Financial commentators tend to lean bullish on Square (NYSE:SQ) stock as a targeted bet on the future growth of digital payments. I see this as a perfectly reasonable position, as millennials seem willing to give Square’s Cash App a chance in a sphere once entirely dominated by the likes of Visa (NYSE:V) and Mastercard (NYSE:MA).
However, I believe there’s more to the story.
Millennials and other demographic segments are becoming more aware of cryptocurrency, and Bitcoin (BTC) in particular. So, unlike the stodgy, payment-processing companies that have hesitated to embrace Bitcoin as a viable currency, Square is preparing for a blockchain-powered world right now. With that said, a position in Square stock could be a serious moneymaker if this gambit succeeds.
Love Bitcoin? Then You Should Like Square Stock Too
When I’m on Internet forums, I sometimes get the feeling that investors divide into two mutually exclusive camps; Those who invest in stocks, and those who buy or “HODL” (hold on for dear life) cryptocurrency. The dividing line isn’t necessarily generational, but I’ve observed that younger investors seem more willing to give crypto a chance.
There’s something to be said for the safety of investing in long-standing Dow Jones components like Visa and Mastercard. However, now that millennials are America’s biggest generation population-wise, investors need to understand that point-of-sale payment processing has changed; and so has the way people perceive money itself.
The U.S. dollar has lost much of its value over the years. With that, Bitcoin has become an attractive alternative currency to open-minded consumers. In this regard, Square got a big head start compared to its old-school rivals. As early as November of 2017, the company’s Cash App allowed its users to buy and sell Bitcoin.
Not everyone wants to open up a Coinbase or Binance account. Therefore, I feel that early Bitcoin integration was a savvy move on Square’s part. The numbers bear this out, as Square’s third quarter 2019 Bitcoin sales totaled an impressive $148 million. This represents a 20% increase in volume quarter-over-quarter, as well as a massive 245% year-over-year increase.
A Job Ad Provides Clues
As a financial reporter, sometimes I gather information from interesting and unexpected sources. In this instance, I discovered a job advertisement on LinkedIn that teases a number of potentially new Bitcoin-friendly Cash App features. If these pan out, Square could end up being miles ahead of Visa and Mastercard in the crypto-integration department.
Along with a six-figure salary range and a daunting list of job requirements that would disqualify 99.99% of the population, the employment ad signals Square’s eagerness to add Bitcoin functionality to the Cash App in 2020:
“The Cash App continues to push the boundaries in finance and Bitcoin sits at the very forefront of these efforts. Cash App’s large and ever-expanding network of customers uniquely positions us to add utility to BTC and to bring Bitcoin to the masses in a user-friendly way.”
Square investors already sensed the company’s crypto-friendly vision. But, it’s still nice to hear it stated so forcefully — and with a tone of commitment that I haven’t heard from Visa or Mastercard. However, it’s the next part of the job ad that indicated the Cash App’s potential upcoming perks:
“[The chosen job candidate] will own the Crypto Investing product and be entirely responsible for growing its adoption in whatever ways you see fit, which could include tried and true growth tactics, new functionality (e.g. limit orders, auto-invest), or building entirely new features like BTC gifting (P2P).”
Whether these Cash App features are actually built out in 2020 is immaterial. Square stock investors, if they’re also Bitcoin devotees, should be excited at the prospect of peer-to-peer (P2P) BTC gifting and auto-invest functionality.
Call me a visionary or a nut, but I can easily imagine a time in the near future when payment processors will have to integrate these types of Bitcoin-friendly features. The fact that Square wants to move in this direction at this early stage is, to me, highly encouraging.
The Takeaway on Square Stock
Maybe you like Bitcoin and maybe you don’t; I can see the merit of both sides of the argument. Overall though, if you’re willing to keep an open mind concerning Bitcoin’s potential to transform the way we use money, then you might consider “HODLing” some BTC; and while you’re at it, some Square stock too.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.