The idea of having a Secure Bitcoin Wallet to help hold BTC – or other cryptocurrencies – is not at all new.
It’s basically a high-tech flash drive. It protects any cryptocurrency data on the device with a password or pin code, allowing the user to secure access to the data. The “wallets” range in display size from smartphones to computers.
There are a variety of wallets available to support various cryptocurrencies. They’re designed for people who trade in multiple currencies and need to manage multiple keys. They’re useful for those who trade in multiple currencies, but not for anyone else.
The company Square grew out of a simple white dongle that anyone can use on their smartphones to accept credit cards.
First Square’s hardware wallet plans were revealed in a series of tweets from the company’s CEO in June. “The company is thinking about making a Bitcoin hardware wallet,” he said on Twitter. “If we go ahead, we will design it in the open, from software to hardware with community input” (the company declined to comment further).
Square had posted jobs for the project on multiple recruitment sites since then; they were searching for software developers, project managers, supply chain managers, and security experts to work on the wallet. Its corporate name was changed to “Block” in December.
“Block”, Square’s parent company, has been dabbling in cryptocurrency for quite some time. In late 2018, Block announced it was expanding its mobile payment platform, Cash App, to include Bitcoin trades and the ability to send them to other users.
Originally, Square charged a fee for these transactions, but recently stopped doing so. The company now acts as its own exchange, with different pricing for buying and selling.
While apps do not work like hardware wallets, they leave the private keys on the cloud. There have been cases in which hackers have gained access to such accounts.
A hardware wallet stores private keys offline, increasing the security but creating complexity for users. Square CEO Dorsey said the hardware wallet uses “assisted self-custody” to provide the best of both worlds, security and simplicity.
In his view, Bitcoin has changed everything in the world since its inception. “I don’t think there’s anything I’d rather work on than Bitcoin in my lifetime,” The Bitcoin 2021 Conference attendees heard Dorsey say this.
In 2019, he tweeted that Bitcoins will keep on rising against other cryptocurrencies, because Bitcoins are resilient and principled. Bitcoins are native to the internet.
As a result, Square’s wallet does not support multiple cryptocurrencies, only Bitcoin. There are existing hardware wallets like the Ledger Nano X, Trezor Model T, and KeepKey that do so.
The hardware wallet, that Dorsey had announced, could just be the stimulant that Bitcoin needs to take over Tether, Ethereum, Binance, Ripple, and others as the standard cryptocurrency.
According to Dan Dolev, the managing director and senior analyst of equity research for Mizuho, a global bank and financial services provider, this crypto gadget will arrive in the second half of the year.
Square’s announcement wouldn’t be a simple flash drive, according to Dolev. He compared Square’s move to Apple’s entry into smartphones. Prior to the introduction of the iPhone in 2007, there were more than a few smartphone models that were connected to the Internet. These worked, but there was no sense of an ecosystem. The same applies to hardware wallets.
According to him, Square’s involvement means the key won’t just store Bitcoin passwords, it’ll also serve other uses. Maybe it will be a debit card or something else. On top of the Bitcoin blockchain, Square aims to create a global network for decentralized finance.”
We will need to make it not just easy to buy, sell, and hold cryptocurrencies, but also to purchase things in the real world. The challenge will be to work with merchants to accept the currency and to lower transaction costs, says Dolev. As it was with near-field-communication (NFC) payments, hardware is not a problem.
Although the exact shape of this device is unknown, it will probably come in the shape of a square or, says Dolev, “even more likely, a block.”
Historically, Square has succeeded on everything they’ve touched.