While Bitcoin flutters between being viewed as a store of value or a digital currency, veterans of the FinTech space, payments companies like Square, Skrill, PayPal and Circle are firmly honing in on driving the Bitcoin revolution.
We have seen this before though. Payments companies have followed the way of thinking that banks had when it came to Bitcoin; and to unashamedly quote Mahatma Gandhi, ‘First they ignore you, then they laugh at you, then they fight you, then you win.’
Banks began seeing cryptocurrencies as a non-event, then they decided to laugh at it - Jamie Dimon’s anti-Bitcoin rhetoric springs to mind - then they began fighting it by putting out their own coins - JPM coin - which I think we can all call a win for Bitcoin.
For payments companies, it has been a similar path, except I would add another step in there as the likes of Square, Skrill and Circle are actually starting to champion Bitcoin and are backing the digital currency to be the next big thing in the payments space.
News has flooded recently about Square and its cryptocurrency and Bitcoin dealings. The payments company, that is headed up by Twitter CEO and Bitcoin-believer Jack Dorsey, has said it plans to “improve money.”
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This is being championed by a dedicated cryptocurrency branch, which recently tweeted that it is “close to making our first hire.” What is important to tie to Square’s drive towards cryptocurrency is that they are not looking to go their own direction, but seem to have realised the best option is Bitcoin.
Steve Lee, a project manager at Square Crypto even made a number of recent remarks during an “ask me anything” (AMA) session via Twitter that solidify the company’s emphasis on Bitcoin.
Dorsey has said previously that they will be focusing on developing the crypto ecosystem in general, and that the company taking steps to improve infrastructure for all. However, Lee’s recent comments seem to point towards Bitcoin being at the center of this drive.
When looking deeper into Square’s move towards cryptocurrency, one can quickly get an understanding as to why a payments company like them would want to be at the forefront of this push towards Bitcoin.
Earlier this month, Square reported its second-quarter earnings, revealing $125 million in Bitcoin sales through its Cash App, nearly doubling a record first quarter. Their decision to adopt Bitcoin into their offerings is paying off, and paying off at an exponential rate so for them to grow and expand this ecosystem is a no-brainer.
Jumping on the bandwagon
Still, further afield from the US is European payments company Skrill, which has opened up a tab on its platform to enable the buying and selling of Bitcoin and other cryptocurrencies through its custodianship.
Adoption of cryptocurrencies are starting to reach critical mass, and accessing them is only getting easier through these payment companies . Skrill boasts 40 million users and by integrating their Bitcoin buying and selling services, a huge base of people looking for alternative payment solutions separate from banks are exposed.
Skrill is part of a billion-dollar multinational payments group called PaySafe, based in London with that parent company also pushing Bitcoin and cryptocurrency adoption through a partnership with American cryptocurrency exchange, Coinbase.
It was through this partnership that Coinbase was able to roll out its cryptocurrency cards to those in the UK with both firms obviously keen to see the use of cryptocurrencies for payments be as simple as fiat currencies.
One name missing from this drive for Bitcoin adoption in the payments sphere is PayPal, who to be fair are not totally removed. PayPal joined a Series A investment in Cambridge Blockchain, a startup working to give individuals a way to own their own online identities without the need of middlemen like Facebook, in April.
They are also part of the Libra Association, aiding Facebook to bring its cryptocurrency to the masses. However, their interest in the ready-to-go digital currency solution that is Bitcoin seems very minimal.
Calling for regulation
One big aspect that these payments companies will also be weary of, and considering all the time, is the regulatory direction governments are going. Currently, in the US, there are a number of hearings in the Senate that could be setting the stage for how far cryptocurrencies will be regulated.
Some are fearful of the US government being to harsh on this innovative technology. Ripple CEO Brad Garlinghouse even wrote an open letter asking for Senate not to “paint us all with the same brush.”
Moreover, Circle, another payments company that is champion the use and growth of Bitcoin and other cryptocurrencies, has put itself in the firing line for the Senate.
Circle’s CEO, Jeremy Allaire, was the lone crypto-industry representative who testified before the Senate Committee on Banking, Housing and Urban Affairs during a hearing titled, “Examining Regulatory Frameworks for Digital Currencies and Blockchain.” earlier this week.
He spoke to Bloomberg afterwards saying that he fully believes that the cryptocurrency space needs to be regulated, not only for the protection of the industry, but to boost the US and its role as a leading technological super power.
“The increase in proliferation of digital asset projects outside the U.S., the movement of companies to leave the U.S. and projects to get started outside the U.S. is definitely getting people’s attention,” Allaire told Bloomberg.
“I think it is ultimately going to lead to, ultimately legislative initiatives to try and ensure that there are appropriate safeguards and investor protections but also clarity, which is much needed to allow the technology and industry to flourish.”
A payments base
Blockchain has been gaining huge momentum within enterprises for its ability to increase efficiency. In banking, both blockchain and cryptocurrencies are getting institutional boosts, especially for the ability to move value across borders, but primarily in the form of permissioned blockchains.
However, it is the payments companies, who were innovative enough to break away from banking payments when they first came to markets, who are now breaking more boundaries with Bitcoin.
These companies are institutional enough now to be trusted, but innovative enough not to be afraid of Bitcoin. Potentially, this is where Bitcoin’s mass-adoption fate will be realised.