The PayPal News Is Extremely Bullish For Bitcoin
Payments giant PayPal announced that it was to allow its customers to buy, sell and spend Bitcoin and a few other altcoins inside its network, but is the news bullish for Bitcoin?
The news has been met with mixed feelings from Bitcoiners. Many are extremely bullish, but some see the payments giant short selling their users by not actually offering Bitcoin.
After the announcement, the price duly rocketed above $13,000 before correcting during the night. At time of writing, the price is Bitcoin to USD $12,854, up over 5% from before the news broke.
PayPal To Roll Out Bitcoin Payments Service
PayPal’s Bitcoin payments facility will be rolled out to U.S. users initially, and then to other Bitcoin friendly countries early next year.
PayPal has also obtained a New York Bitlicence from the New York State Department of Financial Services (NYDFS), so it’s making serious inroads into the U.S. market.
The online payments giant is likely to be competing with Bitcoin friendly payments firm Square, who recently made a $50 million investment in Bitcoin.
But is the news really all that?
Is The PayPal News Really Bullish for Bitcoin?
PayPal has almost 350 million users, and they will be able to offer a seamless onboarding process for anyone who has difficulty buying Bitcoin.
PayPal also plans to introduce a crypto shopping facility, which will allow its customers the ability to shop and spend Bitcoin with PayPal’s 26 million registered merchants.
The shopping service could speed up adoption of layer two solutions such as Lightning Network, while introducing global use of Bitcoin as a peer-to-peer spendable currency.
If PayPal intends to use Bitcoin as a payments mechanism, it will no doubt have to buy Bitcoin in large amounts to keep enough for demand within its network.
Seems Bullish, But Some Bitcoiners Are Skeptical
The news was initially met with great excitement, but shortly afterwards it was revealed that PayPal’s Bitcoin buy and sell option wouldn’t allow its users to send Bitcoin from the network.
‘OK, we can forget this Paypal ‘news’. ‘Crypto in [the Paypal] account cannot be transferred to other accounts on or off PayPal.’ So, this is all a big PayPal nothing burger, just entries in a central PayPal database, nothing to do with Bitcoin.”
Ripple (XRP) CEO, Brad Garlinghouse was quick to criticize the announcement.
‘2 steps forward, 1 step back…’ said the Ripple CEO. ‘Great to see a payment pioneer leaning in, but disappointing some fundamental tenets / benefits of crypto are spurned. I suspect PayPal is concerned about the (wait for it…) regulatory uncertainty, impacting its roll-out on a number of levels.’
It should be noted that PayPal spurned the opportunity of adding XRP as one of its cryptocurrency offerings. Burned much, Brad?
And popular crypto lawyer Jake Chervinsky was also critical of PayPal’s foray into Bitcoin.
‘I understand the temptation to just be excited about PayPal and ignore the fact that they prohibit transfers to other accounts and withdrawals to self-custody,’ said Chervinsky. ‘But if you can’t hold your own keys, is it even Bitcoin? How much will we sacrifice in the name of ‘number go up?’’
So PayPal users won’t be able to own Bitcoin, but that’s not all. PayPal has already said all payments will be settled in fiat, and no merchants will receive Bitcoin or any other cryptocurrency it adds.
And the payment network is expected to add stablecoins, which some suggest will bypass Bitcoin as a payment option altogether. So is it really bullish for Bitcoin?
PayPal Can Introduce 350 Million People To The Bitcoin Rabbit Hole
‘Not your keys not your Bitcoin’ is most certainly true for any Bitcoiner. However, I think PlanB, Garlinghouse and Chervinsky are all wrong here.
PayPal will have to buy plenty of Bitcoin to cover its users’ holdings, which will take a large amount of Bitcoin off the market. But this is nothing compared with the onramp PayPal can offer.
I expect most transactions to be done using stablecoins. Who really wants to sell their bitcoins now? Most people are hodling Bitcoin for the expected price appreciation.
Peer-to-peer money will happen it due course, but the best thing about the announcement is the onramp it offers to nocoiners.
PayPal can introduce up to 350 million people to Bitcoin. The payment giant’s users might not be able to hodl Bitcoin in a hardware wallet, but at least they are getting exposure to it.
And once someone buys Bitcoin, the intrigue really starts, and they go in search of Bitcoin discovery. And the further down the rabbit hole they go, they finally pop the orange pill.
From there, there’s no turning back. It’s how all Bitcoiners become Bitcoiners. And it’s here they will realize their Bitcoin on PayPal isn’t really theirs and will want to actually buy Bitcoin itself, and custody it themselves.
PayPal Onramp Is Bullish For Bitcoin
PayPal offering Bitcoin payments and trading was obviously going to happen one day. The payments giant probably fears losing out big time to Square, so knew it had to make a move.
To not offer full Bitcoin services is a cautious approach by PayPal, and some Bitcoiners and shitcoiners are sceptical of the closed network approach.
But PayPal has to play within the regulatory rules. It also has to builds out its infrastructure, and wait for more clarity on the regulatory front.
Once this happens, it wouldn’t be a surprise to see PayPal roll out deposits, withdrawals and everything else a cryptocurrency exchange offers. Why wouldn’t it? Its a lucrative business after all.
I believe that will come, but until then PayPal will introduce millions more who have struggled, or not been bothered to find out where to actually buy Bitcoin before.
PayPal is the leading digital payment network and whatever service it offers at first, the news is bullish for Bitcon.