Bitcoin for everyone? Square plans the “block” transformation

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Bitcoin for everyone? Square plans the “block” transformation

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Dare more Bitcoin – Jack Dorsey is now trimming the payment company Square for cryptocurrencies

Quelle: Getty Images/Joe Raedle

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After stepping down as Twitter boss, Jack Dorsey is now devoting himself to his other founding. He renames the Fintech-Square in Block and relies on crypto currencies. This is intended to arouse price fantasies among investors – and open up new payment options for consumers.

KJack Dorsey is no longer the boss at Twitter, but he dedicates himself all the more intensively to founding his other company: The US fintech giant Square, market value 90 billion dollars, is renaming itself to “Block” – with this Dorsey wants to signal a reorientation of the company. From now on, Square should concentrate more on the topic of cryptocurrencies and blockchain.

In doing so, Dorsey is using a trick that Mark Zuckerberg has already used: If, from the investors’ point of view, everything does not go according to plan, then a communicative realignment must be found that will fuel the fantasies of the stock market again. The new name is intended to signal innovation and the move towards a new product – in Zuckerberg’s Facebook meta renaming, the development of the Metaverse, in Square, the new development of blockchain offers.

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Square had sales of $ 3.8 billion in the past quarter, analysts had expected 4.5 billion. The company even made a net loss in the corresponding period. The largest competitor Paypal, however, can currently pull away, posted 6.2 billion dollars in quarterly sales and made a good 1.1 billion dollars in profit.

So far, Square has mainly earned its money with business customers – forays into the end customer world, where PayPal is extremely successful, have so far remained rather weak.

Dorsey started the company in 2009 with the idea of ​​upgrading every smartphone to a credit card reader in order to give small business owners access to the technology. The company name “Square” referred to a small white box that was plugged into the headphone input of the devices.

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Both headphone entrances and boxes are now technology history, Square now offers an entire ecosystem for everything to do with digital POS systems and suitable online shopping applications, right up to complete salary management for small businesses.

But all of this is simply too much of a bread-and-butter business, and growth in the pandemic is currently lower than hoped. The group’s other branches of business are also doing less well than offers from competitors: The music streaming service Tidal, which was taken over at the beginning of the year, lags far behind the offers from competitors such as Spotify or Amazon Music. Square’s digital payment service for end users called “Cash App” remains almost insignificant compared to the market reach of PayPal.

The new name alludes primarily to the blockchain

Nevertheless, the Square share has risen from 50 to 170 euros since 2020, and investors reacted enthusiastically to Dorsey’s start-up of the company branch “TBD54566975” – which is supposed to deal with cryptocurrencies. Dorsey is now signaling how important the project is to Dorsey by renaming Square to “Block”. In addition, with the new name he is very publicly pointing out that his company now has a lot more iron in the fire than just that Payment processing business.

The new name alludes primarily to the blockchain, the underlying technology of all decentralized cryptocurrencies. The technical principle behind it: Many computers all over the world compute on a shared database in which all transactions between users of a currency are stored mathematically encrypted. They can only change this “blockchain” if they work together and in agreement. In addition, all historical changes are publicly stored in the common file, fraud or data falsification should be impossible thanks to the technology.

In July, the cryptocurrency fan Dorsey announced that it would develop its own offline wallet for cryptocurrencies, a so-called “hardware wallet”. That should be safer than offers from the competition. All around it, TBD is supposed to knit an ecosystem for trading and paying with crypto currencies.

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On Dorsey’s initiative, TBD is developing a blockchain technology called tbdEX, with which future exchange transactions between classic fiat currencies and crypto currencies will be simplified – Dorsey wants to simplify access to the technology, especially for socially disadvantaged market participants. The idea thus resembles the founding idea of ​​Square. At the same time, Square also operates a branch of the company that deals with classic Bitcoin investments. That has now also been renamed, in “Spiral”.

But whether the realignment will go beyond mere name cosmetics remains to be seen: Dorsey is not planning any organizational changes in the group, nor is he changing the strategy of the other group subsidiaries. Even the trading symbol on the exchange, SQ, stays the same.

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