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SQ stock is a good buy here, but crypto weighting is a risk

To block (NYSE:SQ) the stock has been slaughtered within the last 12 months. Formerly known as Square, Block now embodies a number of other subsidiaries, including the Square payment system that made it easier to browse farmers markets and some cryptocurrency companies.

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While its digital banking tools have certainly helped small and medium-sized enterprises (SMEs), Block is now expanding its offerings to dedicate some of its size and power to Bitcoin (BTC-USD) operations.

As a digital payment platform, I think Square is the star player here.

SQ Stock takes a step into crypto

I have been following Bitcoin history since the early 2000s. It has had its ups and downs over the past two decades.

The first wave of interest in bitcoin tended to always evoke the story of one of the first miners to own bitcoins. Basically, the miner spent 10,000 bitcoins for $40 worth of pizza. I wonder if the pizzeria still has these pieces!

But the thing is, the original cryptocurrency went through various boom and bust cycles.

However, I remain a strong believer in German philosopher Arthur Schopenhauer’s concept of truth. He says that all truth goes through three phases: first, it is ridiculed; Second, it is violently opposed; third, it is accepted for granted.

I would say that we are currently moving towards the second phase. Based on the huge amount of Super Bowl ads for crypto companies this year, it’s safe to say that there are a lot of people diving into the world of crypto.

However, there are also massive government seizures of cryptocurrencies that are believed to be impossible to trace. There are also crypto brokers getting ripped off left and right. And remember, there is no Federal Deposit Insurance Company for Bitcoin or the like. When it’s gone, it’s gone.

Personally, that’s why I think so many people are opening crypto stores. There are many people who are dying to dive. And, if it all blows up, they don’t owe these people a dime. It’s not banking.

And that brings me to my second point, which concerns violent opposition. Regulators are starting to get involved. It’s not “violent opposition” to Bitcoin, but it will change the market significantly.

Not a new path

This kind of truth has happened before. Internet was pretty much the same. But it took a dotcom bubble before it became a more restrained pursuit and eventually became obvious.

Decentralized finance (DeFi) is the real key to Bitcoin and other cryptos. And personally, I think the power of this new era is in blockchain and DeFi more than a specific coin.

However, SQ founder and CEO Jack Dorsey spent a lot of quality time thinking. And he’s on board with Bitcoin. It is an important commitment.

But it also jeopardizes the digital payments aspect of SQ shares. If Bitcoin tank, Block too.

Yet, in the long run, the big growth is on the Square platform. And right now this company is undervalued after all the sales. If you’re looking for a good digital banking stock for the next two decades, SQ stock is a good buy.

I’m pretty confident that Bitcoin and other cryptos will enter the mainstream, but they have an uphill battle against governments and major financial institutions. Moreover, they are far too volatile for a true monetary standard. It’s a boutique for now, but maybe not in a decade.

SQ stock is a smart and indirect way to play a potential version of the global financial future.

At the date of publication, GS Early did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to Publication guidelines.

early GS has been an award-winning financial writer and editor for nearly three decades, working with many top financial publishers during that time. He has seen a few things and hears more.


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