May 5, 2022 - Economy

Ten million accounts have bought bitcoin on Cash app

Illustration of a shopping basket full of pixelated coins.

Illustration: Gabriella Turrisi/Axios

Since introducing bitcoin on the Cash app, more than 10 million accounts have bought some of the original cryptocurrency, according to the Q1 shareholder letter from Block, Inc (the company most people probably still think of as Square), released Thursday.

Why it matters: 10 million people is a lot of people. That level of usage suggests that there really is demand for bitcoin from people who don't want to mess with weird wallets and keeping track of private keys.

  • For context, Glassnode estimates that there are a little under one million active bitcoin addresses right now, that is, people or entities holding their bitcoins on chain, under their own control.
  • It's believed that vastly more people hold cryptocurrencies using services like Cash App, where a few addresses control the bitcoin ultimately belonging to thousands of people.

Yes, but: Demand for the original cryptocurrency has flagged, somewhat. Bitcoin revenue was down 51% year over year, to $1.73 billion in the first quarter of 2022. Block made $43 million in profit off that revenue in Q1.

  • "The year-over-year decrease in bitcoin revenue and gross profit was driven primarily by relative stability in the price of bitcoin during the quarter," the report said.
  • Cash app primarily earns profit on bitcoin via the spread between buyers and sellers.

Details: This quarterly report highlighted some of Cash app's new bitcoin features:

  • It integrated with Bitcoin's lightning network, making payments to other lightning users nearly instantaneous.
  • "This new feature expands our peer-to-peer capabilities and presents an opportunity to strengthen our network with bitcoin while eliminating fees and processing times from sending bitcoin through on-chain transactions," the shareholder letter states.
  • In April, it allowed users who get their paycheck via direct deposit to automate receiving some of it in bitcoin without fees, similar to programs facilitated by Coinbase, the country's largest crypto exchange.

In the weeds: Bitcoin is always such a giant part of Cash app's revenue that it always has to give gross revenue numbers in total, and then excluding Bitcoin.

Bottomline: Cash app's gross profit was $624 million in Q1, better than all four prior quarters. All together, Block, Inc. earned $1.29 billion.

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