Square is one of the many interesting companies to have ventured into the domain of cryptocurrency recently. Using the firm’s Cash App, customers now have the ability to buy and sell Bitcoin in a highly streamlined fashion.
Square Takes a Different Approach
It is interesting to note how Square prepares to make Bitcoin trading more profitable for itself moving forward– especially since the company hasn’t drawn in any real profits since introducing its BTC trade option.
Square CEO Jack Dorsey has always made it clear that Bitcoin trading wasn’t added to make big profits quickly. Instead, the firm is currently exploring different options which its clients may appreciate. To make the venture a bit more profitable, Square will procure Bitcoin liquidity from completely different sources, since relying on public exchanges is no longer a suitable business model.
More on the Matter
Sourcing private broker-dealers for Bitcoin is a surprising change. It is a bit of a risky venture first and foremost. Private broker-dealers may not sustain the trading demands needed by Square Cash users in the future. Even so, OTC desks are far cheaper to use, and these brokers can usually fill orders on demand without any real delays.
It remains to be seen how this decision plays out for Square moving forward. Most of its trading liquidity comes from OTC providers, although exchanges will remain a backup solution in case users show a sudden increase in demand. It is also the first time a major financial services provider has tapped OTC trading for Bitcoin in such a capacity.
When third-party service providers such as Square start to acknowledge that exchanges are not the best sources for buying Bitcoin on a regular basis, a clear message is sent to the entire industry. Decentralized exchanges need to gain traction soon but until that happens, P2P and OTC trading solutions will continue to gain more and more traction.
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