By Peter Chawaga This week, anonymous sources reported that mega online payment facilitator PayPal is planning to offer cryptocurrency through its platform, as well as its mobile payments subsidiary Venmo. The report indicated that PayPal and Venmo could soon offer the buying and selling of cryptocurrency directly on their platforms, as well as a built-in wallet that allows users to keep their holdings there. Though none of the sources were named on record and the particular cryptocurrencies that could be sold weren’t specified, the report — coupled with recent job openings for PayPal’s new Blockchain Research Group — had the Bitcoin community excited. What’s The Big Deal? “Nothing burgerers” could be excused for dismissing the report, which came from CoinDesk’s Ian Allison. In addition to its reliance on anonymous sources, it did not include a specific timeline or any concrete details. Also, PayPal already integrates cryptocurrency to a small extent. In 2014, the platform announced a partnership with BitPay, Coinbase and GoCoin to allow merchants to accept bitcoin through its Payments Hub. In 2018, Coinbase began offering instant fiat withdrawals to PayPal. But the potential for PayPal and Venmo to offer bitcoin directly to their users is enough to get many of us excited, even as spurious as that potential still is. PayPal has some 325 million users who leverage the service to instantly transfer money digitally around the world. Plus, thousands of online retailers use the service to sell their goods. So, further integration of bitcoin could put the world’s original cryptocurrency in front of its largest audience in history — an audience that is already leveraging digital payments. Plus, these new users would hypothetically benefit from bitcoin right away. If PayPal offers BTC investment on its platform, it would let users convert their dormant fiat cash into the soundest form of money ever created. There would be a lot of red pills being taken. And, as Cash App has demonstrated, there is a significant appetite for bitcoin on mainstream digital payment platforms. The company reported $306 million in bitcoin revenue in its Q1 2020 shareholder report. PayPal Also Might Screw It Up However, it’s likely that PayPal users who leverage bitcoin will not realize all of the benefits that the middleman-free, natively-digital cryptocurrency can provide. By removing the gatekeepers of the traditional monetary system, Bitcoin allows users to transfer massive sums with relatively insignificant transaction fees. As Eric Wall, the CIO of cryptocurrency investment firm Arcane Assets, explained during the BitcoinHalving.com live stream in May, this is a massive differentiator for Bitcoin that has attracted many of its users to date. “I think we had the largest transaction in Bitcoin history just a couple of days ago,” said Wall. “I think it was Bitfinex that had a transfer that was over $1 billion, for just a 70 cent transaction fee. And, I mean, I think that it’s those things … that we can transfer around ... [that have] led to hundreds of thousands, millions of people getting attracted to Bitcoin.” In that sense, Bitcoin alone has the capacity to do what PayPal does, but even better. But it’s likely that the platform will custody any bitcoin that it offers on behalf of its user and charge some kind of fee for transactions. Thus, PayPal would be acting as the kind of middleman that Bitcoin on its own eliminates. Still, PayPal has the reach, functionality and ease-of-use that would propel Bitcoin by leaps and bounds. So you’ll have to excuse the community for imagining what this rumored integration could mean. We know that it is just a matter of time. |