Square, which is known for its disruptive innovations in the field of finance and technology, has announced that it will be launching a new platform to support decentralized financial projects using Bitcoin.
The decentralized finance movement, or DeFi, is gaining momentum. And Square may be the first major company to make a significant impact on its growth.
Twitter CEO, Jack Dorsey, has been publicly outspoken about Bitcoin and believes that it is the most compelling technological innovation of our time. Some of the crypto industry’s biggest challenges have been public perception and general knowledge about blockchain until this point.
A figurehead such as Dorsey could be enough to push crypto into mainstream status by solidifying its legitimacy as a viable financial tool for individuals looking for ways to upgrade their investment practices.
With the relentless push for crypto banking and start-ups, Dorsey will have his work cut out for him. But should he be the sole face of this movement? In order to take crypto banking up a notch – where it needs to be – what needs to happen? And who needs to lead it?
Jack Dorsey’s History with Bitcoin
It’s no secret that Dorsey is very, very fond of bitcoin and has consistently advocated cryptocurrency for a long time.
During this year’s B-Word conference, hosted by the Crypto Council for Innovation, Dorsey re-stated his love for bitcoin and provided a few reasons, such as it being a currency native to the internet, how the community surrounding cryptocurrency sees it as a genuine way to help people, and that it reminds him of the early days of the internet (in how it’s always evolving, deeply principled, and “weird as hell”).
In June, at a Bitcoin conference, Dorsey endorsed Bitcoin as a way to protect individuals against currency devaluation. He also said that he doesn’t see anything more important, in his life, to be working on and that he believes Bitcoin has the potential to change absolutely everything. Which, even for Jack, is a serious statement.
Back in 2018, Dorsey claimed Bitcoin would become the world’s single currency, and, in 2020, Square purchased an estimated $20 million worth of Bitcoin, further solidifying his enthusiasm in the project and his belief in blockchain and DeFi as a whole.
Where Does DeFi Fit In?
In recent years, DeFi (decentralized finance) has emerged as one of the most consequential developments of cryptocurrency’s reshaping landscape. This ascension, however, is more connected to Ethereum’s emergence rather than Bitcoin. These decentralized networks allow users greater control over their funds, which means they can also provide services or execute more complicated tasks besides simply making payments.
As the popularity of cryptocurrencies continues to grow, more people are looking for alternative ways to trade. The selling point with these decentralized platforms is that users have complete control over their money without having third-party intermediaries who can easily take away some or all of your funds at any time.
You see, many cryptocurrency companies have evolved into becoming more like banks. And with new proposed regulations from the Financial Crimes Enforcement Network (FinCEN), which want crypto companies to disclose the data of people trading on their platforms, they may have no choice but to become more bank than crypto exchange.
Of course, Jack Dorsey opposed this legislation in an open letter, where he stated Square was founded on the sole belief that people should be able to trade without barriers.
With DeFi, you no longer need to go through identity checks and anti-money laundering regulations because there’s not a central authority overseeing trades – it’s up to each user whether they want this type of responsibility in trading decisions.
Problems DeFi, Bitcoin, and Dorsey Could Face
If Jack Dorsey does indeed become the face of the cryptocurrency revolution, there are things he will have to overcome.
First, many people will have a hard time adjusting to the idea of leaving banks and other financial intermediaries out of transactions. Without public figures, companies, or even celebrities on board with this kind of change, how can we expect society as a whole to be involved? To the average individual, removing bank accounts from our every day lives might seem like an impossible challenge.
There’s also the problem of environmental impact. Bitcoin’s environmental impact is a major pain point for many environmental advocates, and it will be difficult for cryptocurrency to gain more support because of this.
The network has an enormous amount of computers that are constantly solving math problems and generating new Bitcoin, which requires power from coal plants or electric companies that use large amounts of energy. Most of which is collected and harnessed using unsustainable methods.
On the plus side, Jack Dorsey does seem to have a plan for this. In a released white paper from Square, he argues that Bitcoin is the key to a clean, abundant energy future. He argues that Bitcoin mining is an opportunity to transition the global mining of energy into renewables and that crypto-mining could secure investments into solar-powered systems.
An additional problem is the transaction system. With the success of Ethereum comes an increased need for ETH to be recorded on their blockchain. With so many people using DeFi, transaction fees will continue to rise as Ethereum continues its dominance and more users come on board. DeFi must, therefore, figure out a way of integrating themselves into the transaction element of blockchain so as to minimize ETH charges and financial barriers as a whole.
So is Jack Dorsey the Right Leader?
To be completely honest, it’s hard to say. There are things that make him a good facilitator of change, and there are things that make it hard to believe that he’ll successfully push crypto banking into the future.
As we’ve already seen, Jack Dorsey evangelizes Bitcoin and has had an almost religious response to cryptocurrency. In a world where celebrities endorse products they don’t actually believe in or use – a trend that dates back to the 1980’s – and where influencers on Instagram only push products if they get a kickback – resulting in highly inauthentic partnerships, it’s actually a little nice knowing Jack Dorsey believes in the future of cryptocurrency and what it can do for the futures of the unbanked.
But the public perception of Jack Dorsey is mixed. He’s testified in front of the United States Senate about Twitter, and articles have been written about him and his bizarre, high-end lifestyle. But in that same vein, positive articles about his philanthropy have also been written.
As we’ve also seen, crypto’s success and failure depend largely on its community. If this community is centered around a figure like Jack Dorsey, does that help or hinder it? Or does it place it in a neutral position where it won’t fall but won’t rise either?
So, is Jack Dorsey the right face? It’s not an easy question to answer, as there are too many variables at play. At the very least, he shouldn’t be the only one.
However, Jack Dorsey is in a unique position. He’s clearly trying to solve issues related to crypto – like it’s environmental impact – and the DeFi platform, since his involvement, has been surging in popularity.
If he can just work out some of the kinks – like the transaction system – he could be a major force of change for global commerce and blockchain adoption.
Guest post by Ian Kane from Unbanked
Ian Kane is the Co-Founder at Unbanked, a global fin-tech platform built on blockchain. Kane has worked in technology & digital media for over 10 years with a heavy focus on business development, sales, and strategy. His diverse professional background enables him to bring unique insight and experience to every challenge he takes on.
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