2018 wasn’t a fun year for cryptocurrencies. Bitcoin in mid-December of last year was near $20,000 only to be trading around $6,200 to $6,500 in the last months. Though it is seen as a sign that the market is maturing, there are those who lost a significant amount of money. In fact, Bitcoin miners are losing their profits.
But things are different for financial services company Square. It seems that adoption has favored Square this year. It was revealed that for the third quarter, Square is up by $6 million. This includes a profit of $500,000. Though this isn’t really a huge number to celebrate, this means a lot and represents a substantial step forward for cryptos especially Bitcoin payments. This is a big deal because Bitcoin has been seen this year as a money-losing venture.
Square published its numbers in a shareholder letter on November 8. It has revealed that the payment company’s Bitcoin division experienced gains throughout 2018. Included in the report is a $43 million revenue in Bitcoin.
Small Progress On Bitcoin
The good news is that they made 51% more than what they did last year up to this point. And also, it is worth noting that their reported revenue is 68% better than the same quarter last year. As for the Bitcoin sales, it is one of the smallest components that contributed to their total revenue which is around 5%.
However, Square explained that the revenue that was reflected was already adjusted deducting the transaction costs. Square explained that “We deduct bitcoin costs because we consider our role in the bitcoin transactions to be facilitating customer access to bitcoin. Since we only apply a small margin to the market cost of bitcoin when we sell bitcoin to customers, and we have no control over the cost of bitcoin in the market, which tends to be volatile, we believe deducting bitcoin costs is a better reflection in the economic benefits as well as the Company’s performance from the bitcoin transactions”.
After everything has been deducted, the Bitcoin revenues were roughly around $500,000. That is around 20% more than what they made in the same quarter on Bitcoin. And to give you a perspective, Bitcoin was bullish last year. It went from just around $1,000 during the start of the year to near $20,000 by mid-December.
Better Than PayPal?
Now, should we expect that Square’s revenue will go up soon? Square is basically a Cash App. It allows people to transact just like in PayPal. However, it makes use of the prominent cryptocurrency. They were able to secure a patent for their payment network this year, and is looking to build legitimacy within the industry.
Regulatory clarity slowly happening in the niche could work in favor of Square. It is possible that the adoption of Bitcoin will also increase once there’s a Bitcoin ETF. And most likely, Square is going to continue to grow in the coming months. Square’s cash app already has around 10 million installs on the Google Play Store. It has even surpassed PayPal’s Venmo in terms of the number of downloads. And so far, it carries an edge against PayPal since they already are offering cryptos.