Patrick is an accounting & economics graduate, a Cryptocurrency enthusiast, and a Blockchain technology fanatic. When not crafting informative pieces on any of the above subjects, he will be researching on how the Blockchain technology can transform the world, particularly the financial space.
Square’s proposed hardware wallet might be a game-changer and a driver for crypto adoption.
On Friday, Square director Jack Dorsey, who’s also the chairman and creator of Twitter, said that his company is highly weighing the options of creating a Bitcoin hardware wallet that will provide total control over the cryptocurrencies users own. Following Dorsey’s comments via a tweet, the shares of the company, Square Inc (NYSE: SQ), rose by 2.7% but eventually closed the day at 1% higher compared to the previous day, Thursday.
Square is considering making a hardware wallet for #bitcoin. If we do it, we would build it entirely in the open, from software to hardware design, and in collaboration with the community. We want to kick off this thinking the right way: by sharing some of our guiding principles.
— jack (@jack) June 4, 2021
Bitcoin trades and transactions are now a major source of revenue for Square. The company gives consumers an opportunity to make cryptocurrency purchases through CashApp and even store it digitally. According to 2020 performance data, the company’s Bitcoin sales grew from $516 million in 2019 to end the year at $4.75 million as of the end of 2020. Dorsey’s proposals seek to eliminate the aspect of control by third parties including Square.
Building of the Proposed Wallet
The new hardware will enable users to keep their digital coins securely and decide when to use it. Square however appears unsure of their timelines. Dorsey suggested that if the project takes off, they will strive to ensure the whole process is transparent and inclusive by building it openly, which includes the software and hardware design while collaborating with the community. Dorsey further took time to explain how the proposed product will differ with the current alternatives, noting that most BTC buying exchanges probably have the best intentions while addressing security issues.
Challenges and Disadvantages of Current Exchanges
Even with the good intent, circumstances reveal that custody isn’t controlled by customers, which generally works out like an “IOU”. He further noted that considering how some exchanges operate, taking custody and enhancing the security of your BTC is rather complicated.
A classic example is PayPal, which will allow you to purchase BTC but retain control of the private key. The whole process works more like an IOU at the end of the day. On top of that, PayPal prohibits the movement of Bitcoin to external wallets.
Advantages of the Proposed Hardware Wallet by Square
Crypto hardware wallets have been around for some time, so the concept isn’t new, blockchain phones are currently in the market. However, Square’s proposed hardware wallet might be a game-changer and a driver for adoption. This is particularly so when fintech companies such as Venmo have gladly embraced blockchain technology. A hardware wallet would also make it easier for the average customer to learn about bitcoin in a friendly way. Dorsey said that once the project kicks off, Twitter and GitHub accounts focusing on the project will be set up.