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Jack Dorsey, co-founder and CEO of Twitter and Square, at the Bitcoin 2021 conference in Miami on June 4, 2021.
Eva Marie Uzcategui / Bloomberg
Digital payment company
Square
plans to create a platform for decentralized financial services, according to CEO and founder Jack Dorsey. Mizuho analysts called Square the “bank of the future” earlier this week and reiterated a buy rating for the stock.
Square
(ticker: SQ) has expanded its services, including for Bitcoin, stock trading, a debit card for the Cash App mobile payment app, and the Tidal music service. It is also advancing in its Cash for Business segment, offering payment services to businesses and earning a standard 2.75% commission on transactions.
“Square is building a new company (joining Seller, Cash App and Tidal) focused on building an open development platform with the sole purpose of facilitating the creation of non-custodial, unlicensed and decentralized financial services,” said Dorsey Thursday at a Twitter feed. Dorsey, who is also the founder and CEO of
Twitter
(TWTR) clarified that the main focus of the platform will be Bitcoin.
Dorsey has been on the Bitcoin bandwagon for years, announcing plans to develop a Bitcoin hardware wallet last week. Square invested over $ 470 million in Bitcoin and processed $ 3.5 billion in Bitcoin transactions during the first quarter on the Cash App.
Decentralized finance, or DeFi, relies on blockchain technology rather than central financial institutions like banks to negotiate transactions, and has been hailed as a way to make financial transactions more efficient and less expensive. The number of DeFi exchanges rose 70% in June, topping $ 1.5 billion in transaction volume, according to CoinDesk. Adhering to the broader values of transparency and democratization of crypto, Dorsey emphasizes that the platform will be “an open roadmap, open development and open source.”
Mizuho analyst Dan Dolev wrote that Cash App “may be on its way to becoming the ultimate neo-bank and monetary central bank of the future,” and said buying Square shares right now is “Analogous to
JP Morgan
in 1871.
Shares were up 1.2% to $ 238.20 on Friday afternoon, while the S&P 500 Index was down 0.4%. Square stock is up 9% so far this year.
Dolev, a longtime bull on Square stocks, wrote that there was a “clear path” for Cash App to increase its Average Income Per User (ARPU) three to five times, to $ 150- $ 200 from $ 40 to $ 50, adding products ranging from tax services to home equity loans. In doing so, Cash App and Square can significantly expand their user base, as they have so far tapped less than 10% of their potential user base.
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