Square paid $300M to get access to Jay Z and elite musicians
Square acquired Tidal to build a financial platform for artists and make Bitcoin the currency of the internet.
I love Square and it's one stock that I have had in my portfolio for ages. However, I don't think Bitcoin will ever be the currency of the internet. I find it hard to believe Bitcoin will replace any currencies - yes even the weak ones.
The fundamental problem for Bitcoin as a currency and as a way to pay for music - or anything else for that matter - has to do with the very thing lots of people like about it. Namely, Bitcoin's supply is controlled and limited. Because the supply is limited, when demand for Bitcoin rises (because, say, people are convinced they can get rich quick by buying it), then the value of Bitcoin is going to rise as well. So, if you believe your Bitcoin is going to become more popular, then it’s foolish to spend it on music or a Tesla for that matter: you should hoard it and then sell it once its price rises. And since you can get along perfectly well without spending Bitcoin, there’s never been anything pushing people to stop hoarding. The more people hoard Bitcoin, treating it as a speculative asset, the less appealing it seems as a currency.
As mentioned previously, I do see strong applications for Bitcoin as a crypto-asset (store of value) but not as a currency. So while it makes sense for Square and artists to accept Bitcoins because each coin value is likely to increase as people continue to hoard, it doesn't make sense - at least for now - for the customer to pay for music with a Bitcoin.
The acquisition gives Square access elite musicians already working with Tidal and gets Jay-Z on Square's Board of Directors. Except for these two things, I don't think Square owning a music streaming service - especially one that failed miserably like Tidal- gives it that much of a leg up when trying to build a financial platform for artists. Bottom line, Square could have built "Square for Artists" without owning Tidal. But without Jay Z and his relationship with elite musicians, it would be much harder for "Square for Artists" to make headway.
I love Square and it's one stock that I have had in my portfolio for ages. However, I don't think Bitcoin will ever be the currency of the internet. I find it hard to believe Bitcoin will replace any currencies - yes even the weak ones.
The fundamental problem for Bitcoin as a currency and as a way to pay for music - or anything else for that matter - has to do with the very thing lots of people like about it. Namely, Bitcoin's supply is controlled and limited. Because the supply is limited, when demand for Bitcoin rises (because, say, people are convinced they can get rich quick by buying it), then the value of Bitcoin is going to rise as well. So, if you believe your Bitcoin is going to become more popular, then it’s foolish to spend it on music or a Tesla for that matter: you should hoard it and then sell it once its price rises. And since you can get along perfectly well without spending Bitcoin, there’s never been anything pushing people to stop hoarding. The more people hoard Bitcoin, treating it as a speculative asset, the less appealing it seems as a currency.
As mentioned previously, I do see strong applications for Bitcoin as a crypto-asset (store of value) but not as a currency. So while it makes sense for Square and artists to accept Bitcoins because each coin value is likely to increase as people continue to hoard, it doesn't make sense - at least for now - for the customer to pay for music with a Bitcoin.
The acquisition gives Square access elite musicians already working with Tidal and gets Jay-Z on Square's Board of Directors. Except for these two things, I don't think Square owning a music streaming service - especially one that failed miserably like Tidal- gives it that much of a leg up when trying to build a financial platform for artists. Bottom line, Square could have built "Square for Artists" without owning Tidal. But without Jay Z and his relationship with elite musicians, it would be much harder for "Square for Artists" to make headway.
Disclaimer: This post is merely my own assessment and is not an investment recommendation. For professional advice, seek input from a licensed investment advisor.
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