Jack Dorsey Says Square Will Launch Bitcoin DeFi Platform

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Jack Dorsey on Thursday put his mobile payments company Square at the center of one of the most talked about areas of innovation in finance, announcing that he would launch a platform for developers to create projects of ” decentralized finance ”based on bitcoin.

In a Twitter thread, Dorsey said Square plans to start a “new business” with the “goal of facilitating the creation of non-custodial, unlicensed and decentralized financial services,” in what would mark one of the first major projects of its kind in the emerging market.

Decentralized finance, or DeFi, is the name given to the growing number of cryptocurrency projects that attempt to build a nested cryptocurrency-denominated financial system that cuts out traditional middlemen.

Supporters say it will provide a new way to access financial services ranging from loans and trading to insurance and savings products.

Dorsey, who is CEO of Square and Twitter, said Square had “some ideas on the initial platform primitives that we want to build.”

However, it’s unclear exactly what the company would offer potential developers or how it could be monetized. It should be called TBD, until a name is chosen.

“We’re going to do it completely in the open. Open roadmap, open development and open source, ”Dorsey said, adding that Mike Brock, an executive who worked on Square’s push into cryptocurrency, would lead the platform.

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Private investors have backed over 70 DeFi companies this year and although the area remains small, its value has swelled in tandem with the cryptocurrency bull market. DeFi product assets have grown from around $ 2 billion a year ago to over $ 55 billion today, according to data from DeFi Pulse.

The freewheeling space has also caught the attention of regulators, who have raised concerns about the safety and liability of projects, as well as the potential for fraud. Dan Berkovitz, commissioner at the US Commodity Futures Trading Commission, claimed that many DeFi applications could be illegal.

Many DeFi projects are built on the ethereum blockchain because it can be used to easily create smart contracts – essentially computer code that is automatically triggered when certain conditions are met. However, Dorsey said the platform’s “primary focus” will be bitcoin, the oldest and most popular blockchain.

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The bitcoin blockchain has always been viewed as slower and less efficient than its ethereum counterpart. However, in November, it will receive its first big upgrade in several years, known as Taproot, which will make it easier to create smart contracts on the protocol.

Founded in 2009, Square began life as a digital payments company, but Dorsey signaled broad ambitions for the group. Earlier this year, he acquired a controlling stake in Tidal, the struggling streaming platform owned by Jay-Z, for $ 297 million, making an unexpected entry into the music industry and placing the rapper in the spotlight. Square board of directors.

TBD is said to be the latest in a number of cryptocurrency bets made by Dorsey, a strong supporter of bitcoin. Square’s revenue more than doubled in 2020 in part due to an increase in bitcoin-related transactions made on its Cash app, its peer-to-peer mobile payment facility.

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