Why did Square buy Bitcoin?

by: Luuk Soons

A second publicly traded technology company has taken the bold step of investing in Bitcoin. It concerns the American fintech company Square (SQ) which competes in Europe with the popular payment solutions of iZettle and Sumup. However, it's no coincidence that Square dared to take this step. The company is led by Jack Dorsey. He is the CEO of Twitter and is known as a 'Bitcoiner'.

He probably heard Michael Saylor's call. Michael Saylor, the CEO of Microstrategy After much consultation with the management board, it was decided to exchange almost all dollar reserves for Bitcoin. In an interview with podcaster Anthony Pompliano, he encouraged Jack Dorsey to do the same. It didn't take long. On October 8, Dorsey announced that Square purchased a total of 4,709 BTC for $50 million on October 7, 2020.

Square gets in Bitcoin

However, this is a more modest, perhaps a more rational BTC allocation. $50 million represents about 1% of Square's net worth; however, MicroStrategy is in a different financial position than Square. The reasoning for why the company chose Bitcoin comes down to the same thing. Holding only dollars is unwise, given the unprecedented macroeconomic uncertainty and monetary policy. Square has an extensive Whitepaper in which the company gives the following arguments:

"Given the rapid evolution of cryptocurrencies and the unprecedented uncertainty from a macroeconomic and currency regime perspective, we believe now is the right time to expand our largely dollar-denominated balance sheet and create a significant Investment in Bitcoin achievable. We see Bitcoin as an instrument for global economic strengthening; 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 advancing our mission."

The whitepaper further discusses in detail how Square can be implemented within 24 hours cheap Bitcoin purchased without the Bitcoin price how Square has stored the Bitcoins insured and secured. The document serves as a blueprint for other companies to follow Square's lead. We will keep an eye on which other publicly traded companies will follow suit.

This article is based on the free online Bitcoin course and the many different articles and news items about the development of the world of crypto finance. This information can be found on the bestebank.org.

Disclaimer: This article on Bitcoin is for educational purposes only. It is not investment advice.

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