Square Cryptocurrency Payment Network Approved
The San Francisco-based digital payments firm Square had their patent application approved on August 29th for a system that allows merchants to accept cryptocurrencies (in addition to conventional payment methods like USD), and cash out their cryptocurrencies into a currency of their choice.
According to the patent,
“The disclosed technology addresses the need in the art for a payment service capable of accepting a greater diversity of currencies…including virtual currencies including cryptocurrencies (bitcoin, ether, etc.)…than a traditional payment system in a transaction between a customer and a merchant, and specifically for a payment service to solve or ameliorate problems germane to transactions with such currencies. Specifically, the payment service described herein can facilitate real-time (or substantially real-time) transactions, allowing a customer to pay in any currency of their choice, while the merchant can receive payment in a currency of their choice.”
If and when implemented, Square would be the first payment processor to offer a direct gateway for its merchants to automatically accept and convert cryptocurrency into their local currency.
A critical component of the patent outlines how the POS system could eliminate the infamous latency issues throughout cryptocurrency transactions. This means that Bitcoin transactions could be approved at around the same speed as your standard credit card.
In order to do this, a private blockchain will need to record Square transactions in real time so that the POS system can identify the new balances before the transactions get added to the main public blockchain. It also notes that the risk of double spend attacks would shift from the merchant to the payment service.
The above two issues have been major obstacles to more merchants accepting cryptocurrency.
Square Founder and CEO, Jack Dorsey (also Twitter co-founder and CEO), has proven to be very supportive of cryptocurrency and bitcoin as a payment system. He’s also invested into projects such as Lightning Labs, a Bitcoin startup working on a second layer payment protocol to speed up Bitcoin transactions to “lightning” speed.
In the first quarter of 2018, Square reported a total net revenue of $669 million, $34 million of which was bitcoin revenue collected after Square launched the ability to buy and sell bitcoin on its Cash App in January 2018.*
*The bitcoin revenue was calculated as the total sale amount of bitcoin to customers, with the costs being the total amount of bitcoin Square purchased in order to facilitate the transactions. The adjusted revenue in the first quarter of 2018 is $.2 million related to bitcoin.
The full patent can be found here.
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ABOUT THE AUTHOR
Alex is the Editor-in-Chief of CoinCentral. Alex also advises blockchain startups, enterprise organizations, and ICOs on content strategy, marketing, and business development. He also regrets not buying more Bitcoin back in 2012, just like you.