In what appears to be the biggest breaking news for the crypto industry in 2020, sources have confirmed that global payments giant PayPal will start directly selling Bitcoin to its users. This comes as a big surprise for the global crypto community as the payments wallet leader had remarked in 2018 that Bitcoin was going to zero.
According to media sources, PayPal and Venmo, a similar digital payment wallet, will work with multiple crypto exchanges to directly sell cryptocurrencies to their vast user-base. PayPal has a mammoth user-base of over 325 million, and Venmo serves more than 50 million people worldwide.
The PayPal Bitcoin History
Despite being a major innovative tech start-up of the 21st century, PayPal discarded Bitcoin for a long time. However, there’s an interesting connection between PayPal and Bitcoin which goes way back to 2010.
In December 2010, PayPal blocked the account of the famous Germany-based exposé website, Wikileaks, which was termed as the biggest attack on the organization. The company defended itself saying that Wikileaks violated its regulations & policies, which compelled it to shut down the organization’s account permanently.
However, Wikileaks found the solution to this otherwise devastating problem, and it was Satoshi Nakamoto’s Bitcoin. As per a report by Forbes, “WikiLeaks turned to Bitcoin donations because it couldn’t raise and store funds in any other manner.” It is then when Bitcoin gained an international repute of being a truly independent financial system, which cannot be manipulated or controlled by the elites or even the government.
Founding member of PayPal and former CEO, Bill Harris made a headliner in 2018 that Bitcoin is going down to zero. The year was one of the worst for the industry, as Bitcoin continued to fall from its peak of $20,000 in December 2017, before ending a six-months long losing streak in February at around $3,800. While talking to CNBC, Harris told that that was no value, and “the cult of bitcoin [makes] many claims — that it’s instant, free, scalable, efficient, secure, globally accepted and useful — it is none of those things.”
Support from Another PayPal Gene Pool
However, contrastingly, Elon Musk, who also is a founder of PayPal, has continued to be a strong supporter of Bitcoin from the get-go. More interestingly, the current CEO of PayPal, Daniel Schulman, admitted in November last year that he owns Bitcoins.
PayPal also withdrew from the Facebook-backed Libra Association, citing that they wanted to focus on advancing their existing mission and business priorities. Well, now we can speculate what the “business priorities” were. Libra is being positioned by Facebook and its other supporters as an alternative to Bitcoin. While being a part of Libra Association, PayPal would have found it extremely difficult to explore the possibilities with Bitcoin, which, even at this moment and for the foreseeable future, appear to be much bigger.
PayPal Selling Bitcoin is a Game Changer with Positives & Negatives
One must humbly admit, PayPal is the bigger than almost every digital wallet that has ever been in existence. It has more than 325 million users, with annual transactions amounting to a whopping $700 billion. To give a perspective, Bitcoin’s market cap is about $117 billion.
With such a large user-base and a truly global digital payment architecture, PayPal could be game-changer the industry has been looking for. Bitcoin is now moved well past the testing phase, and in itself is a legit and recognized digital asset, which makes it an attractive proposition for PayPal. Also, PayPal itself realizes the importance of getting into the crypto game to avoid lagging back in the long run.
However, the entry of such a giant player in the game could force smaller and economically vulnerable projects out of the market. Being an established, Fortune 500 company, gives PayPal a massive advantage over its competitors in the crypto space. According to media reports, PayPal is also hiring crypto engineers for its Bitcoin activities, and this will eliminate any deficiency it has in terms of industry expertise.
Mixed Industry Reactions
Heisenberg Capital Co-founder and Bitcoin market expert, Max Keiser tweeted that the move is another strike from Bitcoin’s built-in game theory. He also predicted that a global hash war is coming soon.
#Bitcoin’s built-in game theory strikes again.
Paypal, seeing $SQ making a killing with BTC, is forced to take on BTC or suffer huge competitive consequences.
Global Hash War is coming!
— Max Keiser (@maxkeiser) June 22, 2020
Bitcoin Educator and entrepreneur Jimmy Song took a pinch reminding the Wikileaks incident. He added that all it took was a decade for PayPal to come a full circle.
PayPal is going allow people to buy #Bitcoin.
Paypal is the company that froze the Wikileaks account and put #Bitcoin on the map back in 2010.
It only took a decade for this to come full circle.https://t.co/m6fHfndeer
— Jimmy Song (송재준) (@jimmysong) June 23, 2020
Hunter Horsley, CEO of crypto investment firm Bitwise also applauded the move, saying that though still unconfirmed, it is massive news. He also presented how massive PayPal is in comparison with premier exchanges like Coinbase.
Unconfirmed, but could be *massive*.
Venmo has >50M users, >$100B in annual payments volume.
PayPal has >300M users, >$700B in volume.
Robinhood has 13M users, Coinbase has 40M.https://t.co/OM68WFTcHX
— Hunter Horsley (@HHorsley) June 22, 2020
However, there was a section of the community which seemed to skeptical about PayPal selling Bitcoin directly. For instance, Stephan Livera, co-founder of the Ministry of Nodes, a Bitcoin education platform, argued that the PayPal Bitcoin move could be bullish only if it results in self-custodied Bitcoin.
The PayPal Bitcoin news is only bullish if you think it results in more self custodied Bitcoin.
If it’s just numbers on a screen but still the same govt regulations and controls, what’s bullish about that?
— Stephan Livera (@stephanlivera) June 22, 2020
While PayPal’s entry as a direct Bitcoin selling platform is extremely celebratory, there are seldom any moves in the financial sector without any drawbacks. PayPal’s entry can be a threat not only to the existing Bitcoin trading platforms but also to customers. If an incident as the Wikileaks one occurs again, how PayPal will react continues to be a topic of debate. The control of government agencies on PayPal would be much thicker than other platforms. How this will affect the industry, only time will tell.