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Summary
- Amid global virus crisis (GVC), when fiat-currencies have experienced a tough time, cryptocurrency usage has surged.
- US-based Square, Inc. (NYSE: SQ) purchased nearly 4,709 bitcoins at an aggregate purchase price of USD 50 million on 7 October 2020.
- Square is a firm believer in the future of bitcoin trading and considers it as an instrument of global economic empowerment.
- Investing in digital currencies is risky due to factors like volatile nature. Before investing in cryptocurrencies, one should be aware of the risks associated.
The disruptive year 2020 has altered the world at different levels. At a time when sectors like aviation, hospitality, and tourism experienced their worst crisis in history, technology has been advancing at a fast pace to meet the demand of changed world, owing to the COVID-19 pandemic. The fiat-currencies also faced wrath of the crisis, and global banks suffered a massive plunge resulting in disturbing financial markets.
Also read: Technology has changed the way we work amid the COVID-19 crisis: A look at in-demand technologies
The pandemic has pushed the world to a cashless payment system. Now, the consumers prefer more of contactless and digital payments. During these unprecedented times, digital assets seem to have been immune to current business affairs. Cryptocurrency usage has surged since the beginning of the pandemic, and these digital assets are getting more recognition worldwide.
Bitcoin, the most popular of these digital currencies, uses revolutionary blockchain technology. Initially, the blockchain technology has been famous for being the technology behind bitcoins, but now it is getting its due credit, and big businesses and several sectors are embracing it. Due to its multiple benefits, various sectors, like healthcare and finance, are looking to use this technology for their infrastructure.
To know more on blockchain technology, read here: Blockchain Makes Inroads; More Diverse Sectors Adopt this Decade-Old Technology
Cryptocurrencies emerging as attractive investment options: Cryptos do not behave as fiat currencies in the market, hence amid the pandemic, they are gaining more popularity, and investors are finding them attractive. COVID-19 is a stressful time for investors all across the globe. The macro happenings are scary for the market, as GDPs around the world have been contracting.
Also read: What is a cryptocurrency and how to use it?
The entire global economy is getting topsy-turvey. Read here: Radical Shifts to Occur in Popular Index Compositions Amidst COVID-19 Crisis
Square Purchases Bitcoins Worth USD 50 Million
US-based Square, Inc. (NYSE: SQ) has made headlines for making unusual use of corporate cash by buying a large block of bitcoin. The company was founded by billionaires Jack Dorsey and Jim McKelvey in 2009.
Image Source: © Kalkine Group 2020
On 7 October 2020, Square bought nearly 4,709 bitcoins valued at USD 50 million. The company considers this investment as a significant step. It also believes that bitcoins offer an instrument of global economic empowerment as individuals from any part of the world can participate in this global monetary system to secure their financial future. Square is a believer in bitcoin's potential for continued future growth.
Must read: Will the acceptance of bitcoin grow due to the pandemic?
Maintains Market Leadership: Through its Cash App product, Square has been strengthening its market leadership in the bitcoin space since 2018. The app offers customers the ability to buy and sell bitcoin.
At this time of unprecedented uncertainty from macroeconomic conditions and currency regime, coupled with the rapid evolution of cryptocurrency, Square feels that this is the right time to make a meaningful investment in bitcoin. It would help the company to grow its broadly USD-denominated balance sheet.
Also read: How did the economy get affected by the pandemic?
Other initiatives by Square in the crypto space include:
- The company formed an independent team, which will be engaged in bitcoin open source work. The team works under the name Square Crypto.
- It recently launched a non-profit organisation Cryptocurrency Open Patent Alliance (COPA) to help companies and individuals defend themselves against patent aggressors and also to open access to patented crypto inventions. COPA will encourage crypto innovation.
- As part of the Cash App's launch, and to help protect customers' funds, the company invested heavily in building cryptocurrency infrastructure.
Also read: How has COVID-19 affected bitcoin price?
What to Know Before Parking Funds in Cryptocurrencies?
Bitcoin and Ether are the most popular cryptocurrencies, but new cryptocurrencies continue to be created. These are digital money with no physical presence; it only occurs online. One can buy cryptocurrencies with credit cards or through the process of mining. They give the option of quick digital payments without any transaction fees and central authority systems, as it is a peer-to-peer payment system due to the underlying blockchain technology.
Bitcoin values fluctuate highly, and the volatile nature makes it risky for the investment.
In the US, digital currencies are not insured by the government, which means these currencies do not have the same protection, as funds in a bank account.
While writing on 12 October 2020, Bitcoin (BTC) traded at USD 11,391.62, with 24 hours per cent change of 0.55 per cent and market capitalisation of USD 210.99 billion.
Good read: Bitcoin: A Year ASX Journey and 2020 Outlook
