Square Earned $200,000 From Bitcoin Trading, Without Charging Fees

  • Square's Cash app started letting users buy and sell bitcoin back in January. Since then, the company earned $200,000 in profit from trading.
  • The Cash app doesn't charge any fees, and made money thanks to the cryptocurrency's price fluctuations.

Square’s Cash app jumped on the Bitcoin bandwagon back in January this year, when it started letting users buy, sell, and hodl Bitcoin in the app. The company recently unveiled its first quarter results, which show the cryptocurrency brought the company $200,000 in profit.

The Cash app earned the company the funds without charging fees, as Square charges none to trade Bitcoin. The cryptocurrency’s price fluctuations, as Markets Insider notes, essentially helped Square sell $34.1 million worth of BTC, at a cost of $33.9 million.

Square founder and CEO Jack Dorsey, who’s also in charge of Twitter, is a well-known Bitcoiner. As covered, Dorsey revealed he believes Bitcoin will become the world’s “single currency” by 2028. Per his words, Bitcoin is a “transformational technology.”

According to Markets Insider, Nomura Instinet analyst Dan Dolev commented on Square’s Bitcoin earnings, saying:

"If they actually charged a fee as some of their competitors do, that number would be much higher. They're just basically testing out, allowing people who don't normally trade Bitcoin to trade Bitcoin."

Dan Dolev

Notably, the company isn’t depending on Bitcoin for a large portion of its revenues, but Dolev revealed its popularity showed potential. Per his own research, 60 percent of Square merchants are willing to accept Bitcoin as a payment method. As such, the company could in the future charge fees, once cryptocurrencies are used in day-to-day transactions.

Moreover, adding Bitcoin to the Cash App likely spurred downloads and brought Square new users, Dolev noted. In this year’s first quarter, the app had 7 million monthly active users, and remained one of the top 25 apps in Apple’s App store.

Per Dolev, while Bitcoin has the potential to help Square improve, the company doesn’t depend on the cryptocurrency. According to him, even if it dropped to zero, Square would still be successful.

When it comes to Bitcoin trading, Square currently faces competition from Coinbase, which reached over $1 billion in revenue last year, and Robinhood, a popular mobile stock trading app that recently introduced cryptocurrencies to its services.

Bitcoin’s Being Used as ‘Currency Hedge’ in Pure Speculation, Says CNBC's Brian Kelly

Francisco Memoria

CNBC contributor Brian Kelly, the founder and CEO of crypto investment firm BKCM, has argued bitcoin is being used as a hedge against economic uncertainty but as “pure speculation.”

Commenting on a buy signal pointed out by a Goldman Sachs sales and trading desk, Brian Kelly revealed that while he likes the call he is “concerned about the bitcoin market” as the number of BTC addresses hasn’t been growing.

Per the analyst bitcoin “has been trading right with gold for the first time” since he started covering the cryptocurrency back in 2013.  This, he said, means bitcoin is now being used as a currency hedge by macro players and other investors, even though at this point it’s “pure speculation.”

The analyst then added that we’re currently seeing a “perfect storm” for bitcoin as there are multiple fiat currencies “breaking down at the same time,” and institutional investors are now starting to embrace cryptocurrencies.

These two combined, he added, “funneled all the money into bitcoin” helping the flagship cryptocurrency outperform other assets so far this year. In December of 2018 BTC was trading at about $3,200, and has been rising this year to a current $10,980.

Kelly was likely referring to the Argentine peso and the Chinese yuan when he mentioned declining fiat currencies. As covered the peso recently plummeted after the country’s President Mauricio Macri suffered a defeat in the weekend’s primary elections, leading to speculation a bitcoin premium was developing in the country.

The yuan, on the other hand, dropped to an 11-year low as China devalued its currency to offset the impact of tariffs imposed on the country by the Trump administration. Amid fears of a trade war escalation equity markets plummeted, and bitcoin started rising.

Back in April, Kelly explained why he believed bitcoin was headed for a new all-time high, pointing to solid fundamentals he argued were behind the cryptocurrency’s rise this year.