Ark Invest Bets Cash App Will Earn Bitcoin Payouts


Bitcoin-friendly Ark Invest sold its PayPal holdings in favor of Cash App, and Bitcoin is behind the move.

Cathie Wood, CEO of Ark Told CNBC at the Bitcoin 2022 conference in Miami that the “singular focus on Bitcoin” by the creator of Cash App Block, “is key here.”

“We owned PayPal, very focused on Venmo becoming the digital wallet,” she explained. “It will be in contention. But I think the way Cash App grows organically, as opposed to a more top-down, “Let’s get this thing moving”, stretch-stretch-stretch.

Payments company Block, owned by former Twitter CEO Jack Dorsey, was the first consumer payment app to embrace crypto, in November 2017, when the company was still called Square. In June 2019, Cash App allowed users who had been able to buy, sell and trade bitcoins to transfer them to third-party wallets and “transfer profits from the sale of bitcoins to any linked bank account or debit card to your Cash App”.

See also: Square Cash App Mobile Users Can Now Deposit Bitcoin

This was a huge deal back when banks were still closing the accounts of retail customers who even sent money to or from a cryptocurrency exchange.

PayPal first opened its wallets to bitcoin and three other cryptocurrencies – ether, litecoin and bitcoin cash – in early 2021, with the move seen as a milestone in bitcoin integration. This is the Venmo app followed in April 2021.

Read more: PayPal Scale Drives Crypto Utility

In March, PayPal allowed users to pay for goods with crypto across its 32 million strong merchant network through Checkout With Crypto.

greased lightning

Wood said a few key factors influenced his decision. The first is that Cash App was the first to use crypto. But organic growth and a focus on Bitcoin were also key.

Dorsey is known to be a bitcoin maximalist, which means he thinks it will be the only crypto needed for payments. “This is how Bitcoin is going to proliferate around the world,” Wood said.

So when Ark consolidated its portfolios last year, it favored its “strongest names”. For Wood, it was Block.

Another important factor in Wood’s thinking is the Lightning Network, a Layer2 scaling solution that allows slow and expensive Bitcoin to scale from its current 5 transactions per second (TPS) to 1,000 TPS.

Layer2 blockchains like Lightning are essentially an overlay on top of Bitcoin, taking all actual transaction processing to the next level that is much faster and capable of smart contracts, simply sending large batches of completed transaction results over Bitcoin to be written on the blockchain.

Wood pointed to another Bitcoin 2022 announcement that day – Cash App’s announcement that it was able to accept payments on the Lightning Network, and that users of Cash App’s direct deposit feature can choose to be paid directly in bitcoin.

That was a big deal, Wood said, saying it “removes a lot of the friction in the UI.”

She added: “The second layer solution has become more robust now and is ready for prime time.”

On April 7, bitcoin-payments processor Lightning Strike announced deals that will bring crypto payments capability to Shopify, prepaid payments provider Blackhawk Network, and leading POS maker NCR.

See more : Integrate Bitcoin firmly into payments, Strike Partners with NCR, Shopify, Blackhawk

This gave Bitcoin a huge leap forward as a realistic payment currency, relieving it of the need to factor in a 10-minute clearing time and multi-dollar fees per transaction.

“You’re going to be able to walk into a grocery store, Whole Foods, Chipotle, if you want to use a Lightning node [to pay], you do that,” Strike CEO Jack Mallers said. “Want to use the Cash app? You do that.”

Wood added that the Lightning Network’s channel had tripled in the past year, largely thanks to “El Salvador and maybe some of the other hotspots around the world.”

She sees even bigger things in 2022.

I think the number of channels will explode,” she said. “And I suspect the number of developers developing on this platform is going to explode as well.”

This growth, she said, “is going to bring the United States”



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