U.S. based payments company Square has announced that they will begin experimenting with Bitcoin integration for their mobile Cash app. Select users will now be allowed to buy and sell Bitcoin as Square tests to see if such a service is economically viable and inline with the company’s objective as an innovator in the payments space.
This news serves as a positive price indicator for both Square and Bitcoin as Square stock is up ~2.5% and Bitcoin shot up nearly 11% in today’s trading.
CFO of Square Sarah Friar told Mad Money host Jim Cramer that;
“When we develop products at Square, we spend a lot of time listening to what our customers want, and what we heard from individuals – so this isn’t sellers asking to accept bitcoin, this is individuals using Square Cash to make payments … saying, ‘We want an easy way to buy and sell bitcoin.'”
Scaling transaction times to peer-size is still a problem.
In the short-term, Square’s experimentation with Bitcoin may seem like good news, but it may be short lived because the key word here is – experimentation.
For starters, Square’s CASH app is designed and intended for seamless and near instantaneous transactions between users. This is ironic when considering that Bitcoin’s network is backlogged by nearly 100,000 transactions due to network congestion, and as it stands, is simply not capable of scaling to peer-size because in order for it to do so without marginal and temporary solutions like user-activated forks (which is essentially the cryptocurrency version of inflation) would require a fundamental re-write of the Satoshi algorithm.
Even the marginal solutions like raising the block size to 2MB can’t come to pass, as SegWit2x was called off last week. Also keep in mind that today it costs anywhere from $15 – $50, depending on conditions and network congestion to transfer a single dollar’s worth of Bitcoin.
Many argue that Bitcoin will never be able to scale to credit-card like transaction times, and that it should be treated more as a store-of-value rather than an “e-cash”, or that effective transfer-of-value that so many of us anticipated it to be.
Bitcoin Cash may deceivingly seem like a contender to Bitcoin because it has a larger block size, but that is still only a temporary “solution”.
Other proposed solutions for scaling blockchain networks include Ethereum’s Plasma and Litecoin’s Lightning Network, but they too are riddled with problems and until they are delivered and implemented are mere conjecture.
Here’s what one Blockstream employee says about the “Lightening” upgrade;
Cute, the Lightning Network solution to bitcoin scalability has problems with scaling according to Blockstream employee. pic.twitter.com/0Y8xdjK8wI
— Andrew Quentson (@Aquentson) October 10, 2017
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