A Bitcoin wallet for the masses
A wallet to hold bitcoins – or other cryptocurrencies – aren’t a new idea at all. Basically a bloated flash drive, these gadgets contain a private key, protected by a PIN or password, which allows a user to securely access cryptocurrency data; the data itself lives on the blockchain. Some of these “wallets” have their own screens, some require use with a computer or phone.
Most wallets support a variety of cryptocurrencies. Indeed, they are intended for people who trade in several currencies and manage several keys. They make it a bit easier, but they don’t make cryptocurrencies useful for the rest of us.
Enter Square, the company that developed a small, white smartphone dongle that makes it easy for anyone to accept credit card payments.
“We are creating a hardware wallet for the next 100 million bitcoin users,” the company wrote in a recent recruiting post. “Our goal is economic empowerment, starting with providing reliable and easy-to-use self-preservation to a global audience. ”
Square first unveiled its hardware wallet plans in a series of tweets in June, the first coming from Square CEO Jack Dorsey. “Square plans to create a hardware wallet for Bitcoin. If we do, we’ll build it entirely in the open, from software design to hardware design, and in collaboration with the community, ”he said in the tweet. (The company declined to comment further for this article.)
Since then, Square has listed job postings for the project on several recruitment sites; the company is looking for project managers, engineers, supply chain managers, software developers, security experts and other professionals to work on the portfolio. And in December, the company changed its name to “Block”.
This is not Square – Block’s first foray into cryptocurrency. In late 2018, the company expanded its mobile payment platform, Cash App, to include the ability to buy and sell bitcoin, as well as send it to other Cash App users. Square initially charged a fee for these transactions, but it has recently lowered the fees and now makes a profit by acting as its own exchange, with slightly different prices for buy and sell transactions.
However, an app is not a hardware wallet. The apps leave users’ private keys in the cloud, and there have been a number of incidents where hackers have successfully accessed such cryptocurrency accounts online. Storing private keys offline, in a hardware wallet, greatly increases security but increases complexity for the user. Square CEO Dorsey has indicated that Square’s hardware wallet will use what he calls “assisted self-preservation” to have the best of both worlds, security and simplicity.
Dorsey has been a die-hard Bitcoin fan since its early days. “Bitcoin changes absolutely everything,” he told Bitcoin 2021 conference attendees. “I don’t think there’s anything more important in my life to work on. ”
It’s all-in on bitcoin compared to other cryptocurrencies because, he tweeted in 2019, “Bitcoin is resilient. Bitcoin is principled. Bitcoin is native to the ideals of the Internet.
So, unlike existing hardware wallets like the Ledger Nano X, Trezor Model T, and KeepKey, Square’s wallet won’t support multiple cryptocurrencies, only bitcoins. Dorsey wants Bitcoin to become the standard cryptocurrency, leaving Tether, Ethereum, Binance, Ripple and dozens of other popular alternatives in the dust. Its hardware wallet move just might be the accelerator Bitcoin needs to make it happen.
When will all this happen? Look for this crypto gadget in the second half of the year, says Dan Dolev, managing director and senior analyst for fintech equity research at Mizuho, a global banking and financial services company.
And it won’t just be another USB drive, Dolev says. He compared Square’s announcement to Apple’s entry into the smartphone market. “Before the iPhone was introduced in 2007, there were a bunch of smartphones that connected to the Internet, like the Palm Pilot and the Blackberry. And they worked well. But there was no sense of an ecosystem. Same thing with hardware wallets.
With Square’s participation, he said, “we know it’s not just going to be a key that stores bitcoin passwords; it’s going to be something that people can use for more. Maybe it’ll be like a debit card, maybe something else. Square’s end goal is to create a global decentralized finance network on top of the Bitcoin blockchain.
It is not going to be easy. People will want him to buy things in the real world, not just to buy, sell, and hold cryptocurrency. As was the case with the development of near field communication (NFC) payments, hardware is not the issue. Rather, according to Dolev, the challenge will be working with traders to accept the currency and figuring out how to reduce transaction costs.
And while no one is sure exactly what this gadget will look like, its basic shape will likely be a square, of course. Or, says Dolev, “even more likely, a block.”
“I wouldn’t underestimate Square’s ability to be successful here,” he said. “Everything they’ve touched, historically, has turned to gold.”
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