Square’s long-term dance with Bitcoin ??; A startup that wants to make Ethereum faster ??; Disappointing results from Coinbase ??

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Last week (8-12 November) was a really hot and super exciting week in the world of Blockchain & Cryptocurrency.?We will look at?Square dancing with Bitcoin; a startup that wants to make Ethereum faster; Coinbase's disappointing results, and other interesting news and developments.

Without further ado, let us dive into what has happened in the Blockchain & Crypto sector last week. Let’s connect the dots.

Square’s long-term dance with Bitcoin ??

Earnings ???Payments giant?Square?said in its?third-quarter earnings letter ?that its peer-to-peer payment service,?Cash App, generated a whopping $1.82 billion of Bitcoin revenue in the quarter and $42 million of gross profit.

This is up 115% and 29% year over year, respectively.?Not too shabby!

The numbers ???Some other notable figures from the earnings:

• Bitcoin revenue and gross profit decreased in the third quarter versus the second quarter, however, Square said, citing the “relative stability in the price of Bitcoin, which affected trading activity compared to prior quarters.”
• Square’s total net revenue was $3.84B in the third quarter, up 27% year over year, while gross profit was $1.13B, up 43% year over year.?That’s solid???

Bitcoin-focus ???On its third-quarter conference call, the company also said it will release a white paper on Nov. 19 regarding TBD, its new division focused on creating an open developer platform to build a decentralized bitcoin exchange.

More interestingly, Square also said on the call that the company doesn’t plan on offering users other cryptocurrencies outside of Bitcoin. The company said it is focused on building its hardware wallet and continuing plans to allow individuals and businesses to mine bitcoin.

?? THE TAKEAWAY

Risks involved.?Square’s long-term dance with Bitcoin is somewhat similar to what MicroStrategy has been doing. On one hand, it’s great that they have a clear strategy and show commitment to?the new age gold. On the other hand, it’s an obvious risk as you keep all your eggs in one basket, not to mention product limitations (users have literally no choices outside of BTC, which could insensitive them to switch to other platforms/exchanges). Hence, it’s not surprising that the hares of Square were down about 4.9% in post-market trading following the release of its Q3 results.

A startup that wants to make Ethereum faster ??

The money ???Matter Labs ?that develops?zkSync , one of the so-called Ethereum “rollup” scaling solutions, has just closed a $50M Series B investment led by a16z Crypto just months after closing a Series A led by Union Square Ventures.

What is it? ???The problem ???Ethereum’s insufficient network volume limits have led to slow transactions and prohibitively pricey fees, but it’s a familiar problem for longtime developers in the ecosystem.

The so-called Ethereum “rollup” scaling solutions hence emerged that effectively reduce the traffic on the central Ethereum blockchain by offloading the hard work of processing transactions to efficient secondary chains that record data of transaction batches to the main Ethereum network.

What this means functionally is that developers can earn the benefits of speedier and cheaper transactions without having to lose the security of the Ethereum ecosystem.

?? THE TAKEAWAY

Scaling Ethereum.?Ethereum is the OG when it comes to blockchain infrastructures, and more and more apps & services have been built on top of it. But pretty jammed with traffic, leading to high fees. Hence, Matter Labs wants to remove some of that traffic to a side chain to make the whole experience faster. If Ethereum is the future (and developers tend to be choosing it more and more), this is where the progress of tech will go.

Disappointing results from Coinbase ??

Earnings call ???Shares of one of the biggest crypto exchanges?Coinbase?(COIN) were falling around 10% after the crypto exchange reported its third-quarter revenue came in at just $1.24 billion, versus the consensus analyst estimate of $1.61 billion, according to FactSet.

Adjusted earnings per share for the quarter also missed at $1.62 versus expectations of $1.81.

The numbers ???In addition to the above, here are other key metrics to know about Coinbase’s 3Q2021:

• Coinbase posted $1.1B in transaction revenue in the third quarter, down from about $1.9B in the second quarter.
• Q3 trading volume was $327B, down from $462B in Q2.
• Coinbase had 7.4M retail monthly transacting users (MTUs) in Q3, down from 8.8M in Q2, but up from 2.1M in the year-ago quarter.
• Coinbase reported that the percentage of total trading volume coming from bitcoin continued to decline, falling to 19% from 24% in Q2 and 39% in Q1. Ether trading volume dipped from 26% of the total in Q2 to 22% in Q3. Meanwhile, trading volume for other crypto assets rose from 50% of the total in Q2 to 59% in Q3.
• Q3 subscription and services revenue grew 41% quarter over quarter to $145M, up from about $103M in Q2.

?? THE TAKEAWAY

Remain optimistic.?It’s clear that Coinbase's fortunes are largely dependent on the continued success of?Bitcoin?&?Ethereum, the two most popular and valuable cryptocurrencies. And this is obviously a risk. Knowing that the exchange is looking at other ways to diversify its revenues. One of them is NFTs, which Coinbase appears to be very bullish about. Coinbase hence expects to launch its NFT functionality in the next couple of quarters, which they believe has the potential to become bigger than its crypto business. Also, more focus on subscription services can also boost their recurring revenue base. Zooming out, it’s still worth it to be bullish on COIN, especially in the world of growing crypto adoption.

Extra Reads & Quick Bites for Curious Minds??

• DeFi hacked. Again ???Decentralized finance (DeFi) lending protocol?bZx?was compromised for $55M. According to a tweet from the protocol itself, the private key controlling the project’s deployment on Polygon and Binance Smart Chain (BSC) was compromised.
• Blockchain for cross-border payments ???A new report from?Juniper Research ?has found that the deployment of blockchain for cross-border settlement will drive increasingly significant cost savings for banks. This can rise from $301M in savings in 2021 to $10B in 2030. Blockchain implementation in the cross-border settlement will allow stakeholders to use improved payment transparency and traceability; a critical advantage in an omnichannel payments market.
• Crypto trading from Ripple ???Blockchain solutions provider?Ripple?introduced plans for a new platform to help enable users to buy, sell and hold digital assets, according to their?blog post . Dubbed?Ripple Liquidity Hub, the turnkey crypto solution, which is designed for financial institutions (FIs), will enable enterprises to access deep liquidity within markets and expedite the transition to cryptocurrency, according to the announcement. The system will feature smart order routing to source digital assets at optimal prices from market makers, exchanges, and over-the-counter desks. The California-based company said its Liquidity Hub will help simplify the process via a streamlined API that waives the pre-funding requirements typically needed to free up working capital.

Money Moves??

• Crypto market surveillance firm?Solidus Labs?raised?$15M.
• The global FinTech startup and stablecoin issuer?Circle Internet Financial ?has launched Circle Ventures, a new project designed to invest in “compelling, early-stage blockchain projects and companies.”?The projects and companies in question would be those that fulfill “Circle's mission to raise global economic prosperity through the frictionless exchange of financial value.”?
• UK crypto app?Ziglu?has raised ￡7.19M from a crowdfunding campaign via?Seedrs? as part of an ongoing Series A round. Ziglu offers customers access to a curated range of cryptocurrencies: Bitcoin, Bitcoin Cash, Cardano, Chainlink, Dogecoin, Ether, Litecoin, Polkadot, Solano, and Tezos.?

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P.S.?You might enjoy my earlier pieces as well:

???A Wise pitch deck that led to London’s biggest and most successful direct listing ever

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About: I am?a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading the company's expansion into Europe, I'm an active member of the FinTech community and a TechFin evangelist.

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