Block’s overarching goal is to drive economic empowerment around the world and Bitcoin plays a central role in that mission, its chief executives said Wednesday at the company’s first Investor Day since 2017.
“We believe Bitcoin is going to have a profound impact on financial services, particularly as a tool for economic empowerment and as a global currency for the internet,” Block’s chief financial officer Amrita Ahuja said during the talk. online event following a claim that the company has ‘just scratched the surface’ for pushing bitcoin adoption in the US and around the world.
Ahuja shared her thoughts after Block Leader Jack Dorsey opened the event with an introductory panel explaining the company’s larger goal and how it plans to achieve it.
Dorsey, a longtime Bitcoin proponent, said Block’s approach is to create “an ecosystem of ecosystems” – with each line of business dedicated to building an ecosystem on itself that can no only evolve, but also impact other ecosystems in the organization.
Cash and Spiral App – A Case Study
Cash App’s recent integration of the Lightning Network, Bitcoin’s overlay protocol for faster and cheaper payments, is an example of how Block seeks to have different business units producing products that can impact each other. others.
The money-transmitting app has added support for Lightning payments via the Lightning Development Kit (LDK), software developed by Spiral, an independent subsidiary of Block focused on developing and funding open-source Bitcoin projects.
“Bitcoin is the best version of money,” said Steve Lee, head of Spiral. “With our help, we believe it can become the world’s favorite currency.”
Cash App was one of the first business units of what was then Square to integrate Bitcoin. The app added bitcoin buying and selling capabilities as well as a custody solution for customer funds in 2018, its manager Brian Grassadonia said at the event.
Since the feature’s launch, Cash App has had over 10 million monthly active users purchasing bitcoin in-app and the spread fees charged by Block on those purchases have become a major revenue driver for Block. Cash App’s gross profit has increased 44 times since 2017, Ahuja showed at the event.
Bitcoin’s integration into Block’s business model has gone mainstream since Dorsey stepped down as CEO of Twitter – and now goes beyond a bitcoin exchange app.
The bitcoin ecosystem
A core aspect of Block’s business is what it calls the Bitcoin ecosystem, which falls under the company’s “emerging initiatives” that aren’t as established as Square or Cash App – which have both found the adequacy with the market of the products and succeeded in developing their activity. model, according to Ahuja.
In addition to the aforementioned Spiral, Block’s bitcoin ecosystem is made up of an open-source company called TBD, as well as the company’s bitcoin wallet and mining initiatives.
Block seeks to create a Bitcoin wallet for the masses, combining security and ease of use to make self-custody accessible to those new to Bitcoin.
The product aims to encourage ordinary people to hold the keys to their bitcoin funds instead of resorting to custodians amid more complicated self-custody setups that are popular today. In the same way that Spiral’s LDK helps developers and enterprises more easily integrate Lightning into their apps, Block wants to make it easier for end users to self-guard, explained Jesse Dorogusker, Block’s Bitcoin hardware wallet manager.
“If you don’t have the key, you don’t have the money,” Dorogusker said. “We want to create a safe and easy way for people to store their own bitcoin. Our wallet divides the secret key into three parts: a mobile app, a hardware device, and a self-service recovery tool. »
The company seeks to avoid single points of failure with this approach, which it says could improve the user experience around bitcoin self-custody – which currently revolves around 12 or 24 seed words.
Bitcoin Mining ASIC
Block’s bitcoin ventures also extend into the mining industry.
The company said it was focused on creating an open system that would reduce concentration around Chinese bitcoin mining ASIC chip makers. The approach – an open source setup – has the potential to reduce risk and increase competition, Dorogusker said.
“We want to build our own bitcoin ASIC,” explained Dorogusker, who also leads the mining initiative. “Our ASICs will be available for sale and will all be open source.”
The company previously said it would develop an open bitcoin mining system, and a post from Block was spotted in January looking for a team to produce a “next generation” bitcoin mining ASIC. However, this was the first time the company announced that it would produce a true bitcoin ASIC that would be open source.
Decentralized Bitcoin Exchange
In addition to a bitcoin wallet and a bitcoin miner, Block is also set to bridge the gap between the traditional financial world and the burgeoning system through the crypto unit TBD.
“TBD’s mission is to bridge the gap between the old and the new,” said Mike Brock, Head of TBD. “We are building a new open source society from the ground up, focused on open protocols and open standards that everyone in the economy can benefit from. What Red Hat did for Linux, TBD can do for money, payments and identity.
Brock went on to explain that under the “old” model as he calls it, which relies on centralized entities, 1.1 billion people are unable to prove their identity. TBD wants to bring a secure and decentralized identity standard to allow not only these customers to benefit from a more accessible and equitable protocol, but also companies to reduce their costs.
“Under the new financial system, you can create your own digital identity and use all these services that require identity verification,” Brock said. “You can also create a digital wallet to hold bitcoins or stablecoins, and you can convert stablecoins to bitcoin directly without leaving the app because it’s integrated with tbDEX.”
“If we want to have an internet-native currency, we need trust, and trust comes from time, openness and transparency which are principles that are embodied in the Bitcoin system,” Brock told Dorsey’s question about why he believed in Bitcoin. in the first place.
“We’re building a network that delivers better financial access experiences around the world,” Brock said in his final thoughts.
From businesses to consumers
Just as Square caters to businesses and Cash App targets consumers, Block’s Bitcoin businesses seek to provide a roundup of solutions that collectively empower retail and institutional investors in the decentralized and digital economy.
Amid a sea of early-stage Bitcoin initiatives, most details remain unknown as the company takes steps to develop its products by iterating between ideation and gathering community feedback. It remains to be seen whether Dorsey will be able to stir the corporate ship to bolster economic empowerment with open Bitcoin systems beyond Spiral’s freelance work.