Sebastian Sinclair

As the US earnings season enters its third week, after-hours trading of four prominent crypto-related stocks is beginning to shed light on broader market sentiment toward the sector.



Jack Dorsey&#8217;s Square (SQ), known for its exposure to bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) through its Cash App, experienced a 5.5% drop in after-hours Thursday, shortly after posting its Q2 earnings. 



The company reported substantial growth in its bitcoin sales, which rose to $2.39 billion during Q2, a year-over-year jump of 34%, Blockworks previously <a href="https://blockworks.co/news/block-earnings-cash-app-bitcoin">reported</a>.



Despite its crypto growth, investors have balked, sending its stock tumbling to $69 per share. SQ is down 9% since July 31 but remains elevated year-to-date (YTD) at roughly 13.5%.



Coinbase (COIN), one of the world&#8217;s largest cryptocurrency exchanges, saw a minor dip of 1% in its share price following the closing bell to $89.95. Coinbase&#8217;s Q2 earnings <a href="https://blockworks.co/news/coinbase-earnings-q2">beat analyst expectations</a>, posting a loss per share of 42 cents against the predicted 76 cents.&nbsp;



Still, transaction revenue for the company fell 12.8% quarter-over-quarter to $362 million. COIN remains 164% higher in 2023.



MicroStrategy (MSTR) suffered a 4.3% drop to $389 in Thursday&#8217;s trade, with after-hours trading recovering half a percent, despite a 10% drop over the previous five days.&nbsp;



Q2 2023 revenues reached $120 million, down 1.4% year-over-year. In Q2, the firm, headed by bitcoin bull Michael Saylor, added <a href="https://blockworks.co/news/microstrategy-buys-467-btc">12,333 BTC</a>, pushing total holdings above 150,000 BTC. Year-to-date, MSTR has seen a 169% increase.



Stock trading platform Robinhood (HOOD) saw its crypto trading revenue decline by 18% to <a href="https://blockworks.co/news/robinhood-crypto-revenue-decline">$31 million</a> in Q2, 2023. HOOD was hardest hit on the day, slipping 7.2% and a further 0.5% in after-hours to $11.48.



It comes despite the company reaching GAAP profitability for the first time since its IPO. HOOD remains in the green this year, up more than 40%.



The focus now shifts to those crypto firms yet to report second-quarter earnings. Many of the industry’s major mining companies are expected to post earnings during the second half of this month.



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Crypto stocks stumble in after-hours trading despite mixed earnings

Shalini Nagarajan

Bob Lee, a former chief technology officer of Square and founder of Cash App, has reportedly died after a stabbing in San Francisco.&nbsp;



The San Francisco Police Department <a href="https://www.sanfranciscopolice.org/news/sfpd-investigates-main-street-homicide-23-039" target="_blank" rel="noreferrer noopener">announced</a> Tuesday that a 43-year-old male suffering from stab wounds passed away, but officials didn’t name the victim. However, local media and the CEO of MobileCoin confirmed the news.



Lee was most recently the chief product officer of crypto company <a href="https://blockworks.co/tag/mobilecoin">MobileCoin</a>, where he supervised the firm’s entire product portfolio.&nbsp;



Joshua Goldbard, MobileCoin’s CEO, sent the following statement to Blockworks: &#8220;Bob was a force of nature. Helped to birth Android and CashApp into our world. Moby was his dream: a privacy protecting wallet for the 21st Century. I will miss him every day.&#8221;&nbsp;



The news was confirmed by his friends and colleagues on Twitter, including <a href="https://twitter.com/billbarhydt/status/1643482531533303808" target="_blank" rel="noreferrer noopener">Bill Barhydt</a>, CEO at trading platform Abra, and <a href="https://twitter.com/thatrpb/status/1643486318070996992" target="_blank" rel="noreferrer noopener">Jack Dorsey</a>, CEO at Square, who eulogized the tech executive.



“It’s real. Getting calls. Heartbreaking. Bob was instrumental to Square and Cash App. STL guy,” Dorsey wrote on decentralized social media platform Nostr.



Former Ultimate Fighting Championship fighter Jake Shields, who says he was a friend, <a href="https://twitter.com/jakeshieldsajj/status/1643470001566015488" target="_blank" rel="noreferrer noopener">wrote</a> on Twitter that Lee was in the “good” part of the city and appears to have been targeted in a mugging attack.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I didn’t want to be the one to leak the name but now it’s out Bob Lee is an extremely high profile tech guy so hopefully this will at least bring attention to these problems <a href="https://t.co/YL3wN4UhuB">pic.twitter.com/YL3wN4UhuB</a>&mdash; Jake Shields (@jakeshieldsajj) <a href="https://twitter.com/jakeshieldsajj/status/1643470001566015488?ref_src=twsrc%5Etfw">April 5, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



No arrest has been made in the case as of press time, and the San Francisco police have not revealed further details on the suspect or motive.



“Officers rendered aid and summoned medics to the scene. The victim was transported to a local hospital with life-threatening injuries. Despite efforts by first responders and medical personnel, the victim succumbed to his injuries,” police said.



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Cash App Creator Bob Lee Killed in San Francisco Stabbing

<div id="highlights-block_621843749f993" class="highlights">
 <ul>
 <li>Investors responded favorably Thursday to the strong quarterly earnings, sending the company&#8217;s share price on the ASX to highs not seen in 22 days</li>
 <li>Over 43% of Block&#8217;s fourth quarter earnings came from its crypto peer-to-peer payment service Cash App of $518 million</li>
 </ul>
 
</div>



Shares of merchant payments company Block Inc. (SQ), formerly Square, rose more than 40% Thursday following a strong posting of fourth-quarter profits, partly bolstered by its crypto earnings.



The company announced it had generated gross profit of $1.18 billion for Q4, 2021 — a 47% year-over-year increase, according to its <a href="https://s29.q4cdn.com/628966176/files/doc_financials/2021/q4/4Q21-Shareholder-Letter_Block.pdf" target="_blank" rel="noreferrer noopener">letter to shareholders</a>. 



Of that, Block said its crypto peer-to-peer payment service Cash App generated a gross profit of around $518 million, up 37% year over year, while Square&#8217;s ecosystem generated a gross profit of $657 million.



Square offers small to medium businesses point-of-sales payment registers aimed at accepting credit card payments. Over the years, Block has edged its way into a sector typically dominated by large banks and financial institutions.



Block&#8217;s share price on the Australian Securities Exchange (ASX) rose to a 22-day high of AUD $165 ($118) per share from around AUD $116 ($83), the day prior following the strong posting. It etched out a 42% increase in share value at the peak of trading fervor before cooling slightly.



Shares were last seen changing hands for around AUD $152.50 ($109.38). Block&#8217;s main listing is via the New York Stock Exchange — which closed before its quarterly earnings went live — while its secondary listing is on the ASX.



Following <a href="https://cms.blockworks.co/jack-dorseys-square-to-change-its-name-to-block/" target="_blank" rel="noreferrer noopener">Square’s rebranding</a> to Block in December, the company announced in January it had purchased Australian &#8220;buy-now, pay-later&#8221; firm AfterPay as part of its <a href="https://cms.blockworks.co/jack-dorseys-block-to-list-on-australias-asx-in-first-major-crypto-listing-in-exchanges-history/" target="_blank" rel="noreferrer noopener">move to the ASX</a>. Profit from the fourth quarter did not include earnings from AfterPay.



Share prices had already begun to slump following that announcement in August but began to decline in earnest during a 50-day deterioration in prices from around US$252 per share on Nov. 4, 2021, to around US$133 by the time the acquisition was finalized. 



&#8220;We believe this acquisition will further Block’s strategic priorities for Square and Cash App by strengthening the connections between our ecosystems,&#8221; the company said in its letter. &#8220;Peer-to-peer payments have allowed us to virally grow Cash App’s network and remained the primary driver of customer acquisition in the fourth quarter.&#8221;



The company added that it had introduced a new feature allowing its customers to send fractional shares and bitcoin from their Cash App balances to friends and family in a bid to &#8220;enhance network effects&#8221; via other products.



&#8220;By expanding peer-to-peer capabilities, we see an opportunity to drive network effects across other products within our ecosystem and encourage customers to try new products within Cash App,&#8221; Block said.



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Jack Dorsey’s Block Jumps 42% on Positive Crypto Quarterly Earnings

Jacquelyn Melinek

<div id="highlights-block_61f7ed2931b78" class="highlights">
 <ul>
 <li>“Meta joining COPA means crypto is not a niche,” Max Sills, general manager at COPA, told Blockworks. “It’s a technology that will be depended on by every industry&#8221;</li>
 <li>The non-profit community was founded by Block, formerly Square, Inc. and consists of over 30 members, including MicroStrategy, Kraken, Uniswap, Chaincode Labs and OKCoin</li>
 </ul>
 
</div>





Meta, formerly known as <a href="https://cms.blockworks.co/zuckerberg-says-facebooks-new-name-will-be-meta/" target="_blank" rel="noreferrer noopener">Facebook</a>, has joined a nonprofit community focused on making digital assets open-source in big tech’s latest move into the crypto ecosystem. 



The social media platform joined the board of the Crypto Open Patent Alliance (COPA), which is working to assemble a pool of crypto patents that all members can use in an effort to encourage innovation.&nbsp;



“Meta joining COPA means crypto is not a niche,” Max Sills, general manager at COPA and counsel at Square, told Blockworks. “It’s a technology that will be depended on by every industry.”



Through COPA, <a href="https://cms.blockworks.co/facebook-parent-meta-reverses-crypto-ad-ban/" target="_blank" rel="noreferrer noopener">Meta</a> pledged to not enforce its core cryptocurrency patents against any individual or company, except for “defensive reasons.” This effectively makes its patents freely available for all to use. 



Some of those patents include Meta’s technology that enables the creation, mining, storage, transmission, settlement, integrity or security of cryptocurrencies, Sills said. 



The non-profit community was founded by <a href="https://cms.blockworks.co/jack-dorseys-square-to-change-its-name-to-block/">Block</a>, formerly Square, Inc., and consists of over 30 members, including <a href="https://cms.blockworks.co/microstrategy-buys-1900-more-bitcoins/" target="_blank" rel="noreferrer noopener">MicroStrategy</a>, <a href="https://cms.blockworks.co/kraken-acquires-staking-platform-staked/" target="_blank" rel="noreferrer noopener">Kraken</a>, <a href="https://cms.blockworks.co/?s=uniswap#:~:text=Uniswap%20Delegates%20Consider%20Liquidity%20Mining%20to%20Kickstart%20Ethereum%20Layer%2D2%20Adoption" target="_blank" rel="noreferrer noopener">Uniswap</a>, Chaincode Labs and OKCoin.



Meta representative Shayne O’Reilly, who manages the company’s licensing and transaction group, will join board members from Block and Coinbase. It’s not known who the representative for both companies is.&nbsp;



Overtime, the board will be governed by a board of nine members: three members from crypto companies and six members from other companies.



COPA is a cross-industry effort with a mission of uniting large technology companies like Meta, with financial services organizations, government agencies, crypto-native companies and others to protect crypto innovation.



“Crypto technologies are a public commons that eventually everyone in the world will depend on for transacting value,” Sills said. “Protecting that commons is paramount to its development.”&nbsp;



Here’s how it works: members pool their crypto patents together to form what the organization calls a “shared patent library.” Any member is then free to use the technology behind a patent.&nbsp;



Over the next 12 months, COPA will continue to outreach to big tech, banks and payments companies, Sills said.



“COPA’s goals over time are to double down on minimizing [intellectual property] risk in cryptocurrency, and create more patent protection for our members,” Sills said. 



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Facebook Parent Meta Joins Nonprofit to Make Digital Assets Open Source

<div id="highlights-block_61e0c9487d746" class="highlights">
 <ul>
 <li>Following its merger with buy now pay later firm Afterpay, Jack Dorsey&#8217;s Block will list on the Australian Securities Exchange on January 20</li>
 <li>The move marks a significant first for a crypto-related company to be listed in the country and paves the way for similar companies to feature on the ASX, according to the exchange&#8217;s Group Executive of Listings </li>
 </ul>
 
</div>



The newly merged Block, formerly Jack Dorsey&#8217;s Square (SQ), and buy now pay later firm Afterpay is expected to begin trading on the Australian Securities Exchange (ASX) later this month, marking a major first in the bourse&#8217;s history to list a cryptocurrency-related company.



Following <a href="https://cms.blockworks.co/jack-dorseys-square-to-change-its-name-to-block/" target="_blank" rel="noreferrer noopener">Square&#8217;s rebranding</a> to Block Inc in December, the financial-services company <a href="https://www.afr.com/markets/equity-markets/asx-prepares-for-most-important-listing-in-200-years-20211231-p59l2t" target="_blank" rel="noreferrer noopener">announced</a> last Friday it had bought Australia&#8217;s Afterpay and had concluded a month-long delay for approval by the Bank of Spain on Wednesday.



The merged company is expected to trade via the ASX on January 20 under the ticker (SQ) while Afterpay (APT) shares will be suspended from trading the day before. The move marks a significant first for a crypto-related company to be listed in the country, which was made possible through its purchase of the buy now pay later firm.



Square, which owns the crypto peer-to-peer&nbsp;payment service CashApp, posted earnings exceeding $1.1 billion in gross profits for Q3, 2021, according to a recent <a href="https://s29.q4cdn.com/628966176/files/doc_financials/2021/q3/SQ-3Q-2021-Shareholder-Letter.pdf" target="_blank" rel="noreferrer noopener">shareholder letter</a>. Buy now pay later firms have risen to prominence within Australia in recent years and offer customers the ability to pay for goods and services in installments instead of incurring the full cost upfront.



Caroline Bowler, CEO of Australian crypto exchange BTC Markets, told Blockworks the move was welcome news for the ASX and the Australian blockchain community.



&#8220;The industry here has irreversibly moved forward,&#8221; said Bowler. &#8220;Happily for the ASX, there are a significant number of quality Australian companies in this space. This is an opportunity for the exchange to become a real powerhouse in the sector.&#8221;



Max Cunningham, Group Executive of Listings at the ASX told the <a href="https://www.smh.com.au/business/companies/block-debut-opens-the-asx-gates-for-other-crypto-listings-20220112-p59nmq.html" target="_blank" rel="noreferrer noopener">Sydney Morning Herald</a> on Wednesday, the exchange was establishing a framework for other companies backed by blockchain to debut by the middle of this year.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We are moving on it and our goal is to bring investment-grade opportunities in various crypto asset classes to the ASX in the coming months and years,” said Cunningham.</blockquote>



Cunningham also said his exchange wanted to ensure cryptos had an &#8220;appropriate level of maturity and security&#8221; when they hit the traditional market, according to the report.



The ASX has also been seeking to replace its outdated Clearing House Electronic Subregister System with a blockchain-based one, currently in its testing phase, and is expected sometime in the next two years.



Square&#8217;s shares were down 5.86% by the end of the daily closing bell in the US while Afterpay&#8217;s share price was also down by 7.74% by press time.



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Jack Dorsey’s Block to List on Australia’s ASX in First Major Crypto Listing in Exchange’s History

<div id="highlights-block_61ddbd6adc5e0" class="highlights">
 <ul>
 <li>Cash App is a mobile money transfer service that allows people to send and receive money as well as bitcoin</li>
 <li>Block (formerly Square) developed Cash App; Block’s CEO is Jack Dorsey</li>
 </ul>
 
</div>



Mobile payment service Cash App has added a layer-2 payment protocol Lightning Network to help users transact with bitcoin, according to reports by users.&nbsp;



The feature was rolled out to a handful of users and the Lightning Network feature can be used as “the fastest, free way to pay anyone in bitcoin,” according to <a href="https://twitter.com/yeg0rpetrov/status/1480743605467815945?s=20" target="_blank" rel="noreferrer noopener">screenshots</a>.&nbsp;



At the time of publication, it was not clear how users were selected and how many users have received the new feature.



Cash App was not available for immediate comment requested by Blockworks. But Jack Dorsey, the co-founder and CEO of Block, which developed Cash App, has been acknowledging and <a href="https://twitter.com/ODELL/status/1480927111087104009?s=20" target="_blank" rel="noreferrer noopener">liking</a> tweets on Twitter by Cash App users posting screenshots of their Lightning Network transactions on Cash App.&nbsp;



Dorsey is the former co-founder and CEO of Twitter. Block, <a href="https://cms.blockworks.co/?s=dorsey#:~:text=Jack%20Dorsey%E2%80%99s%20Square%20to%20Change%20its%20Name%20to%20Block" target="_blank" rel="noreferrer noopener">formerly known as Square</a>, owns Cash App, TIDAL and <a href="https://cms.blockworks.co/jack-dorsey-tbd-will-be-open-platform-for-decentralized-bitcoin-exchanges/" target="_blank" rel="noreferrer noopener">TBD54566975</a>, a platform for decentralized bitcoin exchanges being developed by Dorsey.&nbsp;



<h3 class="wp-block-heading">The Lightning Network</h3>



Lightning Network is a decentralized protocol that uses smart contracts on top of blockchain-based cryptocurrencies like bitcoin. Through the network, participants can instantly send, receive or transact payments without creating an on-blockchain transaction for individual payments, according to its <a href="https://lightning.network/" target="_blank" rel="noreferrer noopener">website</a>.&nbsp;



In February 2019, Dorsey said during an <a href="https://stephanlivera.com/episode/52/" target="_blank" rel="noreferrer noopener">interview</a> that rolling out the Lightning Network on Cash App, is “not an if, it’s more of a when.” Nearly three years later, his plans have come to fruition.



Dorsey has recently been an outspoken advocate for crypto and said that bitcoin will <a href="https://cms.blockworks.co/jack-dorsey-says-bitcoin-will-replace-us-dollar-and-you-dont-own-web3/">replac</a><a href="https://cms.blockworks.co/jack-dorsey-says-bitcoin-will-replace-us-dollar-and-you-dont-own-web3/" target="_blank" rel="noreferrer noopener">e</a><a href="https://cms.blockworks.co/jack-dorsey-says-bitcoin-will-replace-us-dollar-and-you-dont-own-web3/"> the US dollar</a>. He has also <a href="https://twitter.com/jack/status/1424854924194729984?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1424854924194729984%7Ctwgr%5E%7Ctwcon%5Es1_c10&amp;ref_url=https%3A%2F%2Fcms.blockworks.co%2Fwp-admin%2Fpost.php%3Fpost%3D12995action%3Dedit" target="_blank" rel="noreferrer noopener">tweeted</a> that bitcoin will “unite a deeply divided country (and eventually world).”



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Cash App Integrates Lightning Network for Bitcoin Payments

Morgan Chittum

<div id="highlights-block_61a7fc9e7319a" class="highlights">
 <ul>
 <li>Shares of the company are down 6.6% </li>
 <li>Square Crypto will change its name to Spiral, according to the announcement </li>
 </ul>
 
</div>



Square Inc. (SQ), the financial-services company co-founded by Jack Dorsey, announced that it will be changing its corporate name to Block Inc.



“We built the Square brand for our Seller business, which is where it belongs,” Dorsey said in a statement. “Block is a new name, but our purpose of economic empowerment remains the same. No matter how we grow or change, we will continue to build tools to help increase access to the economy.”



The payment giant detailed its rebranding, which will go into effect on Dec. 10, in a series of <a href="https://twitter.com/square/status/1466158910067388423?s=21" target="_blank" rel="noreferrer noopener">tweets</a> on Wednesday.&nbsp;



“Block references the neighborhood blocks where we find our sellers, a blockchain, block parties full of music, obstacles to overcome, a section of code, building blocks, and of course, tungsten cubes,” San Francisco-based Square said.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We’re changing our company name so we can give the full <a href="https://twitter.com/Square?ref_src=twsrc%5Etfw">@Square</a> brand to our Seller business. So now we need a name to tie <a href="https://twitter.com/Square?ref_src=twsrc%5Etfw">@Square</a>, <a href="https://twitter.com/CashApp?ref_src=twsrc%5Etfw">@CashApp</a>, <a href="https://twitter.com/TIDAL?ref_src=twsrc%5Etfw">@TIDAL</a>, and <a href="https://twitter.com/TBD54566975?ref_src=twsrc%5Etfw">@TBD54566975</a> together into one. That name is “Block.” Why? <a href="https://t.co/vVSKNnMUU3">https://t.co/vVSKNnMUU3</a>&mdash; Square (@Square) <a href="https://twitter.com/Square/status/1466158910067388423?ref_src=twsrc%5Etfw">December 1, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



As a part of its rebranding, Square Crypto will change its name to Spiral. The company holds roughly $220 million of bitcoin in its treasury, according to <a href="https://www.wsj.com/articles/square-changes-name-to-block-days-after-ceo-jack-dorsey-leaves-twitter-11638394200" target="_blank" rel="noreferrer noopener">The Wall Street Journal.</a>&nbsp;



The news comes just two days after Dorsey <a href="https://cms.blockworks.co/twitter-ceo-jack-dorsey-to-step-down-cto-parag-agrawal-appointed-as-successor/" target="_blank" rel="noreferrer noopener">resigned</a> as CEO of Twitter.



Shares of the company, whose ticker symbol will not change, are down 6.66% on the news.



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Jack Dorsey’s Square to Change its Name to Block

Sam Martin

<div id="highlights-block_617725d07bf3f" class="highlights">
 <ul>
 <li>Square subsidiary TBD looks to build an open platform to create a decentralized exchange for bitcoin</li>
 <li>ETH has outperformed BTC over the last 24 hours, according to TradingView data</li>
 </ul>
 
</div>



TBD, a business created by Square this year, has released its whitepaper for the tbDEX protocol. 



ETH has outperformed BTC since yesterday&#8217;s broader market sell-off. The crypto asset is showing strong similarities to bitcoin in 2017.



NFTs continue to show strength due to falling prices of the assets they are denominated in. 



<h3 class="wp-block-heading">Latest in Macro:</h3>



<ul class="wp-block-list"><li>S&amp;P 500: 4,697, -0.14%</li><li>NASDAQ: 16,057, +0.40%</li><li>Gold: $1,847, -0.62%</li><li>WTI Crude Oil: $76.11, -3.67%</li><li>10-Year Treasury: 1.539%, -0.05%</li></ul>



<h3 class="wp-block-heading">Latest in Crypto:</h3>



<ul class="wp-block-list"><li>BTC: $57,960, +0.56%</li><li>ETH: $4,273, +6.19%</li><li>ETH/BTC: 0.07, +5.09%</li><li>BTC.D: 42.74%, -2.28%</li></ul>



<h3 class="wp-block-heading">Square unveils tbDEX whitepaper</h3>



<a href="https://squareup.com/us/en" target="_blank" rel="noreferrer noopener">Square</a> subsidiary <a href="https://twitter.com/TBD54566975" target="_blank" rel="noreferrer noopener">TBD</a> released its <a href="https://tbdex.io/whitepaper.pdf" target="_blank" rel="noreferrer noopener">tbDEX whitepaper</a> on Friday.



“We believe Bitcoin will be the native currency of the internet,&#8221; <a href="https://cms.blockworks.co/jack-dorsey-tbd-will-be-open-platform-for-decentralized-bitcoin-exchanges/" target="_blank" rel="noreferrer noopener">said</a> Mike Brock, Square&#8217;s TBD lead. &#8220;While there are many projects to help make the internet more decentralized, our focus is solely on a sound global monetary system for all.&#8221;



The decentralized exchange (DEX) hopes to make digital assets and decentralized financial services more accessible by creating a ubiquity of on-ramps and off-ramps directly between the fiat and crypto financial systems without the need for centralized intermediaries and trust brokers.



&#8220;We are at a crossroads in our financial system,&#8221; the project&#8217;s whitepaper states. &#8220;The emergence of trustless, decentralized networks unlocks the potential for a future where commerce can happen without the permission, participation or benefit of financial intermediaries.&#8221;



Unlike other DEXs, tbDEX will not have its own token or utilize atomic swaps, but will instead rely on the public key infrastructure that is used for securing the internet today in conjunction with digital identifiers. The whitepaper clearly acknowledges that on- and off-ramps to fiat currencies will never be fully decentralized. 



An overview of the protocol can be seen in the image below.



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="883" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.29.24-PM-1024x883.png" alt="" class="wp-image-11623" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.29.24-PM-1024x883.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.29.24-PM-1024x883.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.29.24-PM-1024x883.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.29.24-PM-1024x883.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.29.24-PM-1024x883.png?w=298 298w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.29.24-PM-1024x883.png?w=303 303w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.29.24-PM-1024x883.png?w=254 254w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.29.24-PM-1024x883.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.29.24-PM-1024x883.png?w=1538 1538w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: tbDEX <a href="https://tbdex.io/whitepaper.pdf" target="_blank" rel="noreferrer noopener">whitepaper</a></figcaption></figure></div>



The protocol will be open-source and is still in its early stages of development. 



<h3 class="wp-block-heading">ETH/BTC</h3>



<meta charset="utf-8">ETH has outperformed BTC over the last 24 hours, according to TradingView, with the ETH-to-BTC price ratio rising from 0.070 to 0.074 &#8211; an increase of about 5.3%.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="582" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/ETHBTC_2021-11-19_15-29-37-1024x582.png" alt="" class="wp-image-11622" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/ETHBTC_2021-11-19_15-29-37-1024x582.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/ETHBTC_2021-11-19_15-29-37-1024x582.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/ETHBTC_2021-11-19_15-29-37-1024x582.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/ETHBTC_2021-11-19_15-29-37-1024x582.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/ETHBTC_2021-11-19_15-29-37-1024x582.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/ETHBTC_2021-11-19_15-29-37-1024x582.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/ETHBTC_2021-11-19_15-29-37-1024x582.png?w=460 460w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/ETHBTC_2021-11-19_15-29-37-1024x582.png?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/ETHBTC_2021-11-19_15-29-37-1024x582.png?w=80 80w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Trading View</figcaption></figure>



ETH today shows eerie similarities to BTC in 2017. 



&#8220;I have been showing this spooky chart of ETH now vs BTC in 2017 in various forms,&#8221; Global Macro Investor Founder Raoul Pal <a href="https://twitter.com/RaoulGMI/status/1460779211849932800?s=20" target="_blank" rel="noreferrer noopener">wrote</a> in a Tuesday Twitter post. &#8220;This is my live [crypto index] on Bloomberg &#8230; even nailed this sell off &#8230; to the day and price. What happened next? A 300% rally. 



&#8220;Now, I don&#8217;t expect perfection, but with all the other analysis I have done, something like a 100% to 300% rally is highly probable into year end,&#8221; he added. &#8220;Nothing is a certain. After that, its a tougher call but I think it possibly elongates and sees significantly higher prices.&#8221;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="628" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-v-btc2017-1024x628.jpg" alt="" class="wp-image-11619" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-v-btc2017-1024x628.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-v-btc2017-1024x628.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-v-btc2017-1024x628.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-v-btc2017-1024x628.jpg?w=419 419w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-v-btc2017-1024x628.jpg?w=425 425w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-v-btc2017-1024x628.jpg?w=357 357w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-v-btc2017-1024x628.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-v-btc2017-1024x628.jpg?w=1040 1040w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Raoul Pal</figcaption></figure>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="589" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-vs-btc-2017-1024x589.jpg" alt="" class="wp-image-11620" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-vs-btc-2017-1024x589.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-vs-btc-2017-1024x589.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-vs-btc-2017-1024x589.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-vs-btc-2017-1024x589.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-vs-btc-2017-1024x589.jpg?w=454 454w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-vs-btc-2017-1024x589.jpg?w=381 381w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-vs-btc-2017-1024x589.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/eth-vs-btc-2017-1024x589.jpg?w=1200 1200w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Raoul Pal</figcaption></figure></div>



&#8220;ETH is also attempting a similar flip,&#8221; a <a href="https://members.delphidigital.io/reports/deleveraging-volatility-mixed-market-signals/" target="_blank" rel="noreferrer noopener">Delphi Digital report</a> stated. &#8220;If price holds above the May 2021 closing peak, ETH will also look primed for trend continuation to the upside. If price support gives way, the hope for bulls would shift to a possible retest and bounce off the upper trend line established from the May 2021 top to the Sep. 2021 high.&#8221; 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="512" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-3.42.29-PM-1024x512.png" alt="" class="wp-image-11621" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-3.42.29-PM-1024x512.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-3.42.29-PM-1024x512.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-3.42.29-PM-1024x512.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-3.42.29-PM-1024x512.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-3.42.29-PM-1024x512.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-3.42.29-PM-1024x512.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-3.42.29-PM-1024x512.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-3.42.29-PM-1024x512.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-3.42.29-PM-1024x512.png?w=2048 2048w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Delphi Digital</figcaption></figure>



Ethereum has seen the <a href="https://etherscan.io/chart/active-address" target="_blank" rel="noreferrer noopener">number of active addresses</a> on the network continue to climb. The <a href="https://watchtheburn.com" target="_blank" rel="noreferrer noopener">net issuance</a> of ETH continues to fall towards zero, <a href="https://etherscan.io/chart/address" target="_blank" rel="noreferrer noopener">unique addresses</a> are increasing, <a href="https://dune.xyz/datanut/Polygon-MATIC" target="_blank" rel="noreferrer noopener">scaling solutions</a> are seeing increased adoption and mainstream use cases continue to unfold, such as <a href="https://www.sothebys.com/en/press/sothebys-to-announce-live-bidding-increments-in-ether-eth-cryptocurrency-for-banksys-trolley-hunters-and-love-is-in-the-air" target="_blank" rel="noreferrer noopener">Sotheby&#8217;s denominating prices in ETH</a>. 



In addition, the <a href="https://ethereum.org/en/eth2/merge/" target="_blank" rel="noreferrer noopener">Ethereum merge</a> is right around the corner.



<h3 class="wp-block-heading">Non-Fungible Tokens (NFTs)</h3>



Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found below:



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="333" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.35.47-PM-1024x333.png" alt="" class="wp-image-11624" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.35.47-PM-1024x333.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.35.47-PM-1024x333.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.35.47-PM-1024x333.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.35.47-PM-1024x333.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.35.47-PM-1024x333.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.35.47-PM-1024x333.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.35.47-PM-1024x333.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.35.47-PM-1024x333.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.35.47-PM-1024x333.png?w=2048 2048w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Top Ethereum Projects</figcaption></figure></div>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="278" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.36.09-PM-1024x278.png" alt="" class="wp-image-11625" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.36.09-PM-1024x278.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.36.09-PM-1024x278.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.36.09-PM-1024x278.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.36.09-PM-1024x278.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.36.09-PM-1024x278.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.36.09-PM-1024x278.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.36.09-PM-1024x278.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.36.09-PM-1024x278.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-19-at-4.36.09-PM-1024x278.png?w=80 80w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Top Solana Projects </figcaption></figure></div>



If you made it this far, thanks for reading! I am looking forward to catching up on Monday.



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Square Unveils tbDEX Whitepaper; ETH Outperforms BTC: Markets Wrap

Casey Wagner

<div id="highlights-block_61844d53b7edb" class="highlights">
 <ul>
 <li>Square’s Cash App reported $2.39 billion of revenue and $512 million of gross profit</li>
 <li>During the earnings call, company executives mentioned plans to delve deeper into the digital assets space</li>
 </ul>
 
</div>



Digital payments company Square <a href="https://investors.squareup.com/overview/default.aspx" target="_blank" rel="noreferrer noopener">reported</a> $1.81 billion in bitcoin-generated revenue and detailed plans to increase digital asset investments and exposure in its third quarter earnings report Thursday.&nbsp;



The bitcoin revenue was an 11% increase year-over-year. Bitcoin gross profit was $42 million, approximately 2% of bitcoin revenue.&nbsp;



Square executives mentioned plans to delve deeper into the digital assets space.&nbsp;



“We also recently created a business called TBD in order to build an open developer platform with the sole goal of making it easy to create noncustodial and permissionless and decentralized financial services with a focus on bitcoin,” Square CEO Jack Dorsey said during the earnings call. “The plan to share detailed plans with a white paper later this month.”&nbsp;



The white paper, which will provide a more detailed business plan, will be released on November 19, Dorsey said. Dorsey also provided updates on Square’s plans to launch a consumer bitcoin hardware <a href="https://cms.blockworks.co/jack-dorsey-confirms-square-will-make-bitcoin-hardware-wallet/" target="_blank" rel="noreferrer noopener">wallet</a> and <a href="https://cms.blockworks.co/squares-jack-dorsey-says-company-looking-to-build-bitcoin-mining-system/" target="_blank" rel="noreferrer noopener">mining</a> system.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Both are focused on helping Bitcoin reach a mainstream audience, while at the same time strengthening the network and ecosystem,” he said. “We will build both in the open in collaboration with the community sharing all of our decisions, progress and questions along the way, each of these long-term opportunities that we will be learning from over multiple years.”</blockquote>



The company expects its various expansion efforts in digital assets to be lucrative in the long term.&nbsp;



“TBD, the hardware wallet, and Bitcoin mining&#8230; we expect will in aggregate represent roughly 5% of our incremental step up next year for approximately $140 million in overall non-GAAP capex,” said Square CFO Amrita Ahuja on the call. “As we look ahead, we&#8217;re excited for what the future holds for our company. We&#8217;re going after a large and growing addressable market.”&nbsp;



Square’s peer-to-peer payment platform Cash App reported $2.39 billion of revenue and $512 million of gross profit, which increased 16% and 33% year over year, respectively.&nbsp;



Bitcoin revenue and gross profit decreased on a quarter-over-quarter basis compared to the second quarter of 2021.&nbsp;



This was “driven primarily by relative stability in the price of bitcoin, which affected trading activity compared to prior quarters,” the report noted.&nbsp;



The company warned that bitcoin-related earnings are largely unpredictable for the future.&nbsp;



“In future quarters, bitcoin revenue and gross profit may fluctuate as a result of changes in customer demand or the market price of bitcoin, particularly as we lap strong growth rates on a year-over-year basis in the fourth quarter of 2020,” the report said.&nbsp;



Square invested $170 million in bitcoin in the first quarter of 2021. In Q3, the company recognized a bitcoin impairment loss of $6 million on the bitcoin investment.&nbsp;



Square was trading down 4.88% in after-hours trading, at time of publication.&nbsp;

Square Reports $1.81B in Bitcoin Revenue, Reveals Plan to Increase BTC Offerings

<div id="highlights-block_6124fc3a1a656" class="highlights">
 <ul>
 <li>The funding comes in tandem with Blockstream’s acquisition of the intellectual property of a bitcoin mining manufacturer called Spondoolies</li>
 <li>The new capital will help expand the company’s mission to build additional infrastructure in the future with a focus on the Liquid Network and bitcoin financial products</li>
 </ul>
 
</div>



Bitcoin infrastructure firm Blockstream announced it has raised $210 million in a Series B funding round, bringing the company’s valuation to $3.2 billion and officially making it a unicorn.&nbsp;



The funding was raised by two investors; an investment management company, Baillie Gifford, and iFinex, the parent company of the Hong Kong-based cryptocurrency exchange Bitfinex.&nbsp;



“In some ways this valuation is an affirmation of our focus to build on top of Bitcoin and our vision of rearchitecting finance with Bitcoin as the base layer. We still have a long way to go in achieving our goals and now we’re able to accelerate on multiple fronts,” the company’s Chief Strategy Officer Samson Mow said in an interview with Blockworks.&nbsp;



The company has raised a total of $299 million to date, including the latest $210 million, Mow said. “We raised a seed round in 2014 for $21 million, a Series A in 2016 for $57 million, and then added a $11 million convertible note,” he added.



<h3 class="wp-block-heading">Unicorns abound</h3>



Blockstream joins multiple other crypto-based companies that reached unicorn status during the month of August. CoinDCX became India’s first crypto-related unicorn with a valuation of $1.1 billion and FalconX raised $210 million in Series C funding, which brought its valuation to $3.75 billion, Blockworks previously <a href="https://cms.blockworks.co/falconx-coindcx-hit-unicorn-status-amid-uncertain-regulatory-environment/" target="_blank" rel="noreferrer noopener">reported</a>. 



Earlier this month, Singapore-based crypto financial service platform <a href="https://cms.blockworks.co/matrixport-raises-100m-and-hits-unicorn-status-with-1b-valuation/" target="_blank" rel="noreferrer noopener">Matrixport</a> announced it closed its $100 million Series C funding round also with a valuation over $1 billion. Bitpanda also shared a new, <a href="https://cms.blockworks.co/crypto-exchange-bitpanda-valuation-spikes-242-to-4-1b-in-five-months/" target="_blank" rel="noreferrer noopener">higher valuation of $4.1 billion</a> after closing a funding round of $263 million, just five months after its last valuation of $1.2 billion. 



The funding comes in tandem with Blockstream’s acquisition of the intellectual property of a bitcoin mining manufacturer called Spondoolies. This buyout will include rights to Spondoolies’ five different mining products, which the company says delivers energy-efficient mining equipment and the core team joining the company to build out Blockstream’s application-specific integrated circuit (ASIC) arm.



“We see a great deal of demand for both our enterprise-grade hosting of miners, as well as our financial products like the BMN (Blockstream Mining Note). With the new round of funding we should be able to expand in both financial products and mining, but the new ASIC we plan to bring to market will likely be our most disruptive endeavor to date,” Mow said. He also said they’re working with security token exchanges to list the BMN for trading.



The raise and acquisition will be used to add staff and advance Blockstream’s other mining products and services. The new mining infrastructure will be used for global partnerships, including a collaboration with <a href="https://cms.blockworks.co/blockstream-and-square-partner-on-solar-powered-bitcoin-mine/" target="_blank" rel="noreferrer noopener">Square</a> to develop an open-sourced, solar-powered mining facility in the US, the company said. 



<h3 class="wp-block-heading">Expanding its mission</h3>



Blockstream said the new capital will help expand the company’s mission to build additional infrastructure in the future with a focus on the Liquid Network and bitcoin financial products. The <a href="https://help.blockstream.com/hc/en-us/articles/900002016823-What-is-the-Liquid-Network-#:~:text=The%20Liquid%20Network%20is%20a,1%2Dto%2D1%20peg." target="_blank" rel="noreferrer noopener">Liquid Network</a> is a sidechain-based settlement network that enables faster, confidential bitcoin transactions and the issuance of digital assets for traders and exchanges, the company said. Since its launch, the Liquid Network has amassed more than $1.1 billion in network value and has seen growth with a number of platforms being built on the sidechain, it added. 



In the future, Mow said the company will focus on launching additional products through Blockstream Finance like a Bitcoin Alpha Fund, as well as work with the Liquid Network’s ecosystem to expand use of its assets.&nbsp;



“In the next few years, bitcoin adoption around the world will increase rapidly and our goal is to make all our bitcoin products and services more intuitive and easily accessible to those new users,” Mow said.&nbsp;



Want more investor-focused content on digital assets? <a href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/">Join us</a> September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. <a href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/">Buy it now</a>.

Bitcoin Infrastructure Firm Blockstream Reaches Unicorn Status With $3.2B Valuation

Sam Reynolds

<div id="highlights-block_6108156b603cc" class="highlights">
 <ul>
 <li>Square reported triple-digit gains in bitcoin revenue on-year, despite a quarterly decline in revenue</li>
 <li>A $29 billion takeover of Austria-based Afterpay allows consumers to finance the purchase of retail goods at interest rates less than credit cards</li>
 </ul>
 
</div>



In a second quarter shareholder letter released over the weekend, Square reported that its revenue from bitcoin-related services was up 200% on-year but down quarter-over-quarter because of market trends.&nbsp;



Square said that the Cash App generated $2.72 billion of bitcoin revenue and $55 million of bitcoin gross profit during the second quarter of 2021.



Overall, Square’s Cash App generated $3.33 billion of revenue and $546 million of gross profit, according to the shareholder letter. Excluding all bitcoin-related revenue, Cash App generated $606 million in revenue during the quarter.&nbsp;



However, this last quarter’s bitcoin bear market — which saw the <a href="https://cms.blockworks.co/crypto-crash-when-musk-the-environment-tax-day-and-china-collide/" target="_blank" rel="noreferrer noopener">price of bitcoin fall dramatically</a> in May and linger in the low-$30k range — hit Square’s quarterly revenue growth hard. The company said the “relative price stability” of crypto post-crash was a turn-off for traders and caused Square to post an <a href="https://www.bloomberg.com/opinion/articles/2021-02-09/tesla-s-bitcoin-bet-is-a-bean-counter-s-nightmare" target="_blank" rel="noreferrer noopener">impairment loss</a> on its books of $45 million, as the value of bitcoin had declined below its purchase price. 



“In future quarters, bitcoin revenue and gross profit may fluctuate as a result of changes in customer demand or the market price of bitcoin,” Square reported.



As of the quarter that ended June 30, the “fair value” value of the company’s bitcoin was $281 million according to the shareholder letter. Square recently bought 3,318 bitcoin in February for $170 million.



<h3 class="wp-block-heading">Afterpay acquisition</h3>



Separately, Square announced that it had initiated a $29 billion takeover of Austria-based Afterpay, paying $92.65 per share.



Afterpay offers a “buy now, pay later” service that allows consumers to finance the purchase of retail goods at interest rates less than credit cards. This service is expected to be integrated into Cash App’s merchant suite, allowing users to initiate lines of credit similar to PayPal’s “pay later” function.&nbsp;



In a note, Compass Point Research’s Michael Del Grosso gave Square’s stock a “neutral” rating, questioning the $29 billion purchase price and wondering if there wasn’t an “alternative way to do this deal.”

Square Reports Bitcoin-Related Revenue up 200%; Buys Afterpay

Ben Strack

<div id="highlights-block_60f09138f6b92" class="highlights">
 <ul>
 <li>Cash App could increase its average revenue per user by five times in the coming years, according to research by Mizuho Securities</li>
 <li>Square’s bitcoin trading capabilities are among its most important services in terms of driving engagement, and in turn, revenue, Rosenblatt Securities analyst says</li>
 </ul>
 
</div>



Digital payments companies such as <a href="https://squareup.com/us/en/campaign/cross-product-center?device=c&amp;gclid=Cj0KCQjwub-HBhCyARIsAPctr7wIvH42bDDxJSU6ITAmhulhL8Bq83jEWVnnJkBEATG6TRQlASVXjmkaAsPIEALw_wcB&amp;gclsrc=aw.ds&amp;kw=square+inc&amp;kwid=p53639037657&amp;matchtype=e&amp;pcrid=522370665599&amp;pdv=c&amp;pkw=square+inc&amp;pmt=e&amp;pub=GOOGLE">Square</a> are in a position to steal major market share from traditional banks over the next decade, analysts said, as crypto services are driving engagement for such businesses.



Cash App, a service developed by Square, could become the “money center bank of the future,” according to research by Mizuho Securities.&nbsp;



“This could make buying [Square] analogous to buying JP Morgan in 1871,” Senior Analyst Dan Dolev wrote in a July 15 note.&nbsp;



Twitter CEO Jack Dorsey, who has long been a proponent of cryptocurrencies, co-founded Square in 2009 and serves as its chairman and CEO.&nbsp;



Mizuho’s bullish outlook for Square comes after the digital payment business announced in February that it had purchased 3,318 bitcoins at an aggregate purchase price of roughly $170 million. The buy raised the company’s held bitcoin to five percent of Square’s total cash, cash equivalents, and marketable securities as of the end of 2020.



More recently, Jesse Dorogusker, the hardware and TIDAL lead at Square, <a href="https://cms.blockworks.co/jack-dorsey-confirms-square-will-make-bitcoin-hardware-wallet/">tweeted last week</a> that the company has decided to build a hardware wallet service to make bitcoin custody more accessible.



Dolev called Cash App “the ultimate challenger bank,” noting that Mizuho’s analysis of the business indicates a path to an average revenue per user of between $150 and 200 in the coming years, which is between three and five times above current levels. The average revenue per user ranges from $400 to $700 at consumer banks like JPMorgan and Wells Fargo, he added.



Still, Sean Horgan, an equity research analyst at Rosenblatt Securities, told Blockworks that he believes digital wallets as a group are going to disrupt traditional incumbent consumer banks over the next five to 10 years.



The customer acquisition costs for companies like Cash App and Venmo may range from $5 to $100, he added, as they are helped by the “network effect” of millennials helping older adults adopt the services. This is compared to incumbent banks who may spend $1,000 to gain a new customer, Horgan noted, as they may entice prospective credit card users with free rewards and build out costly bank branches around the country.



“Traditional banks [have] about $1 trillion of market value,” he said, “and as they steal revenue share and user share, that market cap is also going to transfer from the traditional banks to the challenger banks.”



<h3 class="wp-block-heading">Crypto services driving engagement, revenue</h3>



Square was a pioneer of gathering users through a free peer-to-peer offering and then rolling out additional products over time, Horgan said. The company’s bitcoin trading capabilities, which were added in 2018, are among the most important services in terms of attracting users to use the platform each day, he argued.



Cash App allows users to buy and sell bitcoin straight from their Cash App balance. Unlike other apps, most of the buying and selling happens in seconds, according to the company’s website, and users can spend their proceeds from a free Visa debit card.



“Bitcoin drives engagement and engagement drives monetization,” Horgan explained. “The more funds you’re bringing onto Cash App, the more you’re considering this thing your primary bank account or primary spending account, the more likely you are to take a debit card or credit card offering out and start using that.”



Venmo followed Square’s footsteps when the company <a href="https://newsroom.paypal-corp.com/2021-04-20-Introducing-Crypto-on-Venmo">announced in April</a> that it would allow customers to buy, hold and sell cryptocurrency directly within the Venmo app.



British fintech firm <a href="https://www.revolut.com/en-US">Revolut</a> revealed this week that it had raised $800 million in a new funding round led by SoftBank and Tiger Global, which values the company at $33 billion. People can use Revolut’s app to buy, sell, receive or spend cryptocurrency, as well as send crypto to other US Revolut accounts.&nbsp;



Moving forward, Horgan said he expects crypto rewards to gain more popularity.&nbsp;



Square offers a service called Bitcoin Boost, in which a user can select to have bitcoin automatically placed into their account upon each cash card purchase. Similarly, BlockFi earlier this month <a href="https://cms.blockworks.co/blockfi-releases-visa-rewards-credit-card-to-us-clients/">launched its Visa rewards credit card</a> for a handful of its US-based clients, providing users with crypto returns when they use the card.&nbsp;



“I’d rather get 2% back in bitcoin than 2% back in a 2% depreciating asset per year, which is cash,” Horgan said. “We’re going to see a lot more of that, and that’s just another reason to use these digital wallets like Cash App rather than traditional banks.”

Analysts: Digital Wallets Poised to Disrupt Traditional Banks Over Next Decade

<div id="highlights-block_60e8585c7fad9" class="highlights">
 <ul>
 <li>“We have decided to build a hardware wallet and service to make bitcoin custody more mainstream,” Dorogusker said</li>
 <li>Dorsey said the wallet would be “entirely in the open, from software to hardware design, and in collaboration with the community”</li>
 </ul>
 
</div>



Square, a digital payments service company led by Twitter CEO Jack Dorsey, is going forward with building a hardware wallet for bitcoin after Dorsey <a href="https://twitter.com/jack/status/1400839179513339905">hinted</a> at the possibility in early June.&nbsp;



The decision was announced in a tweet by Jesse Dorogusker, the hardware lead and TIDAL lead at Square.&nbsp;



“We have decided to build a hardware wallet and service to make bitcoin custody more mainstream,” Dorogusker said.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We have decided to build a hardware wallet and service to make bitcoin custody more mainstream. We’ll continue to ask and answer questions in the open. This community’s response to our thread about this project has been awesome &#8211; encouraging, generous, collaborative, &amp; inspiring. <a href="https://t.co/CHf9hAmKnn">https://t.co/CHf9hAmKnn</a>&mdash; Jesse Dorogusker (@JesseDorogusker) <a href="https://twitter.com/JesseDorogusker/status/1413222597207134214?ref_src=twsrc%5Etfw">July 8, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Following Dorogusker’s tweet, Dorsey quoted his tweet and <a href="https://twitter.com/jack/status/1413261505156599809">replied</a>, “We’re doing it #Bitcoin.”



Neither of them provided specific details or a timeline for the product creation and Square was not available for immediate comment, but Dorogusker shared some details about the plan.&nbsp;



Dorogusker said there are still “a lot of questions and issues to reconcile” and the company will start with a production direction of bitcoin first, while supporting multisig to achieve “assisted-self-custody,” and prioritizing mobile use. 



In general, bitcoin hardware wallets are physical devices plugged into a computer or phone that allow owners to securely store and access bitcoin through private keys.



When Dorsey tweeted that Square was considering making a hardware ballet for bitcoin, he <a href="https://twitter.com/jack/status/1400839191320313860">said</a> it would be “entirely in the open, from software to hardware design, and in collaboration with the community.”&nbsp;



He added that they wanted to build “an inclusive product that brings a non-custodial solution to the global market,” making bitcoin for everyone.