It has been reported that US-based payments giant PayPal is ready to allow its users to buy, sell, and hold Bitcoin BTC and other cryptocurrencies.
Millions of Merchants
The decision by PayPal will also mean that 26 million merchants who use the PayPal platform will, eventually, be able to accept cryptocurrencies as a funding source.
It is believed that PayPal will be adding its cryptocurrency services to its Venmo app and international markets during the first half of next year.
Leap In Value
The reports that PayPal is about to join fintech company Square and trading app Robinhood in supporting cryptocurrencies caused Bitcoin‘s price (BTC) to jump and briefly break $13,000, its highest point since July 2019. Bitcoin’s value means that it now outperforms gold and silver as a commodity, but its current value of $12,978.30 is still much lower than its 2017 peak of nearly $20,000.
Settled In Fiat Currencies
Even though cryptocurrencies like Bitcoin, Ethereum, Bitcoin Cash, and Litecoin will be supported by PayPal, any of the cryptocurrency it processes will happen in fiat currencies i.e. normal government-issued currencies.
PayPal’s announcement has prompted positive reactions from known cryptocurrency advocates such as Matt Odell and billionaire investor Mike Novogratz (formerly of crypto-focused Galaxy Investment Partners).
There have also been reports that PayPal may be looking to buy cryptocurrency companies such as Bitcoin custodian BitGo Inc which offers digital wallets and offline vaults for storing Bitcoin and rival currencies. BitGo is backed by many large investors including Goldman Sachs Group Inc, Digital Currency Group, and Craft Ventures.
PayPal has also reportedly said that it would partner with a competitor of Bitcoin, Paxos Trust Company.
Others Buying Bitcoin
Other signs that Bitcoin is getting a new life and that ‘the word is out’ included Square buying $50 million of Bitcoin earlier this month, saying that it could become a more ubiquitous currency soon.
Last year there was news that Facebook was developing its own digital ‘coins’ cryptocurrency that could be sold to users of its WhatsApp messaging platform.
Also, last February, U.S. mega-bank J.P. Morgan launched its own blockchain-based digital coin, the ‘JPM Coin’, and IBM has also launched a blockchain-backed stable ‘coin’ for international money transfers.
What Does This Mean For Your Business?
The benefits and the need for digital currencies have been understood for some time but their adoption by mainstream financial players was delayed by many issues including concerns about extra regulation in the US, a lack of regulation of cryptocurrencies generally, concerns about price swings, as well concerns about investigations and hacks and not wanting to be associated with either.
Some critics of PayPal’s move have expressed surprise and wondered who this new service of PayPal’s is aimed at because Bitcoin is normally within the realm of those with knowledge of the stock market and dealing with larger sums who are used to the idea that cryptocurrencies can be volatile and can still present some risk. It may therefore be the case that, for the time being, the service may not find much of a market beyond existing cryptocurrency holders.
Also, although PayPal will be adding this cryptocurrency service, the fact that processes will happen in fiat currencies has been criticised for somewhat defeating the object.
The underlying Blockchain technology behind Bitcoin, however, has been widely adopted and used in many different industries and businesses and has proven to be a trusted technology that still has huge potential.