Cryptocurrencies are rapidly gaining recognition as a legitimate asset class among both retail and institutional investors. However, navigating this complex intersection of finance and technology can be daunting for newcomers. Beyond understanding how cryptocurrencies work, there are thousands of digital coins and tokens to evaluate.
Fortunately, there’s a simpler way to dip your toes into the crypto market while learning the ropes: investing in Square (NYSE: SQ). Here’s why this fintech stock offers a compelling gateway to Bitcoin’s long-term potential.
Key Takeaways
- Square leverages Bitcoin to grow its digital payment ecosystem.
- The company holds over 8,000 Bitcoin on its balance sheet and explores mining opportunities.
- Its stock provides a safer entry point for crypto-curious investors.
Square’s Bitcoin Strategy: More Than Just Holdings
Square operates across two primary segments:
- Seller Ecosystem: Point-of-sale and software services for businesses.
- Cash App: A consumer-focused mobile payment platform.
In Q3 2021, the Seller Ecosystem grew revenue by 44% ($1.39B), while Cash App revenue rose 33% ($578M). Notably, Cash App’s Bitcoin transactions generated $1.82B in revenue (up 11% YoY), contributing $42M in gross profit (up 29%).
Though Bitcoin’s profit margins are slim for Square, the company’s commitment runs deeper. As of September 2021, Square held 8,000+ Bitcoin (~$352M), making its stock a proxy for Bitcoin’s price movements.
👉 Discover how fintech innovations drive crypto adoption
Bitcoin Mining Ambitions
CEO Jack Dorsey—a vocal Bitcoin advocate—hinted at potential mining ventures, aligning Square with firms like MicroStrategy (MSTR) and Riot Blockchain (RIOT). This could further integrate Bitcoin into Square’s operations.
How Square Uses Crypto to Expand Its Business
1. Cash App’s Gateway Role
Bitcoin trading attracts users to Cash App, where they later engage with higher-margin services like:
– Linked debit/credit cards
– Stock trading
– Buy-now-pay-later (via Afterpay acquisition)
2. Bitcoin Payments
Merants using Square’s Seller Ecosystem can accept Bitcoin, while consumers spend it via Cash App.
3. Square TBD
Launched in 2021, this division focuses on:
– Developing Bitcoin-based financial tools.
– Supporting decentralized finance (DeFi) applications.
Why Square Is Ideal for Crypto Newcomers
| Factor | Square’s Edge |
|---|---|
| Risk Mitigation | Indirect Bitcoin exposure without self-custody risks. |
| Growth Potential | Benefits from Bitcoin’s rise AND its own fintech innovations. |
| Ease of Access | Invest via traditional stock brokers; no crypto wallets or exchanges needed. |
👉 Learn about beginner-friendly crypto investment strategies
FAQs
1. Does Square own Bitcoin directly?
Yes—it holds 8,000+ Bitcoin (~$352M as of 2021) and may acquire more.
2. How does Square profit from Bitcoin?
Primarily through Cash App transaction fees, though margins are low (~2.3% in Q3 2021).
3. Is Square a safer bet than buying Bitcoin outright?
For beginners, yes. Square’s diversified revenue reduces volatility risks tied to Bitcoin’s price swings.
4. What’s Square TBD’s goal?
To build Bitcoin-centric financial products (e.g., decentralized lending).
5. Could Square’s mining plans impact its stock?
Potentially. Mining would deepen its Bitcoin ties, attracting crypto-focused investors.
6. How does Cash App’s Bitcoin feature work?
Users buy/sell Bitcoin within the app; Square facilitates trades and earns a fee.
Final Thoughts
Square uniquely bridges traditional finance and crypto. By investing in its stock, you gain:
– Bitcoin exposure through its holdings and trading.
– Fintech growth via Cash App and Seller Ecosystem.
– Lower entry barriers compared to direct crypto purchases.
For cautious investors eyeing crypto’s future, Square offers a balanced starting point.