Why Block’s Cash App is focused on Bitcoin and Lightning Network
Bitcoin is a decentralized digital currency created in 2009 and secured by cryptography. It is changing the monetary economy in a number of ways, such as providing a new way to store and transfer value, investing, and hedging against inflation.
It has the potential to revolutionize the way we think about money and finance, with increased financial inclusion, reduced transaction costs, increased transparency, and improved security.
Speaking at the Bitcoin and Lightning for Corporation event by Microstrategy, about how Cash App is integrating and using Bitcoin and Lightning Network, Michael Rihani, the Bitcoin Product Lead at Block and Cash App highlighted the milestones that the company has undergone.
Block, Inc. is an American multinational financial technology company that provides business services such as point-of-sale software, payment processing, and financial services.
It was founded in 2009 by Jack Dorsey and Jim McKelvey and is listed on the New York Stock Exchange under the ticker symbol SQ. Its mission is to increase access to the economy and its vision is to be the global platform for economic empowerment.
Cash App is a mobile payment service developed by Block, Inc. (formerly Square, Inc.) that allows users to send, receive, and invest money. It also offers a debit card that can be used to withdraw cash from ATMs, and make purchases online and in stores. It has over 70 million active users and provides a secure and convenient way to manage finances.
The Lightning Network is a second-layer payment protocol, that operates on top of the Bitcoin blockchain. It allows for fast and cheap payments between parties without the need to broadcast transactions to the entire network. It is still under development but is gaining traction and could be widely adopted in the future.
Michael noted that in 2017, Cash App was created as an assignment given by Jack Dorsey to an engineer during a hack week. One year later, after it was launched, Block became “the first public company to allow customers to buy and sell Bitcoin from our platform”.
By 2019, he revealed that Spiral, a new team, was formed whose job was to focus on “free open source Bitcoin development” and the team created the Lightning Development Kit (LDK) as one of its first projects.
In 2020, Bitcoin Boosts were launched to reward customers with BTC for using their Cash App card to purchase goods and services while Block made 1% of its balance sheet in Bitcoin in 2021. Today, Cash App manages more than 50 million monthly active transactions.
Other achievements by Cash App listed included a gross profit mark of $200 million in 2018, which jumped to $3 billion in 2022, and in 2022 alone, over $7 billion worth of bitcoin was sold to customers.
Why Bitcoin Matters
The Product Lead said that Bitcoin is important because it is breaking the barrier the average person faces in the financial economy, especially as it relates to inclusion.
“We Believe Bitcoin is going to have a profound impact on financial services particularly as a tool for economic empowerment and as a global currency for the internet”.
He added that one of the basic principles of the company is that everyone should participate in the global financial economy irrespective of where they are from. And Bitcoin can deliver on the vision.
Michael noted that there are three basic reasons why Bitcoin is loved around the world, especially by customers who use the Cash App. The first is that it can afford a low cost for financial transactions compared with the current system of the economy. The next feature that makes Bitcoin vital, is that it is global just like the internet.
“Bitcoin is a decentralized system and global by nature like the Internet. It’s always open for business” as it has no banking hours. Users can access their Bitcoin anywhere and anytime around the world.
The next attribute is that it is a rare asset, just like gold. “There’s a limited supply of Bitcoin as there will only ever be 21 million Bitcoin,” Michael said. He also mentioned that the security behind the protocol is also an advantage. No one can have access to Bitcoin that belongs to another in the same manner or cash.
“When customers hold their Bitcoin in cash app we keep their Bitcoin safe by using a secure Cold Storage solution.”
Recent Bitcoin-based features on Cash App
The leader at Block said that three new features are on the Cash App today that are focused on expanding the use case of Bitcoin with the help of Lightning Network.
The first he noted was the Auto Invest. This works by automatically taking out a percentage of a user’s paycheck and investing it in Bitcoin via the Cash App.
In the screen presentation, he said that the user is required to select how much of their income should be invested in Bitcoin before the service is initiated.
The next feature enables users to automatically invest their spare cash when they use their Cash app card to purchase goods. Michael explained that users can activate this by having the Cash App card and activating the Roundups tab found in the Cash App.
Thus, if a user wants to buy a new pair of shoes that cost $41.05, it will be rounded up to $42 but while $41.05 is paid for the shoes, the $0.95 left is used to stack some Sats.
The last feature is the QR Code process that can be used with the Lightning Network on the Cash App to make payments in Bitcoin. So instead of choosing between the Bitcoin Network and Lightning Network when purchases are to be made, users can seamlessly use the QR code option. He added that using this feature is completely free for sending or receiving Bitcoin.
CashApp users to now send Bitcoin via Lightning Network
Jack Dorsey: building an internet decentralized identity layer & payment infrastructures