I added 40 shares of Square at $199 on Wed night. Altogether, I have 160 shares of Square at an average price of $184.25, for a total of $29,480. I have another USD $24,000 in Paypal, making my investments in this space over USD $50,000.
Would like to spend a bit of time on why I’m adding digital payment stocks to my portfolio. Quite frankly, my experience with digital payment systems like FavePay and GrabPay is that it sucks. Using a credit card, I can tap for most purchases. It takes a few seconds. With the digital payment apps here, I have to open up the app, skip whatever notifications, enter the correct amount, wait for it to be processed, and show to the merchant. It takes considerably more time and the only reason I would use it is for the cashback. It doesn’t seem like a sustainable or superior way to pay.
Square is also one of the stocks where I’m not a user or customer, so I don’t have a good idea of how it really is. I have to rely on others’ reviews. I do have experience with having a US bank account and paying bills, as I was a student there for a few years. Though its been a while, I remember the banks there were pretty terrible. There were charges to withdraw money at the ATM, barely any online functionality, and service was slow. Worse were the overdraft fees, which are fees charged when the account withdrew more than it actually had. Square and Paypal provides a much better alternative to the US banks.
I was also quite impressed with Square capital, where they can make quick loans to their customers, far faster than what a bank loan would do. This is a small business owners’ dream. As Square would have direct and real-time info on the businesses’ revenue, they can do a credit assessment easily. It would also seem enormously profitable as you can reduce the manpower needed to assess creditworthiness.
The Bitcoin business of Square and Paypal doesn’t really matter to me. Despite the recent rally of Bitcoin, I’m of the view that it has no fundamental utility. There is no real scarcity to cryptocurrencies, as it can be easily created. It’s just lines of code. In addition, its highly unlikely to work as a medium of exchange. Few merchants would accept a currency that can plummet in value. I would also roll my eyes about the whole “power to the people” idea of bitcoin. More like insiders sitting on their hoards of code telling others its virtual gold, hoping to get rich themselves.
It’s not to say that bitcoin hasn’t made some people rich. It has, and there would likely be some winners ahead. But scams like Enron and Nikola made some people rich too (most undeserved), as long as they had perfect timing. I would also dare say that Bitcoin has ruined much more people than it has benefited.
Despite my scepticism over cryptocurrencies, I don’t mind being in a position that makes money off Bitcoin believers. A good portion of my portfolio would benefit from their rise. Square and Paypal makes money off facilitating transactions with cryptocurrencies. Nvidia and AMD would be winners too, as their graphics cards are highly sought for by miners. They don’t even need the extra business, and they will do just fine without crypto. It’s because they provide real utility.
During the gold rush of the 1800s, it’s common knowledge that those who sold the shovels and picks to the miners profited far more than those who went digging for gold. They did so with far less work and risks too.
That’s the position I want to be in.