cryptocurrency generally involves going through a centralized exchange.
“Accessing decentralized financial services then requires multiple asset transfers and transaction fees each step of the way. Aside from gatekeepers and cost, the complexity and sheer unintelligibility of this process today is a prohibitive barrier to entry for most.
“It is still prohibitively difficult for the average person, starting with traditional fiat-based payment instruments, to directly access on-ramps and off-ramps into and out of the decentralized financial system.
“We need a better bridge into this future. The tbDEX protocol is directed at this problem.”
It all sounds like a compelling proposition, and with [how many] million CashApps installed and [how many] point of sale devices in place, Jack Dorsey’s fintech is perhaps placed particularly well positioned to be the company to deliver crypto to the everyday masses.
Internet anthropologists would naturally point out that Twitter has likely redefined human communication more than any other social media platform.
Critics will of course say that Twitter has been disruptive and divisive at the level of both society and the individual.
Humbugs aside, it is undeniable that trust is a particularly rare commodity when it comes to perceptions around social media.
If it is rare in social media, trust is opaque in TBD’s whitepaper
“The nature of this trust relationship will never be universal,” it says.
Going further the paper describes that trust can vary across jurisdictions, regulations, laws, people and institutions.
What trust actually means in the context of this new exchange remains to be seen, but without the goliath distractions of Twitter evidently @Jack will have a lot more time to figure it out.