In a recent appearance on CNBC’s TechCheck, Block co-founder Jim McKelvey said the pace of disruption driven by crypto-focused firms in the payments sector is accelerating.
The wave of companies that set out to transform payments, including Block, has experienced slower growth recently due to a number of factors, notably increased regulation.
Still, McKelvey rejects the notion that meaningful disruption will take longer than anticipated. The American billionaire investor said that with ongoing innovation in payments, the industry is developing “a faster rate of disruption across the market.”
Bitcoin for its unique properties
The interview also highlighted Block co-founder Jack Dorsey’s well-known preference for Bitcoin. Dorsey, the former CEO of Twitter, has repeatedly expressed an exclusive affinity for Bitcoin over other cryptocurrencies or crypto products.
While McKelvey clarified that he is not a Bitcoin maximalist himself, he noted that Block recognizes Bitcoin’s significance as a technology, even if its long-term outcome is not guaranteed.
He added that although Dorsey champions Bitcoin over other crypto assets, he has historically been able to enter emerging spaces like Bitcoin quite early. The venture capitalist said Block’s stance on Bitcoin is rooted in the asset’s distinctive characteristics—most importantly its high degree of decentralization, which makes it community-driven.
“It’s the response of the community that’s actually more exciting than the coin itself,” he said.
Block has weathered tougher challenges as a disruptor
Digital payment companies like Block remain far from unseating legacy payment leaders such as Visa and MasterCard, but they have made significant progress. Founded in 2009, Block’s most serious test to date came in 2013 with what McKelvey has called the “Amazon effect.”
In a separate discussion with CNBC last week, McKelvey recalled that when Amazon launched Amazon Register in 2013, Block was still a small startup. Amazon offered a processing fee of 1.75% compared with Block’s 2.75%.
“When Amazon does that to a startup, the startup dies. When Amazon did that to Square, we were terrified,” he explained.
Although Amazon’s move could easily have spelled the end for a young payments company, Block persevered. The fintech resisted the pressure, survived the challenge from Register within a year, and the retailer later attributed the decision to shut down the payments service to intense competition in the digital payments space.