- Square is racing to improve self-custody for Bitcoin in an attempt to foster greater adoption.
- The latest development is the use of NFC tech to link communication between mobile devices and the hardware wallet.
- Square is going all-in on Bitcoin with Jack Dorsey free from his obligations as Twitter CEO.
Bitcoin is about decentralization and Square wants to improve this integral feature of the network by taking self-custody to new heights. It turns to NFC to make the development of the new offering a reality.
Near Field Communication
In building a system that allows for safekeeping and easy access to user Bitcoins, Square wants the hardware wallet to be in sync with mobile devices. According to a tweet shared by Max Guise, staff at Square, the payment company will be relying on near-field communication (NFC) to link the hardware and the software components.
NFC has been around for decades and allows electronic devices to communicate over a distance of 4 cm. Square’s decision to go with NFC over other alternatives was borne out of “user experience, ubiquity, hardware cost, and security”. Square chose NFCs over Bluetooth and QR codes because of the need to keep hardware streamlined and utilize low amounts of energy.
“Furthermore, with both NFC and a robust way for the hardware to authenticate its owner, we will be able to provide a strong security perimeter for the hardware,” the firm stated. “Unlike most alternatives, NFC requires the two devices communicating to be very close to each other, which is ideal for a hardware wallet that should communicate only with its owner, not the neighbors.”
The use of NFC comes with its disadvantages for Square. The main challenge with the use of this tech is that not all mobile phones support it. In fact, the level of NFC support in mobile phones is not uniform and could pose a threat to innovation. Square comments that it will be going ahead with the plan because of the growing trend of phone manufacturers enabling NFC on their new devices.
Self Custody Is The Path For Square
Square in a public statement in October highlighted their guiding principles for the development of self custody of Bitcoin. The first principle is to cater to the self-custody needs of the individuals before banks and exchanges. The principle of globalization is central to Square as it targets not only citizens of wealthy countries but also those countries with limited access to financial services.
“For self-custody to be a realistic option for everyone, we need tools that are easy to use, safe and inexpensive,” said Square. The payments added that it will prioritize security by utilizing the “multisignature” feature built in the Bitcoin protocol. For an added layer of security, three keys will be used and two will be required to authorize transactions.
Square has over 8,000 BTC on its balance sheet and is being piloted by former Twitter CEO, Jack Dorsey. The company has been renamed Block, signaling its deepening foray into the Bitcoin frontier.