Summary List Placement
Twitter CEO Jack Dorsey shared how and why digital payments company Square bought 4,709 bitcoins for $50 million on Thursday.
Dorsey was keen to share how Square’s team executed the trades, and revealed the process in a white paper on the same day.
Square’s treasury team executed an over-the-counter transaction with a bitcoin broker using an average price of $10,617.
“This purchase from Square could make sure 10,000 remains a floor to the price,” London Capital Group’s head of research said.
Visit Business Insider’s homepage for more stories.
Twitter chief executive Jack Dorsey has laid out how payment company Square invested $50 million into a block of nearly 5,000 bitcoins on Thursday.
“More important than Square investing $50mm in #Bitcoin is sharing how we did it (so others can do the same),” Dorsey said in a tweet.
Dorsey intends to make bitcoin, which he believes will one day become the world’s “single currency,” more accessible and useful to millions of people through Square’s Cash App.
Square’s treasury team executed an over-the-counter transaction with a bitcoin broker that already works with Cash App’s trading product, the company said in a whitepaper.
To reduce cost and pricing risks, the team carried out trades using the average price of bitcoin over a prearranged 24-hour period. An average price of $10,617 was paid for each bitcoin.
Read more: Citi’s US equities chief warns of an ‘extreme peak’ in earnings revisions heading into the crucial reporting season — and explains why it makes stocks vulnerable to a pullback in the weeks ahead
Square said it “invested heavily” in a cryptocurrency infrastructure, or cold storage, to protect customer funds from potential hackers.
Aside from the security detail, the company said its crime insurance policy protects against internal, or external, theft in both digital and offline wallets.
Within Square’s balance sheet, the $50 million bitcoin investment will be classified as “other non-current assets.” But its short-term, or long-term, classification depends on the length of time for which the company plans to hold the assets.
For now, cryptocurrencies meet the definition of “intangible assets” under accounting principles.
Square is betting on bitcoin, because it believes the currency will feature in its future as a payment company, said Jasper Lawler, head of research at London Capital Group.
“Cryptocurrency trading is notoriously susceptible to influencers advocating it,” Lawler said. “This purchase from Square could make sure $10,000 remains a floor to the price.”
Bitcoin rose 2.8% to $10,877 on Friday.
Read more:Self-taught market wizard Richard Dennis took a $1,600 loan and turned it into an estimated $200 million. He shares the 13 trading rules that turned his performance parabolic.
SEE ALSO: The UK economic recovery is running out of steam – GDP grew just 2.1% in August despite government support
Join the conversation about this story »
NOW WATCH: What happens to animals during wildfires
Source:: Businessinsider – Finance