By Arun Kumar Shrivastav
Two days after his departure from Twitter as its CEO, Jack Dorsey has announced the change in the name of his other company Square that he founded in 2009 and has been its CEO since 2015 when the company was listed on the New York Stock Exchange. Square at current market prices is valued at $96 billion in contrast to Twitter’s $34 billion and is the 160th most valuable company in the world.
The new name, Block, which comes into effect on December 10, gives away Dorsey’s intent in no uncertain ways. He wants to integrate this hugely successful financial payments system into the emerging blockchain and cryptocurrency industry. Dorsey’s fascination with bitcoin is no news. In the last five years, he has emerged as one of the most powerful adopters of bitcoin.
Addressing the issue of long transaction time and the high cost of bitcoin transactions, he supported Bitcoin Lightning Network, a layer-2 solution that would improve the transaction time and charge much less. A layer-2 network is hosted on the main network such as bitcoin or ethereum, and works as a sidechain providing transaction validation services, among others.
This takes the load off the main network which experiences network congestion due to an increase in traffic. A layer-2 network provides faster and cheaper transactions and ends up helping the host network achieve scale. His support came through a unit of Square, called Square Crypto, which is now going to be rebranded as Spiral.
Square’s popular Cash App now has bitcoin functionality and Twitter has Lightning-based tipping services. These are examples of how bitcoin occupied Dorsey’s mindscape in the years running up to his resignation as CEO of Twitter.
Square has a formidable user base built around its consumer app and small business checkout system. Initially, it offered card reading services that make credit card payments through mobile phones possible. Over the last decade, it added many services in the space of banking and finance. Now, Square has grown into a significant player in the financial payments system. Till two days ago, Dorsey had been the CEO of both Twitter and Square. Now, he has decided that Twitter can move away from its founders.
With a huge userbase and financial success as its foundation, Square can chart out a blazing new path of success and Dorsey can take off to a trajectory that he alone can define. What does it mean? Dorsey is now working to improve the user experience for Square customers and he is going to do this through bitcoin, blockchain, and the metaverse. Does that sound exciting? Definitely to Square customers and investors.
But hasn’t Facebook, too, announced something similar? Yes, on October 28, Facebook announced a new name for the company that owns Facebook, WhatsApp, and Instagram. Compared to the high-decibel announcement of Meta by CEO Mark Zukerberg, Dorsey has kept the rebranding exercise low-key.
But a closer look at the evolving scenario seems to have Dorsey and Zukerberg pitted for a close contest over their respective claims to a bigger share of the Metaverse.
Facebook’s transition to Meta doesn’t bring any substantial financial gains to the company. It is going to be a natural evolution of a social media platform into what now seems to be a new reality – Bitcoin, blockchain, digital avatar, blockchain-based businesses, gaming, and entertainment. But there are no cash projections about how these add-ons are going to benefit the company.
In contrast, Square is a successful financial payments business, recording a net profit of $213 million in 2020. Now, it is going to add more features drawing from Dorsey’s 5-year-long association with the bitcoin experiment. Dorsey is going to wow his customers at Square with new bitcoin-coated exciting offerings.
The makeover of Facebook into Meta seems more geared to silence the critics who think Facebook is soon going to be outdated with the emergence of blockchain-powered social media platforms, as part of a complete ecosystem where native coins and smart contract capabilities will rule.
Dorsey’s entry to metaverse looks more sure-footed than many important players who have embraced crypto and blockchain.
The world already has Tesla and SpaceX CEO Elon Musk, the richest man in the world, neck-deep into crypto. He set off a bullish trend in crypto with his announcement to buy bitcoin worth $1.5 billion in January this year. The bull-run on crypto exchanges saw bitcoin coming in a striking distance of $70,000 last month and making other coins appreciate by. Throughout the year, he kept the market on a boil with his tweets. Later the same year, Zukerberg took everyone by surprise with his decision to drop Facebook as the brand name of his company. Now, Square, too, will be part of history and it will be known as ‘Block’.
Welcome to the brave new world of bitcoin! (IPA Service)