Square co-founder and CEO Jack Dorsey announced that they are developing a platform for decentralized finance (DeFi) on Bitcoin.
Square is creating a new business (joining Seller, Cash App, & Tidal) focused on building an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services. Our primary focus is #Bitcoin. Its name is TBD.
— jack (@jack) July 15, 2021
Dorsey is also the co-founder and CEO of Twitter, so he has considerable communication power, so this initiative must be followed with particular attention.
He is known to be a supporter of Bitcoin, if not a real maximalist, and thanks to the recent success of the Lightning Network it is possible to imagine developing new platforms based on the Bitcoin blockchain, but which do not require the registration of transactions on it. resulting therefore very fast and economical.
The same transactions in LN for example are almost immediate, and with negligible commission costs.
Dorsey announced that Square is building a new business, along with Seller, Cash App, and Tidal. It is a business focused on creating an open development platform to simplify the creation of decentralized financial services, i.e. non-custodian and permissionless.
“Our main focus is on Bitcoin”.
Square’s new bitcoin business
So it may not be a Bitcoin-only platform, but it will definitely be Bitcoin-based. On the other hand, second layers such as Lightning Network allow you to develop platforms based on the Bitcoin blockchain, without the need to use it to record transactions.
Previously, Dorsey had also revealed that Square is also working on the development of a hardware wallet , so it is possible that they intend to develop a complete solution aimed at both those who want to create DeFi protocols and end users.
DeFi began to explode more or less a year ago, with a real boom earlier this year thanks to the new protocols on Binance Smart Chain.
The advantage of using LN is to be able to count on fast and cheap transactions, unlike Ethereum, although second-layer solutions are also spreading on Ethereum capable of guaranteeing similar performance. Binance Smart Chain, on the other hand, already offers similar performance thanks to being based on proof-of-stake instead of proof-of-work.
But Bitcoin offers one more advantage: legal recognition.
For example, starting from September it will be in effect a legal tender in El Salvador , and could in the future also be legal tender in other states.
Imagining decentralized finance services based on a fiat currency, in some states, such as Bitcoin, is something unique, given that to date no DeFi protocol is based on fiat currencies: at most they use stablecoins, which even though they may have the same however, the value of fiat currencies are not legal tender.
In other words, for decentralized finance it could be an epochal leap, because thanks to Bitcoin, in theory, even regulated financial institutions will be able to enter this sector, if regulated by the rules of states in which Bitcoin is recognized as legal tender.