Although bitcoin has been slowly gaining popularity for years, it made headlines last week, hitting a record high and sparking debate over whether it is a bubble that will burst. When bitcoin was founded nine years ago, the coins sold for pennies. Despite volatility, the currency is up 700% this year alone, meaning early adopters are seeing large profits. Bitcoin fans are banking on this trend continuing, comparing cryptocurrencies to the internet, which was once looked at as a complicated technology only useful to computer experts. Bitcoin investors expect cryptocurrencies will explode in the same way once they become more accessible, and now companies like Square and London Block Exchange are making that thought seem plausible by offering services that allow customers to buy, sell and spend bitcoin.
Last Wednesday, Square, a credit card processing system that allows anyone with an iPhone or iPad to quickly accept credit card transactions, announced it would begin to allow users to hold and sell bitcoin on its platform. Those with access to the app’s beta interface can swipe right from the Cash Card page, where their balance appears in both USD and BTC, along with Buy/Sell buttons. A graph displays bitcoin performance over the last day, month or year.
For now, Square only permits the buying and selling of bitcoin via an exchange, so users cannot purchase new coins or send them to other users. However, a recent Credit Suisse report states, “We believe it could place SQ in an early-mover position as a mainstream fin-tech company providing crypto-currency services.” This provides strong support of the bitcoin supporters’ internet theory. Once the currency becomes more accessible to everyday consumers, it has the potential to take off.
London Block Exchange
One day after the Square announcement, news broke that UK start-up London Block Exchange (LBX) was releasing Dragoncard, a prepaid debit card that will allow users to spend cryptocurrency anywhere in the UK. In addition to bitcoin, users will be able to convert ethereum, ripple, litecoin and monero to sterling at the point of purchase. The card can be used at any store that accepts Visa, making it significantly easier for users to spend their coins. Currently, the process can take several minutes to complete if the vendor accepts the currency at all.
The Dragoncard also allows users to buy and hold cryptocurrencies through the LBX exchange using a linked app. The company hopes to remove the barriers to access cryptocurrency, making it more realistic for everyday use.
Although both companies are working to make it easier for clients to use and spend bitcoins, we are unsure if it will be enough to make a difference, as most people are buying the coins without any intention of spending them. After all, the people that spent thousands of bitcoins on everyday items when the currency first launched are now realizing they could have been millionaires if they had held on to them until now.
This could be bad news for companies like Square and LBX that are planning on people actually using their coins. While a debit card that allows users to spend cryptocurrencies like cash will make bitcoin more accessible, it won’t matter unless people are willing to part with their investments.