Jack Dorsey is Hodling
Twitter co-founder Jack Dorsey is a cryptocurrency zealot. In recent years, he has been a notable cheerleader and public defender of Bitcoin, promoting it regularly from his Twitter feed. He has said that he believes Bitcoin can bring about world peace, eventually becoming the world’s single currency. He’s negative about fiat currencies and last October tweeted that “Hyperinflation is going to change everything. It’s happening.”
Dorsey is particularly keen on Bitcoin, which some claim is a deflationary force that bypasses the inefficiencies of central banks and fiat currencies. It is deflationary because it is designed to limited in supply, like a real-world commodity: there are only so many coins that can be mined. Crypto supporters say that decentralised blockchain technology cuts out middlemen, making transactions cheaper and faster and keeping efficient records without government oversight.
“As Dorsey believes Bitcoin will eventually be widely used online, it’s only natural that Block is trying to carve out a niche in the crypto world.”
Dorsey resigned from Twitter late last year to spend more time with his other company, Square. Square, a payments platform founded in 2009, is worth almost three times Twitter’s value at about £73bn. He subsequently changed the company’s name to Block, due in part to his interest in blockchain as well as the new name better reflecting the firm’s various businesses.
Dorsey’s fixation with the cryptocurrency fits much better with Block. Block has grown in part due to a feature that makes it easy for regular people to buy Bitcoin from their phones, and the company has spent $220m buying Bitcoin to keep on its balance sheet. In addition, Dorsey says that Block will build a Bitcoin mining system based on custom silicon and open source for individuals and businesses worldwide.
“After hyperinflation left several countries economically devastated, including Argentina and Venezuela, some countries in Africa are using cryptocurrency and blockchain technology to deal with the issue.”
Judging by his tweets, Dorsey’s interest in Bitcoin was ignited during a trip to Africa in 2019, after which he started tweeting about the currency. He met local entrepreneurs, many of whom were building companies focused on Bitcoin. And he apparently left the continent convinced that Bitcoin could change the financial systems there.
After hyperinflation left several countries economically devastated, including Argentina and Venezuela, some countries in Africa are using cryptocurrency and blockchain technology to deal with the issue. As mentioned above, you can’t increase digital currencies at will. And transactions happen over a decentralised and distributed public ledger, enhancing security by making transactions tamper-proof. It is almost impossible to alter or destroy the virtual public ledger.
Bitcoin and other digital currencies are not tied to one country. Therefore, they offer a means to hedge against hyperinflation. With high inflation, trust in government policy and national currency may plunge. Due to the loss in faith of central bank-issued currencies, people turn to Bitcoin as a store of value, increasing cryptocurrency adoption. Thus, high inflation rates can encourage the adoption of cryptocurrencies.
As Dorsey believes Bitcoin will eventually be widely used online, it’s only natural that Block is trying to carve out a niche in the crypto world. But Dorsey isn’t investing in competing digital coins or in so-called web3 technologies that use blockchains to run decentralised web services. He believes that Bitcoin is the only cryptocurrency needed and that web3 is an attempt by corporate investors and venture capitalists to control everything.
Dorsey says that for Bitcoin and all the other projects around it to succeed, there must be increasing transparency within the next five to 10 years, increasing participation that is globally represented, and provision of daily utility, especially in the form of currency.
According to Fundstrat Global Advisors’ Tom Lee, speaking to CNBC, Dorsey is a bullish force for crypto: “One thing to keep in mind is that crypto is the intersection of financial services and technology. That’s literally 60% of the economy. Really, financial services is the other half of GDP, so it’s a huge market…and there isn’t enough capital allocated towards crypto innovation, so it takes people like Jack Dorsey to really marshal focus and I don’t think the space is overinvested yet.”
Dorsey seems to be crossing paths frequently these days with Elon Musk, whose $44bn takeover offer was accepted by Twitter’s board of directors recently. Block and Tesla are teaming up with Blockstream for an ambitious bitcoin mining venture in Texas. The mine will use Tesla solar and battery technology for its power source, and it is set to be off the power grid. As many of the concerns around Bitcoin relate to the emissions mining can produce, this could change the discourse around it.
It is perhaps Dorsey’s aversion to corporate control that explains his love for Bitcoin. He has written that having companies control online content and user identity is a mistake. It’s a view shared by Musk, who was supposedly so upset by Twitter’s speech rules that he suggested building a new service, all while simultaneously buying plenty of the company’s stock. Some claim that Dorsey can become fixated on trends or products years before others see them coming and that his bets on the future are rarely wrong. Time will tell.