Fintech Duopoly: Square and PayPal

Fintech has been a multi-year growth story that’s still in its early innings, with Square (SQ) and PayPal (PYPL) leading the pack. Square recently announced a $29 billion, all-stock deal to buy Afterpay, a buy now and pay later platform. Square’s acquisition highlights consumers circumventing traditional credit, especially younger buyers, for installment loans. Payment players and financial technology, notably PayPal, also offer their own version of buy now and pay later. Both Square and PayPal enable businesses with a point of sale, analytics, peer-to-peer payments via Venmo (PayPal) and Cash App (Square), small business lending, cryptocurrency transactions, and support traditional credit card integrations into their platforms. Square and PayPal offer end-to-end financial solutions for businesses and consumers while powering the next generation of financial technology. These financial technology companies are creating additional revenue verticals while addressing unmet needs in the financial services space. Both Square and PayPal may offer long-term growth at reasonable valuations when factoring in their end markets are current growth rates.

Latest Earnings and Growth

The recent earnings reports by Square and PayPal highlight the massive trends and growth trends in the financial technology space. Square’s profit increased 91% from a year ago, which marked a record quarterly growth rate for the payments company. Cash App profit was up 94%, while seller jumped 85% from a year ago. Net revenue excluding bitcoin came in at $1.96 billion for the quarter, an 87% rise year-over-year. PayPal added 11.4 million net new active accounts for a total of 403 million active accounts. Revenue grew 19% year-over-year. Total payment volume grew 40% to $311 billion, while the Venmo app, which began supporting cryptocurrency services in April, saw payment volume grow 58% to $58 billion. Again, these companies are growing rapidly and clearly seeing widespread adoption across their financial solutions with cryptocurrency and buy now-pay later, serving as long-term catalysts. Continue reading "Fintech Duopoly: Square and PayPal"

What The Heck Is Defi?

I have to admit: Decentralized Finance – or “Defi” – is one of the most fascinating aspects of the blockchain and cryptocurrencies. In fact, it’s defi that got me really excited about crypto in the first place.

So, let’s get to it!

Defi Simplified

At its heart, defi uses the blockchain to make complicated things happen while cutting out the middleman in the process. Here’s what I mean...

Right now, finance is run by a hub-and-spoke model. And that model hasn’t changed much in a long, long time. In fact, it’s pretty much the same as it was before sophisticated computers and large financial networks.

And you can see why: The hub-and-spoke model organizes most financial transactions into large financial centers around the globe, such as New York and London. When financial transactions are made, activities are generated in one of these centers. Those institutions then determine the details of the transactions and make sure that they are carried out like all the parties intended.
Really, not very complicated. And for the most part, it’s not a bad system. Continue reading "What The Heck Is Defi?"

The Best Cryptocurrency Exchange

In our prior installments, we talked about Bitcoin (BTC) and Ethereum (ETH), two cryptocurrencies that were worthy of a place in just about everyone’s portfolio: BTC is the big boy on the block and is a great store of value while ETH takes advantage of the computational features of blockchain technology.

Hopefully, I was also painfully clear that investing in any cryptocurrency – including BTC and ETH -- involves substantial risk. You can lose big. So, if you’re thinking about taking the plunge, do so sparingly. A good rule of thumb: Don’t set aside more than 1% to 2% of your portfolio for crypto.

Now, after all, that, if you’re set to invest in a little cryptocurrency, welcome to the club! I think this class of assets is the future. It’s super-exciting and chock-full of potential, including profit potential.

But before you can get to that potential, you’ll need to actually buy some cryptocurrency. So, today, we’re going to do a deep-dive into one of the best ways to buy crypto: By using the popular crypto exchange, Coinbase (COIN).

Coinbase Is Big And Easy

Unless you’ve been under a rock for the past few months, you’ve heard about the wildly popular IPO (actually, direct listing) of Coinbase. Although it's off its highs, the shares now boast an eye-popping $63 billion market cap. And while Coinbase isn’t the biggest on a global scale, it’s the biggest in the U.S. Continue reading "The Best Cryptocurrency Exchange"