Today Bitcoin reached a year-high of $12,800 upon news Paypal will begin allowing their over 340 million users to buy sell, and hold Bitcoin in the next few weeks. Users will also be able to use Ethereum, Litecoin, and Bitcoin Cash. The announcement also caused Paypal stock [PYPL] to reach an all time high of $213.07 a share.
Users will be able to pay with what many call "digital gold" with their existing accounts. The 26 million merchants who sell with Paypal, will also be able to accept crypto payments, but they will not be sent the crypto used to pay them. These payments will be settled in fiat, then sent as such.
The New York Dept. Of Financial Services swiftly awarded Paypal a conditional virtual currency license for the move, which will get started in the US first then expand to Venmo and select countries by early 2021.
In a statement released with the announcement, CEO Dan Schulman stated, “the shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly.”
For the move, Paypal partnered with Paxos Trust, a company that handles crypto transactions worldwide by integrating various payment methods, including kiosks. Paxos will provide liquidity and custody services to Paypal. They also have the PAX dollar stablecoin and Paxos Gold, which is pegged to the value of gold. This move definitely increases trust in their cryptocurrencies.
I think this is good news for Bitcoin in the short and long term, as it provides hope Paypal users will gravitate to Bitcoin, and it will expand greatly the reach of adoption for Bitcoin. As we spoke about prior to this news, 7% of US citizens owned or interacted with Bitcoin, and it's only sitting at around $239 billion in market cap. Paypal has handled almost as much in global payments, $222 billion to be exact.
In my opinion, Paypal isn't the mos user friendly p2p payments company so I anticipate issues, a slew of fees and long durations of speaking with customer service for users. Also, I just have the feeling their fees compared to other crypto onboarding options like Cash App, Coinbase or Gemini will be much higher and they'll sneak in fees that people will be scratching their heads about, like they were already doing. Also since Paypal users will be using their existing accounts, they will not be in control of their private keys, and as the saying goes, "not your keys, not your crypto."
I, and many others have had issues with Paypal holding funds, halting payments, and giving subpar customer service, so while this is good for exposure, I'll remain cautiously optimistic.
Another thing to note is Paypal making this move more to prepare for when central banks begin rolling out their own digital currencies.Schulman also said they're "working with central banks and thinking of all forms of digital currencies and how PayPal can play a role,”
Overall, they won't be the best option for those already using crypto, but they're available worldwide, so may provide a solution to those itching to get into the market. We may see an increase in user adoption as a result, only for those users to find much better options than Paypal.
At the end of the day, the most important thing is for more people to have the ability to buy Bitcoin. That's what we need most right now anyway.
What do you think? Do you like using Paypal? Would you use it to buy Bitcoin and alts?
Lemme know in the comments below.
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