If you thought the Bitcoin bloodbath ended yesterday… boy, were you wrong!
On Monday, Bitcoin registered what was then the sharpest gross drop in its history in terms of dollar amounts. In a matter of hours, the price of Bitcoin went from just over $57,500 to bottoming at $46,700. But a bullish effort from traders saw its price rebound, and the candle closed at $54,142.
And just when Bitcoin investors were starting to talk about a market recovery, the real flash crash happened.
Yesterday, crypto analysts were admiring (if you can call it that) Bitcoin’s daily red candle wick—that is, the minimum point reached before reversing the trend during the day. But today, the market is faced with the largestred-bodiedcandle in Bitcoin’s history. Starting the day at $54,100, BTC only managed to reach $54,200 for a few minutes before plummeting to its current price of just above $48,000.
The dip cut Bitcoin’s market cap down by nearly $100 billion, from above a historic $1 trillion to now just above $900 billion.
BTCUSD. Image: Tradingview
Its daily minimum came in at $44,880, just off a slight support zone marked by a correction after the price spike following Tesla’s announcements in early February 2020. At the time, Elon Musk’s electric car company revealed a new corporate strategy to the SEC, buying $1.5 billion worth of BTC, and announcing that it was working on accepting Bitcoin payments.
Bitcoin has been in price discovery mode since it first broke the $20,000 price zone—the previous all-time high registered in 2017. Price discovery happens when an asset breaks its all-time high and then maintains a bullish trend. It is called “price discovery” because traders have no previous experience buying and selling above that specific price.
And despite the drop over the last two days, Bitcoin has been on an epic bull run, exceeding the expectations of even the most experienced analysts. Some were even expecting a short-term sell off. Real Vision founder Raoul Pal, for example, shared his relief follow yesterday’s market correction:
It it just me that feels relief when the BTC sell offs come? You know they are coming but when they finally arrive you can switch into buy the dip mode. March is a historically weak month. Not sure if this is the bigger March correction of just another cheeky shakeout . pic.twitter.com/GMH7evctX5
— Raoul Pal (@RaoulGMI) February 22, 2021
Still, some market observers may be surprised to see that even Square’s bullish news—that it has invested another $170 million of corporate funds in Bitcoin—hasn’t been enough (yet) to reignite the rally.
For the time being, it may not be a bad idea to consider removing thoselaser eyes from your Twitter profiles.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
Crypto trader and YouTuber Ben Armstrong is revealing a low-cap altcoin that he says will shake up the gaming industry and become one of the top crypto assets of the year.
In a new video, Armstrong tells his 561,000 YouTube subscribers that he’s eyeing Phantasma, a fast, secure, and scalable blockchain solution for gaming, non-fungible tokens (NFTs) and decentralized apps.
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“The blockchain is powered by a dual-token structure. The governance token SOUL and the energy token KCAL, which allows for interoperability with other blockchains while maintaining a decentralized governance system. Phantasma supports tri-chain interoperability between Phantasma and Neo and Phantasma and Ehtereum, although the cross-chain capability between Neo and Ethereum isn’t quite possible yet. Phantasma enables smart NFTs, infused NFTs, multilayered NFTs with very cheap minting.”
The crypto influencer explains that Phantasma makes use of smart NFTs to perform new functions in video games, such as in the 22 Racing series by GOATi Entertainment.
“Smart NFTs build on the original use cases of digital non-fungible tokens and take things to the next stage by adding properties like time-based access and infusing the NFTs with other assets. Last year at the PAX online gaming conference, GOATi Entertainment debuted the world’s first time-based NFT in their RTS racing game… The NFT gave attendees the ability to play the game for a short period of time in beta…
22 Racing Series isn’t just another NFT game though. The game is featured on the infamous gaming platforms Steam, PS4, and Xbox One. 22 Racing series allows its users to buy and trade vehicles or make assets to sell or license while the non-fungible tokens give you ownership control and flexibility. Cars themselves are actually a combination of these multilayered smart NFTs consisting of 25 or more individual NFTs to create a hypercar within the game. This takes the infusing or fusion of NFTs like the breeding of CryptoKitties to a whole new level. For those that do not understand the concept, it’s essentially the combining of NFTs to create cars within the game that you can then race.“
Armstrong highlights that if popular video games ever start featuring the use of NFTs, Phantasma is currently at the forefront of being able to provide them with the service.
“Just imagine if Fortnite or one of those other popular games implements NFTs for users. Such a system could be huge and Phantasma is the top platform that can actually deliver that to reality.”
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Featured Image: Shutterstock/Anastassiya Bezhekeneva
Another wave of selling pressure hit the cryptocurrency market on Feb. 23 as Bitcoin struggles to reclaim the $49,000 level.
Data from Cointelegraph Markets and TradingView shows that Bitcoin fell under intense pressure in the early trading hours on Tuesday and this pushed the price of BTC as low as $44,927 before buyers arrived to stop the descent.
The majority of altcoins and DeFi tokens are now even deeper into their double-digit losses and Bitcoin (BTC) price has dropped by more than $10,000 in the past 48 hours.
BTC/USDT 4-hour chart. Source:TradingView
At the time of writing, BTC is trading at a price of $48,600, which reflects a 11% decrease for the day but according to Cointelegraph analyst Marcel Pechman, pro traders have looked to buy the dip and opened new leveraged long positions.
Today’s market downturn has overshadowed several positive developments for the cryptocurrency ecosystem, including the news that Bitfinex and Tether have settled their case with the Office of the New York Attorney General and agreed to pay $18.5 million for damages to the state of New York. Both parties also agreed to submit to periodic reporting of their reserves.
Interest in the first Bitcoin ETF in North America has also continued to explode as the Purpose Bitcoin exchange-traded fund has grown to $564 million in assets under management just five days after the fund was launched. Filings also show that the fund added 2,251 BTC being added to the fund on Feb.23.
Pullbacks are a sign of a healthy market
Despite the market-wide carnage, many crypto traders and professional investors view the current pullback as a necessary break that allows overbought assets to retest key underlying support levels.
As pointed out by Twitter user ‘Bitcoin Archive’, corrections like these are par for the course and were commonplace during the 2017 bull market which had “9 dips between 20-40%”. Despite these reoccurring deep corrections the market still increased by “20 times from its previous all-time” high over the course of 2017.
Significant BTC price pullbacks during the 2017 bull run. Source:Twitter
Summing up how that relates today and where BTC is headed, Bitcoin Archive stated:
“We are now sitting on 2.35x the previous cycle ATH OF 20k. This rally is just getting started”
Traditional markets rebound
Traditional markets also faced early selling pressure on Tuesday morning but they were able to climb back into the green shortly after Federal Reserve Chair Jerome Powell reaffirmed that the Fed will maintain the current accommodative policies, including keeping benchmark rates near zero and asset purchases at the current pace of $120 billion per month.
By the closing bell the S&P 500 and Dow managed were up 0.13% and 0.50% respectively, while the NASDAQ closed down 0.50%.
Altcoins take a beating with recent high flyers hit the hardest
Bitcoin’s $13,000 drop over the past 48-hours has taken a heavy toll on the altcoin market and many of the recent high-flying DeFi tokens took the brunt of the damage.
Crypto.com Coin (CRO) saw a 33% pullback and Binance Smart Chain’s Venus (XVS) DeFi protocol saw its price drop 24% to trade at $58.63.
A select few projects were able to buck the trend and post positive gains on Feb. 23, as new announcements about blockchain interoperability-related projects provided a well-needed lift to tokens focused on layer-2 and cross-chain transactions.
Solana (SOL) rose 11.23% to trade at $14.94 after the release of its new automated market maker protocol Raydium. Fantom (FTM) price also rallied by 24% after the team announced a collaboration with Yearn.finance and the rollout of a cross-chain bridge to the Ethereum (ETH) network.
BTC/USD daily chart. Source:Coin360
The overall cryptocurrency market cap now stands at $1.44 trillion and Bitcoin’s dominance rate is 62%.
Elon Musk’s net worth is indirectly linked to the price of Bitcoin because Tesla owns a lot of BTC.
The Tesla CEO has been downgraded to the world’s second-richest person as Tesla stock prices have slid.
With Bitcoin in the midst of a major market correction, billionaire Elon Musk has seen his top spot on the list of world’s richest people revised downward.
After briefly nabbing the top spot on the Bloomberg Billionaires Index of the world’s richest people in January, the Tesla CEO today was overtaken by Amazon founder Jeff Bezos.
Musk, now worth a mere $183 billion to Bezos’s $186 billion, can blame Bitcoin.
The South Africa-born businessman is the largest stakeholder in the electric car company he runs, controlling an estimated 241 million shares,according toBarron’s. Tesla stock prices have been in ludicrous mode since the fall, zooming up from a price of $408 on November 16 to a high of $883 on January 26.
But thenTesla bought $1.5 billion in Bitcoin. Since the purchase was revealed on February 8, share prices have dropped $863 to $709. That equates to about $36 billion less that Musk personally can count toward his net worth.
Tesla’s BTC buy has been a boon for the price of the cryptocurrency, however. On the morning of February 8, the price of BTC was $39,000; in the following two weeks, it ticked all the way up to an all-time high of $58,000. The price bump netted Tesla anestimated $1 billion+ in profit, according to analysis from investment firm Wedbush Securities.
Or it would have if Tesla had cashed out yesterday. Bitcoin has shed $10,000 off its price tag in the last 24 hours. In the process, it’s taken some of the luster off Tesla’s purchase.
Despite the lack of correlation between Tesla and Bitcoin price movements to date, Wedbush analyst Dan Ivessaid in a notetoday that Tesla’s stock price is “heavily tied” to Bitcoin—or, at least, will be moving forward. Nonetheless, his feeling, per aninterview yesterday withYahoo Finance, is that Bitcoin isn’t yet fully “being factored into the price.”
If and when that does happen, we may very well see the volatile Musk moving all over the list of richest people, his company’s fortune tied to an even more volatile currency.
Financial services outfit Square just announced it has picked up more Bitcoin.
Square “has purchased approximately 3,318 bitcoins at an aggregate purchase price of $170 million,” the company said in a public statement on Tuesday, adding:
“Combined with Square’s previous purchase of $50 million in bitcoin, this represents approximately five percent of Square’s total cash, cash equivalents and marketable securities as of December 31, 2020.”
Bitcoin (BTC) has fallen significantly this week so far, dropping below the $50,000 mark after tapping a record high past $58,000, based on TradingView.com data. Based on the $170 million sum Square swapped for about 3,318 BTC, the outfit looks to have paid an average of $51,235 per coin on its new investment.
“Aligned with the company’s purpose, Square believes that cryptocurrency is an instrument of economic empowerment, providing a way for individuals to participate in a global monetary system and secure their own financial future,” Square noted in the statement. “The investment is part of Square’s ongoing commitment to bitcoin, and the company plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis.”
Square bought $50 million worth of Bitcoin in 2020, which it announced last fall.
Square’s statement also included an unveiling of its 2020 financial documents. Twitter CEO Jack Dorsey also serves as CEO of Square. Dorsey recently donated a Bitcoin to a non-profit aimed at Bitcoin technical progress.
Brave has published the specifications for version 2.0 of its privacy-focused, cryptocurrency-powered web browser.
Brave Improves Decentralization
Brave plans to add a new native Ethereum wallet to replace its built-in cryptocurrency wallet. That wallet will hold Brave’s BAT tokens, distributed to users as a reward for viewing advertisements.
Brave additionally plans to introduce a decentralized exchange (DEX), which will allow users to swap tokens from within the browser. That DEX will offer discounted fees to BAT holders, support for liquidity providers, and layer-2 scaling features.
Other assorted features include support for NFTs and DeFi applications, BAT as a method of fee payments, a new wallet for mobile devices, fiat-to-BAT onramps such as card and bank payments, and a redesigned user experience (UX).
Finally, Brave plans to integrate its BAT token with search engines, e-commerce sites, IPFS file hosting, and VPNs, though these features are still being researched.
Will Brave Be Fully Decentralized?
Brave has historically been criticized for the fact that BAT rewards can only be withdrawn through Uphold, a service that requires users to identify themselves through KYC procedures.
Today’s news implies that there will no longer be any KYC for withdrawals. However, the exact degree of control that the project will maintain over BAT token payouts is not entirely clear.
Presumably, Brave will continue to limit payouts based on the number of devices in use; currently, users can only earn BAT through four profiles at once. Geographic limitations also prevent users in some areas from seeing ads and earning BAT as well.
When Will 2.0 Arrive?
Braves’s latest update says that the improvements listed above will be introduced in the next 12 to 18 months, meaning that users will be able to take advantage of the benefits quite soon.
Though Brave has a small market share, its popularity is on the rise. It currently attracts more than 20 million monthly active users; that number is projected to grow to 50 million by the end of 2021.
At the time of writing this author held less than $75 of Bitcoin, Ethereum, and altcoins.
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Looking Back on 2020 and 2021 Predictions
Happy New Year from all of us at Crypto.com Research! 2020 was an unprecedented year for the world and for crypto. Before we fully plunge into 2021 predictions, we will…
Though many Texans are still suffering in the aftermath of a winter storm that left millions without power and running water for days, it’s unlikely that the crypto mining farms in the state played much of a role during the crisis.
Speaking to Cointelegraph, Kristy-Leigh Minehan, a mining consultant and chief technology officer of NEM Software, said Texas doesn’t currently have enough mining infrastructure to cause significant problems in the power grid when compared with that of major regions like Sichuan.
According to Minehan, German Bitcoin (BTC) mining operator Northern Data is likely the only one that could have had a significant impact on the state’s power supply. The firm owns a mining farm in East Texas, with others like HODL Ranch and Layer1 out in West Texas. The mining expert added that there were some farms largely not dependent on the state’s energy grid at all, like those that use excess gas formed as a byproduct of mining oil to power their rigs.
“A lot of these companies also have a lot of not just generators — they have a lot of renewable storage to play with, just in case,” said Minehan.
The effects of a disaster in Texas or the Southern United States on the Bitcoin hashrate is almost statistically insignificant when compared to one in China, whose miners control more than half the network’s hashing power. Minehan noted that the BTC hashrate only dropped roughly 10 TH/s during the recent snowstorm, which isn’t markedly more than the typical 5 TH/s fluctuations on a day-to-day basis. Blockchain data shows that hashrate fell from 160 TH/s on Feb. 11 to 150 TH/s following the coldest night of the winter storm.
Minehan opined that it was unlikely for mining farms in North America to have a larger effect on the hashrate without access to the right hardware. She said a major industry player like Intel getting deeper into developing mining chips could potentially turn the tide, but right now it seems like China will remain the stronghold.
You’ve probably already heard about Taproot, the new proposed soft-fork upgrade for Bitcoin, which will introduce a new signing algorithm and an enhanced, more private and flexible scripting mechanism.
Now, while Taproot has been discussed for a long time, and its code has already been merged to Bitcoin Core, the actual upgrade has not yet taken place. That is, the changes were not yet activated and enforced by the network. The biggest question still left is how to coordinate the activation.
Coordinating Changes To Bitcoin
Why is coordination so important to get right? Well the way that Bitcoin soft forks work is that they introduce new rules to the consensus protocol, i.e., the rules by which a node decides whether a block is valid or not. This means that, in theory, if a node activates a soft fork alone, it finds itself at risk of rejecting blocks that all of the other nodes still accept, essentially forking itself off to another chain that no miners work on, and no users want to transact on.
Now, if a small portion of the nodes coordinates to activate a soft fork, they will find themselves at the same risk as above. They would still be able to transact with one another, assuming at least some miners will still dedicate work to mining its blocks, but they will lose a large part of the mining power, which will still be working on the un-forked chain, making their own fork less useful — since other nodes will not accept its transactions — and more vulnerable to 51 percent attacks.
It is only when the economic majority (nodes actively used for payment verification) of the network coordinates to enable the soft fork together that miners also find themselves at risk — as not upgrading means they might be working on a block which most users will reject, therefore making them waste resources on trying to get a mining reward which no one will accept.
Still, even when the economic majority of the network nodes has successfully coordinated and activated a change, if a significant portion of the miners insist on not enforcing the new rules and will not activate the soft fork, the risk of losing, at least temporarily, a large portion of the securing hash power, is imminent. The “game theory” makes this the most undesirable outcome for all sides — miners risk losing money by mining blocks that the nodes will reject, and the nodes of the network risk loss of hash power and making their chain more vulnerable to attacks.
Since all sides wish to avoid this scenario, great efforts are invested in coordination, ensuring both nodes and miners are ready and willing to activate a soft fork.
You may recall from the drama of the SegWit soft fork activation, when agreement between large portions of miners and those running nodes couldn’t be achieved, how miners were eventually economically forced to comply with the demands of the network to activate SegWit, as many were losing a fortune trying to resist the fork.
While this was a great live demonstration that the power of Bitcoin ultimately belongs to the users, rather than the miners — whose role is of service providers rather than managers — no one suggests that this was a desirable process. Miners lost billions trying to resist the users demands, while the users lost a large factor of security for a while by rejecting the blocks of the non-upgraded miners. Not to mention the overall confusion which arose from the whole situation for months.
LOT: Moving Forward With Taproot
Fortunately, the activation of Taproot is not nearly as controversial as that of SegWit, if it is controversial at all, and practically no notable objections have been raised from either the users or miners. Still, it is very important to get this upgrade process right, as to make the transition as safe and harmless to Bitcoin as possible.
The process chosen for the activation of Taproot is one which is detailed in BIP 8 (Bitcoin improvement proposal 8). In short, the process works by setting a required threshold of supermajority (typically around 95 percent) of the miners to signal via special data in the blocks they produce that they have upgraded and are ready to activate the change. If the said threshold is reached, a final period of about two weeks (2,016 blocks, one difficulty adjustment) will start, after which the soft fork will be activated and the new rules enforced. This mechanism also includes an “expiration” option, where if the required threshold was not met after a certain block height was passed, the activation process will be cancelled and considered to have failed.
So far, this mechanism is nearly identical to the one previously used for soft forks that is BIP 9. However, the process of BIP 8 include another possible option, which could be either set to true or false (used or not) called “lockinontimeout” (LOT).
This option, when set to true, will introduce a different path in case the miner signalling threshold was not reached before the expiration time. Instead of failing, lockinontimeout will force the move for activation to go forward — essentially acting as a deadline instead of an expiration date. In this case, the nodes running the activation process will start rejecting any blocks which do not signal readiness for the upgrade. This will force the chain to reach the threshold (as only signaling blocks will be included) and the next difficulty adjustment period will be the “locked in” period — the last before activation. In short, LOT would trigger a user-activated soft fork (UASF) in the case that miners refuse to act, similar to how SegWit was activated.
See Also
The Controversy Over LOT By Default
While it was decided that the path for activating Taproot will be the process of BIP 8, the debate over using LOT is still ongoing. A recent discussion held on February 16 suggests that a majority of the Bitcoin Core developers would prefer not to enable the LOT option by default. The main objection for the use of LOT being that if the activation of Taproot really is not controversial, as most indicators suggest, the use of LOT will be unnecessary, while if it does end up being controversial, it should fail rather than be activated. It is further argued that it is the role of the Core developers only to propose changes, but by enabling LOT, at least if they do so by default, they will be taking a more aggressive stance than mere proposing, and will be actively pushing toward the protocol change — which is beyond the scope they should act within.
However, when asked during the meeting if they would insist on their original preference, a slight majority in favor of enabling LOT seemed to form. The main claim for supporting the use of LOT was that Taproot has been thoroughly discussed and approved by the community for a long time, and that there’s no reason to let it fail because a small minority of the miners might simply not bother to upgrade — knowing that no harm will happen to them if they just ignore the activation and let it quietly fail. With LOT, miners will not be able to afford ignoring the change and will be forced to actively act as the users demand. In addition, it is said that if Bitcoin Core itself will not offer the signalling for LOT, someone else will fork its code, enable the option and a large portion of the users (node operators) will move away to the forked software. Needless to say, such a scenario is very probable, as we learned during the SegWit activation process, and will make a risky chain split all the more likely.
It is still unclear which approach will eventually be taken, with developers from both sides insisting on their points quite strongly. But it’s worth stressing that whichever choice ends up in Bitcoin Core, it is not in any sense “binding” for Bitcoin as a network. Bitcoin Core is just an implementation of the code for interacting with the network, and as mentioned above, it is possible for anyone to copy the code, make a change to that setting and offer users a different choice regarding the issue.
For this reason, it is very important for anyone running a node to try and understand the discussion. The Core developers’ decisions are always nothing more than recommendations, while the final decisions are made by each node operator and the code according to which they validate their transactions.
For more follow up on the process and planned schedule for Taproot activation, check out the designated page on the Bitcoin Wiki.
This is a guest post by Ben Kaufman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
After more than two years of legal battle and investigation, iFinex and stablecoin issuer Tether have agreed to an $18.5 million settlement with the New York Attorney General’s office (OAG) today while admitting to no wrongdoing.
Originally promoted by findings stemming from a 2018 investigative subpoena, the OAG alleged in 2019 that cryptocurrency exchange Bitfinex used funds from Tether, both of which are run by iFinex, to obscure some $850 million in customer funds losses caused by mismanagement or malicious action by payment processor Crypto Capital.
Bitfinex and Tether have endured a long-standing public relations and legal battle to maintain consumer confidence since the OAG allegations have stoked rumors that tether printing is fraudulent.
Now, in an agreement announced by the OAG, iFinex, Tether and related entities will have to cease trading activities with residents of New York and will have to pay the $18.5 million in penalties, as well as undertake processes to increase transparency such as mandatory reporting on business functions and public disclosures of the assets backing tether.
Ultimately, OAG found that Tether misrepresented the backing of its stablecoin.
Tether Misrepresented USDT Backing
“The OAG’s investigation found that, starting no later than mid-2017, Tether had no access to banking, anywhere in the world, and so for periods of time held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations,” per the announcement. “Tether published a self-proclaimed ‘verification’ of its cash reserves, in 2017, that it characterized as a ‘good faith effort on our behalf to provide an interim analysis of our cash position.’ In reality, however, the cash ostensibly backing tether had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’”
OAG found also that, as of November 2018, tethers were again no longer backed one-to-one by USD in a Tether bank account.
See Also
iFinex Was Misleading Clients
The OAG announcement also noted that its suspicions about Bitfinex and Tether obscuring the loss of $850 million in user funds by Crypto Capital turned out to be true.
“On April 26, 2019 — after the OAG revealed in court documents that approximately $850 million had gone missing and that Bitfinex and Tether had been misleading their clients — the company issued a false statement that ‘we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded,’” per the announcement. “The reality, however, was that Bitfinex did not, in fact, know the whereabouts of all of the customer funds held by Crypto Capital, and so had no such assurance to make.”
As a purported stablecoin, tether is often contrasted with bitcoin as a remedy for the latter’s price volatility. Tether tends to fuel misunderstanding about Bitcoin and cryptocurrency in general, and its possible that the revelations from this legal saga will inform current and future users about the inner-workings of USDT and when to remain skeptical.
In its quarterly earnings statement, Square today revealed it has bought even more Bitcoin.
Its October purchase plus its latest buy amount to 5% of its total cash.
Square is also expected to reveal its earnings from Bitcoin trading in Q1.
Payments company Square is loading up on more Bitcoin.
In its Q4 earnings announcement on Tuesday, the payments company said it has purchased approximately 3,318 Bitcoins at an aggregate purchase price of $170 million.
That’s on top of the4,709 BTC it boughtin October 2020 at $50 million as an asset for its balance sheet. That purchase—along with MicroStrategy’s aggressive Bitcoin buys—arguably helped prompt Tesla’s $1.5 billion entry into the market. The price of Bitcoin has more than quintupled over the past four months.
The two Bitcoin purchases combined total 5% of Square’s total cash as of December 31, 2020, the company says.
Square “believes that cryptocurrency is an instrument of economic empowerment, providing a way for individuals to participate in a global monetary system and secure their own financial future,” Square says in its release. “The investment is part of Square’s ongoing commitment to bitcoin, and the company plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis.”
In its full earnings report, expected Tuesday afternoon, the company will also reveal its Q4 Bitcoin revenue and profit from trading in its Cash App. It has seen strong numbers from bitcoin trading, reflect a growing taste among retail investors for Bitcoin and other cryptocurrencies, as the price of Bitcoin surged from $10,500 to $28,600 in the third quarter.
The Cash App is a competitor to Venmo, Zelle, and other person-to-person payment apps. It differentiates itself, in part, by allowing customers to buy stocks and Bitcoin, similar to Robinhood.
The P2P service has been up and running since 2013 but only introduced Bitcoin buying and selling in 2018—a tad late for the December 2017 bull run, but very early for the current one.
Cash App is generally free for customers. Its business model is to charge merchants a percentage of each transaction. It also charges individuals to transfer funds more quickly or to make payments with a credit card, instead of via debit.
Bitcoin purchases, however, work differently. According to the Cash App website, it charges a service fee and “an additional fee determined by price volatility across U.S. exchanges.”
Square cites that volatility for its decision to deduct Bitcoin revenue from its overall earnings. Nonetheless, those small margins—applied tomake sure it’s not losingon any individual trade—have added up into the billions as new investors stream into a bullish Bitcoin market.
Editor’s note: This story is developing and will be updated.
