Square wants to contribute to the crypto community
Square (SQ) has announced a plan to hire several cryptocurrency experts. Square’s crypto team will work on an open-source initiative as part of the company’s contribution to the development of a cryptocurrency ecosystem.
Although Square says the crypto team it’s planning to create won’t focus on its commercial interests, the company still stands to benefit if the team’s efforts lead to the broader uptake of cryptocurrencies such as Bitcoin. Square operates a cryptocurrency exchange that allows users of its Cash App to buy and sell Bitcoin. In the fourth quarter, Square’s Bitcoin business generated $52.4 million in revenue, up from $43 million in the third quarter. Square is already making a small profit from its Bitcoin business even though the overall business is still seeing losses.
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Facebook is developing a Bitcoin-like product
Square is planning to create a team dedicated to contributing to the crypto community at a time when Facebook (FB) is also developing a crypto product in the mold of Bitcoin. For Facebook, getting into the crypto business could help it diversify its revenue sources.
Facebook currently relies on advertising for the vast majority of its revenue. In the fourth quarter, for instance, Facebook derived 98% of its revenue from advertising. It was more dependent on advertising dollars than Twitter (TWTR), which generated 87% of its revenue from advertising in the quarter, and Alphabet (GOOGL), which generated 83% of its revenue from advertising in the quarter.
PayPal and Amazon
Square doesn’t have to worry about stiff competition from its major rivals PayPal (PYPL) and Amazon (AMZN) in the cryptocurrency space, as they’ve mostly given crypto products such as Bitcoin a wide berth.