Square Goes Crypto

Weekly Newsletter- Week of 7.18.2021

Square Continues to Expand DeFi Services

Last week, Square CEO Jack Dorsey proclaimed the company will start producing their own hardware for a Bitcoin wallet. Dorsey released the following statement “We’ve decided to build a hardware wallet service to make Bitcoin custody more mainstream”.

Crypto wallets are used to store private keys, which are used to key your crypto safe and accessible. Through crypto wallets, users can stay in control of their assets, instead of letting third parties like crypto exchanges handle the keys for them. Jack Dorsey has been a very public endorser of Bitcoin for quite some time. Recently, Bitcoin accounted for $3.51B in revenue through Square’s CashApp in the first quarter of the year.

Now, Square is investing even further into cryptocurrency. Square will not start building a Decentralized Finance (DeFi) business, using Bitcoin. Dorsey released a statement on Thursday that said "We will be focused on building an open developer platform with the sole goal of making it easy to create non custodial, permissions, and decentralized financial services."

For context, DeFi applications are those that don't rely on centralized authorities like banks, but instead, they use blockchain-based contracts to execute financial transactions. DeFi has become increasingly popular due to its potential for much higher yields than traditional banks, but like all of crypto, it comes with many risks. Square is positioning itself to become the bank of the future, we'll be reporting any other breaking news.

 

Netflix Expanding into Videogames

Netflix made big headlines this week when they announced they would be expanding beyond tv and movies! Netflix has hired former Electronic Arts executives to lead the new effort. Going forward, Netflix plans to start offering video games on its streaming platform within the year. As competition in the streaming wars continues to heat up, the move is seen as a form of differentiating from Netflix.

Disney as an example has multiple forms of revenue outside of simply Disney +. They generate sales through theaters, cruises, theme parks, toys, and much more. The same can be said for Comcast, another growing competitor to Netflix. Netflix has had an amazing run for its shareholders but slowing growth on its platform has begun to spook investors. Netflix currently has 208 million global subscribers, but they only added 4 million in the last quarter. This number missed expectations and was also lower than Netflix’s own guidance. With slowing growth, many believe this might be the shot in the arm the streamlining giant needs.

 

Inflation Keeps Climbing

We've been highlighting the effects of inflation over the last several editions of our newsletter. Whether we like it or not, inflation continues to be a key driver for overall market sentiment. This week we learned the Consumer Price Index (CPI) had jumped over 5.5% from this time a year ago. This was the largest monthly gain since August of 2008. Used car sales continue to be one of the highest industries hit by inflation, accounting for nearly 1/3 of the overall jump. Investors are growing more fearful that this current period of inflation may stay with us much longer than anticipated. Much of the pressure on inflated prices has come from sectors hit the hardest by the pandemic. Industries like use cars, airfare, and transportation costs continue to be the most affected by the shutdown.