Shutterstock
Square CEO Jack Dorsey, also known for his role as the head of Twitter, has tweeted that the company will be dipping its toe into crypto. Since the emergence of cryptocurrency, one of the most pressing issues for investors has been how to protect their digital currency. Crypto wallets exist to fill this niche, but there’s no overarching standard for how to store the data to fully protect it from would-be thieves.
That’s where Square wants to come in with its own hardware. The company is best known for its point-of-sale hardware and software solutions that help small businesses stay competitive by accepting credit and debit cards. After revolutionizing smartphone-based bank card readers, it makes sense that Square would be interested in the growing world of crypto.
Put simply, cryptocurrency is a type of fiat currency that represents an amount of energy spent by a computer on “mining” the solution to a complicated math problem. Once a computer solves the problem, the user is given a unique chain of characters that other computers will recognize as a unit of currency.
Those chains of characters are all cataloged in a ledger called a blockchain. So, while crypto purchases are anonymous, they’re also all logged. It’s all but impossible to spoof the blockchain. However, it’s not impossible to steal cryptocurrency. Unsecured “wallets,” repositories for the currency, can be hacked by malicious actors who can make off with your Bitcoin.
On Friday, Dorsey announced the company’s intention to create a hardware Bitcoin wallet with input from the Bitcoin mining community. The stated goal of Bitcoin is to be a crypto standard that is disconnected from government banking organizations, like the US’s Federal Reserve. As such, the democratization of any hardware standard is critical to the adoption of any new products introduced into the ecosystem.
Dorsey confirmed that, if the company pursues the venture, that they’ll design the software and hardware “in the open,” allowing the community to see the process. The news bolstered Square’s stock price, pushing them up an additional three percent during Friday trading.
The company has been investing heavily in Bitcoin recently. A disclosure in February indicated that Square had sunk some $170 million into Bitcoin investments, positioning themselves as a major adopter of the crypto standard. Some analysts have been cautious regarding Bitcoin, citing its volatility as a reason to view it as only part of a portfolio, not the central player.
