Square Moves Into the Bitcoin World

Mike: Anyway, let’s get on to talking about the week in tech! And with that, why don’t we start off with Bitcoin? Square, the micropayments processing company co-founded by Jack Dorsey, recently started letting a small subset of users purchase Bitcoin using one of the company’s consumer-facing apps, Square Cash. It’s primarily a peer-to-peer money transfer service, but Square is dabbling in ways to make money from the app.

Now, you’ve written a bit about Square over the past year, including how the company was set to surge past the market cap of Twitter, Dorsey’s other beloved company. What should I make of this move? Is it something significant for the business or, alternately, is it a significant moment for Bitcoin? With all the daily vacillations in Bitcoin value, it’s hard for me to know if the currency is in a stable, real place with normal people or if it’s still a flight of fancy.

Nathaniel: Square’s stock jumped after this Bitcoin news got out. It reminds me a bit of the British company that saw its shares jump 400 percent last month after it simply added the word “blockchain” to its name. (For those tech readers who have successfully ignored all of this craziness, blockchain is the database technology that Bitcoin introduced.)

It seems hard to dispute that this is a very bubble-y moment for Bitcoin and all the blockchain and virtual currency stuff that have spun off it. A lot of the people buying right now probably don’t have a terribly strong thesis about why the technology matters — they just see it going up and want to get in on the action.

Bitcoin’s position as a new kind of global online gambling parlor has been particularly apparent in South Korea and Japan, which have risen out of nowhere over the last six months to become the largest markets for virtual currency trading. When I was asking around about this a few weeks back, I kept hearing how virtual currency trading fit neatly in countries where ordinary people have long speculated on foreign currencies. It’s worth keeping this in mind for anyone thinking of buying a Bitcoin through Square Cash.