Square Inc., a payments company founded and run by Twitter CEO, Jack Dorsey, has made a significant purchase of a little over 4,700 bitcoins worth nearly $50 million. Having met financial obligations to shareholders, the company carried through with plans to invest around one percent of its total assets as of the end of Q2 2020.
Explaining the rationale behind this move, Square’s chief financial officer, Amrita Ahuja said he believes that bitcoin has the potential to be “a more ubiquitous currency” in the future. Continuing, he argued that as the cryptocurrency grows in adoption, they intend to “learn and participate in a disciplined way. For a company that is building products based on a more inclusive future, this investment is a step on that journey.”
Ahuja also believes that bitcoin’s very structure will ensure that its value will only increase with time.
That angle closely mimics Square founder and CEO, Jack Dorsey, one of bitcoin’s foremost proponents who has repeatedly shared his enthusiasm for digital currencies, saying it provides an “opportunity to get more people access to the financial system.” He went further than most by calling bitcoin “a transformational technology” and it will be the world’s single currency in 10 years.
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The purchase of bitcoins apparently forms part of the Square’s latest capital allocation strategy following its financial results for the second quarter of 2020. While there are other choices that are considered to be safer alternative assets, Square has decided to bet big on Bitcoin.
The growing trend of institutional interest in cryptocurrencies came as the price rally over the past year has invalidated the idea of cryptocurrency bubble pop that many analysts have predicted.
The news follows other, similar stories of progress for Bitcoin companies in the US, though cryptocurrency regulation still happens largely on a state-by-state basis. Online-payments giant, PayPal Holdings is also looking to explicitly unleash cryptocurrencies onto its client base that reportedly boasts over 320 million people.
San Francisco-based Square jumped on the cryptocurrency bandwagon back in 2019 when it rolled out Bitcoin trading to its Cash App customers. Furthermore, it holds a so-called BitLicense by the New York State Department of Financial Services (NYDFS), and now legally operates as a money transmitter and digital currency exchange.