ARK Invest, the New York-based investment house helmed by long-time Bitcoin supporter Cathie Wood, has sold off all of its holdings in PayPal and is now leaning towards Jack Dorsey's firm Block due to its "singular focus" on Bitcoin.
Block, formerly Square, runs Cash App, a payment system that's compatible with Bitcoin's Lightning Network. The Lightning Network is a layer-2 solution built atop of Bitcoin that aims to make transactions faster and more affordable.
Discussing her company’s decision last Friday in an interview with CNBC, Wood pointed to Cash App’s “organic growth” as opposed to the “top-down approach” taken by PayPal’s Venmo.
“I think there's an organic movement,” Wood said of Cash App’s user base growth. “Of course, Venmo is accommodating Bitcoin, as well. But it's more of a follower of Cash App. And so we tend to put our bets with who we believe will be the winners.”
The ARK Invest chief added that the firm "chose Block over PayPal" while consolidating its portfolios during a risk off period for innovation, and had to make decisions in favor of the “highest conviction names.”
According to data pulled from Business of Apps, Cash App’s revenue totaled $12.3 billion last year, while Venmo's respective figure stood at $850 million. That’s despite the latter boasting 70 million users as compared to Cash App’s 40 million.
"I think that Block's singular focus on Bitcoin is critical here,” continued Wood, noting that Bitcoin’s Lightning Network has been in test mode for years, but is “more robust now, and is ready for primetime.”
A boost for Lightning Network’s growth
Last week, speaking at the Miami Bitcoin 2022 conference, Cash App’s crypto product lead Miles Suter announced a new direct deposit feature that allows users to receive all or a portion of those wages in Bitcoin. Suter also said that in “the near future” Cash App’s U.S. users will be able to receive Bitcoin via the Lightning Network.
Block added support for Lightning Network to Cash App in February—but users can currently only send Bitcoin via the network, not receive it, something the company is planning to fix.
“I think that was part of the announcement; direct deposit into the Lightning Network taking away a lot of the friction in the user interface. I think this could be big,” said Wood.
Wood went on to suggest that thanks to the Lightning Network coming to Cash App’s U.S. army of users, both the number of channels and the number of developers contributing to the platform “is also going to explode."
Robinhood, another crypto-friendly payment platform that Cathie Wood’s firm invests in, also announced last week that it is planning to add support for Lightning Network transactions.