Supposedly, PayPal, Venmo To Roll Out Crypto Buying And Selling (#GotBitcoin?)
Fintech giant PayPal plans to roll out direct sales of cryptocurrency to its 325 million users, according to three people familiar with the matter. Supposedly, PayPal, Venmo To Roll Out Crypto Buying And Selling (#GotBitcoin?)
“My understanding is that they are going to allow buys and sells of crypto directly from PayPal and Venmo,” a well-placed industry source told CoinDesk. “They are going to have some sort of a built-in wallet functionality so you can store it there.”
It is unclear which or how many cryptocurrencies would be available. The industry source said they expected PayPal “would be working with multiple exchanges to source liquidity.”
A second source confirmed that PayPal is looking to offer buying and selling of crypto and said the service could be expected “in the next three months, maybe sooner.”
PayPal declined to comment on the plans.
San Francisco-based crypto exchange Coinbase and Luxembourg-based Bitstamp were mentioned as likely contenders by the sources. Both Coinbase and Bitstamp declined to comment.
It’s worth noting that PayPal has a longstanding relationship with Coinbase, going back as early as 2016. In 2018, Coinbase made instant fiat withdrawals to PayPal available for U.S. customers. Last year, European Coinbase users could withdraw to their PayPal accounts, followed by users in Canada.
Meanwhile, fintech apps that offer crypto are making money. Square, the payments unicorn launched by Twitter CEO Jack Dorsey, rolled out bitcoin purchases in its Cash App in mid-2018. Cash App reported $306 million in bitcoin revenue in its most recent earnings report.
London-based Revolut, which began offering crypto to users following a 2017 partnership with Bitstamp, raised $500 million in February, valuing the platform at $5.5 billion. Robinhood, the fintech app thought to be fueling the recent retail boom in equities day trading, first offered crypto in February 2018.
Crypto is increasingly seen as an obvious way to bolster user numbers on fintech apps and create new revenue streams. Indeed, PayPal CEO Dan Schulman has made it clear his plan this year is to aggressively monetize Venmo, which has over 52 million accounts.
Around the start of 2020, PayPal posted job openings to ramp up its new Blockchain Research Group. PayPal posted eight engineering positions: four in San Jose and four in Singapore.
Following PayPal’s short-lived dalliance with the Facebook-led Libra project last year, the focus now is expanding its own payments expertise, one of the sources added.
In an interview with CoinDesk earlier this year, PayPal Chief Technology Officer Sri Shivananda said the company wanted its own “perspective and view on [blockchain] technology itself to see how it can help us contribute to the concept of creating an open digital payments platform that can serve everyone.”
Shivananda said he was unable to comment on any of PayPal’s specific plans.
“We are a strong believer in the potential of blockchain. The digitization of currency is only a matter of when not if,” Shivananda said.
Blackballed By PayPal, Scientific-Paper Pirate Takes Bitcoin Donations
A quiet rebellion against copyright is being waged on a single website by a freelance coder, using cryptocurrency where PayPal won’t do.
Bitcoin as a censorship-free money has been used by outlaws of all sorts, but this time the outlaw is a young scientist from Kazakhstan breaking through the paywalls of academic journals.
Alexandra Elbakyan, a 31-year-old freelance coder, neurobiologist and phylologist, is running a database of over 80 million articles from academic journals that are normally available only through subscriptions. What started out of frustration when she was a graduate student became a free research service funded only through donations. For most people in the world, bitcoin is the only way to support Elbakyan’s work.
The website, called Sci-Hub, has been sued by two science publishing houses and reportedly investigated by the U.S. Department of Justice for possible espionage on behalf of Russian intelligence. (Elbakyan said she never got contacted by the U.S. authorities about it.) This effectively cut Elbakyan off the mainstream financial services in the West.
Elbakyan told CoinDesk the website sees about 600,000 visits each day. Even for those researchers who have access to subscriptions via universities, Sci-Hub turns out to be the most convenient option to get content for their research, she said.
But her struggles underscore one of the fundamental value propositions of cryptocurrency: When people can’t use the mainstream payment ralis, crypto offers an alternative. It’s hardly a bellwether of a broad adoption coming, but it is “a good example of bitcoin as a niche payments rail,” economist John Paul Koning told CoinDesk.
“For most purposes, people prefer to use regular fiat payments because they are easy,” said Koning, a CoinDesk columnist. “But when they get locked out, either because they are engaging in illegal activities or legal ones that are deemed socially unacceptable, bitcoin becomes an option. People who have been locked out of these conventional systems are slowly discovering that bitcoin can serve them.”
Elbakyan says bitcoin only constitutes a small part of all donations. Most often, it’s the online payment service Yandex.Money that is available in Russia and nearby countries including Ukraine, Belarus and Kazakhstan. However, for all the other parts of the world, crypto is the only direct way to support Sci-Hub.
Sometimes, that can be an issue. Still few people trust bitcoin, Elbakyan says, and some countries prohibit crypto, such as Bolivia and Ecuador.
“Somebody wrote to me recently saying that in his country only drug addicts use bitcoin, and asked if there were any other ways to donate,” Elbakyan said.
In 2018, University of Pennsylvania postdoctoral fellow Daniel Himmelstein and a group of other scholars found that Sci-Hub raised more than 94 bitcoin, worth about $900,000 at recent prices, before 2018. Speaking with CoinDesk, Elbakyan confirmed that the estimate was mostly fair.
The 2017 bitcoin rally was a good moment for her, Elbakyan says, as she could sell some bitcoin at a high price. But otherwise she’s nonchalant about all things blockchain and distributed tech. When asked if distributed file storage solutions currently in the works could be useful for Sci-Hub, she says the site works fine as it is.
Elbakyan’s clash with the publishing industry cost her the ability to use any U.S.-based services. In 2015, Dutch science publishing house Elsevier, a publisher of 2,500 science journals, including The Lancet and ScienceDirect, sued Sci-Hub for copyright infringement.
In 2017, a federal court, the U.S. Southern District Court of New York, sided with Elsevier and ruled Sci-Hub should stop operating and pay $15 million in damages. In a similar lawsuit, the American Chemistry Society won a case against Elbakyan and the right to demand another $4.8 million in damages.
In addition, both courts effectively prohibited any U.S. company from facilitating Sci-Hub’s work. Elbakyan had to migrate the website from its early .org domain, and the U.S.-based online payment services are no longer an option for her. She can no longer use Cloudflare, a service that protects websites from denial-of-service attacks, she said.
“When I opened a PayPal account, the donations would hit every minute. But after one day the wallet would get frozen,” Elbakyan said. She showed CoinDesk an email from PayPal in 2013, in which the company notified Elbakyan that Elsevier reported her for copyright infringement and she should either remove the violating materials from Sci-Hub or remove PayPal as a donation option.
“Payment processors are increasingly taking a keen interest in what their users are doing with their services; even going as far as banning political figures who they might disapprove of,” says Nic Carter, partner at Castle Island Ventures.
“In this world of politicized payment rails, the existence of a neutral alternative that treats everyone equally is a godsend,” Carter said, referring to bitcoin.
PayPal’s press office did not return CoinDesk’s request for comment by press time.
So now researchers in the U.S. who, just like Elbakyan, can’t afford costly subscriptions to access scientific content, can only thank her by using bitcoin. And they are using Sci-Hub, data shows.
Himmelstein found that Sci-Hub has been steadily growing in popularity since its inception in 2011, going from 185,243 downloads per day in February 2016 to 458,589 in 2017. The researchers found Sci-Hub usage has exceeded that of the University of Pennsylvania online library twentyfold.
As she was speaking to CoinDesk, 30 papers were being downloaded over the course of three minutes, Elbakyan said, adding that during the busiest hours, there can be thousands of papers downloaded in the same amount of time.
“If you’re working from home, you need to access the university’s server first. And many people told me that they needed to click through multiple links and even then the paper wouldn’t open up – this is how clumsy the legal access is,” Elbakyan said.
She first got frustrated with the cost of academic knowledge as a student, working on her graduate paper, Elbakyan wrote in her autobiography on Sci-Hub. When she was a teenager she hacked websites for fun. When she was 16 she created a script allowing her to download books from the MIT CogNet website for free, despite the paywall, Elbakyan wrote.
Back then, she would rely on the network of researchers who would share papers they had access to via an online forum, she said in an interview with the website Newtonew. Then, she decided to create an automatically updating database of academic knowledge, which became Sci-Hub.
The website is using other researchers’ credentials for university proxy servers – Elbakyan won’t say how exactly she gets the credentials – and automatically downloading papers onto Sci-Hub’s server, where people can find them using a web address or unique identifier of a paper they need.
‘Most People Don’t Care’
Elbakyan is maintaining the website alone, believing it’s the safest way. “If you have a team, it can fall apart at some point, or you might have a mole,” she said.
But while she doesn’t need more people working on Sci-Hub, she would love to see a widespread discussion about free access to academic knowledge, she says. A self-described Communist in her political views, Elbakyan believes the paywall policy of science publishing is a kind of censorship.
“I had a dream that Sci-Hub gets discussed by the U.N.,” Elbakyan said, referring to the United Nations. “For example, Russia could tell the U.S. that it’s a violation of human rights [to ban Sci-Hub] because the U.N. Declaration of Human Rights says everyone has the right to participate in scientific advancement. But that remained only a dream.”
Elbakyan says she hasn’t approached any political parties or government bodies, thinking they could pick up on the censorship argument if they were interested. She does not believe most people are interested in discussing freedom of knowledge.
“There is no real community to discuss that, you hardly hear such voices. Not just in the mainstream media, but even on YouTube, for example. It all died by 2013, when Aaron Swartz died,” she said, adding that even though many people are using her website or pirate websites such as torrent trackers, few care how and why they work.
“People don’t think about the [copyright] laws, about doing something about it or voting against it,” Elbakyan says. “When people reach out to me, they usually write to say ‘thank you’ or ask how to better donate.”
Sci-Hub’s standoff with the publishing industry is a good fight, Carter (who is also a CoinDesk columnist) believes. “The law and morality don’t always match up, and they certainly don’t in this case,” he said, adding:
“Sci-Hub has undeniably made the world a better place, and Alexandra has had to live as a pariah because of it. Funding her operations with bitcoin perfectly demonstrates its value proposition.”
PayPal is Hiring Crypto Engineers Amid Rumors of Bitcoin Integration
There are two public-facing job listings for crypto pros to go to work for PayPal.
PayPal is hiring crypto and blockchain experts amid rumors that the global payment platform will enable direct cryptocurrency purchases for its 305 million users. The job descriptions they’re hiring for are publicly available on the company’s own job board.
The first listing of note is for a job titled “Technical Lead – Crypto Engineer.” The listing describes that this person will be responsible for “new initiatives for PayPal global with a focus on agility, time-to-market and innovation. The role includes designing, developing and maintaining key crypto products/features targeted towards availability, performance and scalability of PayPal services.”
The second listing worth mentioning is for a blockchain research engineer to work within the company’s research group, “a newly formed group within the Strategic Technology Enablement team chartered with establishing expertise and opinions on emerging blockchain technologies and their potential uses within PayPal.”
These job listings remain live while the crypto community is buzzing over today’s collection of recent rumors that PayPal will formally throw its hat into the cryptocurrency ring. The job requirements call for a number of skills that overlap with Bitcoin development, like experience with C++, asymmetric cryptography and cryptographic libraries.
In its latest 10-K filing, PayPal lists potential rapid developments in blockchain and virtual currencies as a possible risk factor that may negatively impact the company. It’s possible that the company decided to preemptively strike against these potential risks.
Former PayPal CEO Reveals Why He Thinks Bitcoin Is The Biggest Scam In History
I’m tired of saying, “Be careful, it’s speculative.” Then, “Be careful, it’s gambling.” Then, “Be careful, it’s a bubble.” Okay, I’ll say it: Bitcoin is a scam.
In my opinion, it’s a colossal pump-and-dump scheme, the likes of which the world has never seen. In a pump-and-dump game, promoters “pump” up the price of a security creating a speculative frenzy, then “dump” some of their holdings at artificially high prices. And some cryptocurrencies are pure frauds. Ernst & Young estimates that 10 percent of the money raised for initial coin offerings has been stolen.
The losers are ill-informed buyers caught up in the spiral of greed. The result is a massive transfer of wealth from ordinary families to internet promoters. And “massive” is a massive understatement — 1,500 different cryptocurrencies now register over $300 billion of “value.”
It helps to understand that a bitcoin has no value at all.
Promoters claim cryptocurrency is valuable as (1) a means of payment, (2) a store of value and/or (3) a thing in itself. None of these claims are true.
1. Means of Payment. Bitcoins are accepted almost nowhere, and some cryptocurrencies nowhere at all. Even where accepted, a currency whose value can swing 10 percent or more in a single day is useless as a means of payment.
2. Store of Value. Extreme price volatility also makes bitcoin undesirable as a store of value. And the storehouses — the cryptocurrency trading exchanges — are far less reliable and trustworthy than ordinary banks and brokers.
3. Thing in Itself. A bitcoin has no intrinsic value. It only has value if people think other people will buy it for a higher price — the Greater Fool theory.
Some cryptocurrencies, like Sweatcoin, which is redeemable for workout gear, are the equivalent of online coupons or frequent flier points — a purpose better served by simple promo codes than complex encryption.
Indeed, for the vast majority of uses, bitcoin has no role. Dollars, pounds, euros, yen and renminbi are better means of payment, stores of value and things in themselves.
Cryptocurrency is best-suited for one use: Criminal activity. Because transactions can be anonymous — law enforcement cannot easily trace who buys and sells — its use is dominated by illegal endeavors.
Most heavy users of bitcoin are criminals, such as Silk Road and WannaCry ransomware. Too many bitcoin exchanges have experienced spectacular heists, such as NiceHash and Coincheck, or outright fraud, such as Mt. Gox and Bitfunder. Way too many Initial Coin Offerings are scams — 418 of the 902 ICOs in 2017 have already failed.
Hackers are getting into the act. It’s estimated that 90 percent of all remote hacking is now focused on bitcoin theft by commandeering other people’s computers to mine coins.
Even ordinary buyers are flouting the law. Tax law requires that every sale of cryptocurrency be recorded as a capital gain or loss and, of course, most bitcoin sellers fail to do so. The IRS recently ordered one major exchange to produce records of every significant transaction.
And yet, a prominent Silicon Valley promoter of bitcoin proclaims that “Bitcoin is going to transform society … Bitcoin’s been very resilient. It stayed alive during a very difficult time when there was the Silk Road mess, when Mt. Gox stole all that Bitcoin …” He argues the criminal activity shows that bitcoin is strong. I’d say it shows that bitcoin is used for criminal activity.
Bitcoin transactions are sometimes promoted as instant and nearly free, but they’re often relatively slow and expensive. It takes about an hour for a bitcoin transaction to be confirmed, and the bitcoin system is limited to five transactions per second. MasterCard can process 38,000 per second. Transferring $100 from one person to another costs about $6 using a cryptocurrency exchange, and well less than $1 using an electronic check.
Bitcoin is absurdly wasteful of natural resources. Because it is so compute-intensive, it takes as much electricity to create a single bitcoin — a process called “mining” — as it does to power an average American household for two years. If bitcoin were used for a large portion of the world’s commerce (which won’t happen), it would consume a very large portion of the world’s electricity, diverting scarce power from useful purposes.
In what rational universe could someone simply issue electronic scrip — or just announce that they intend to — and create, out of the blue, billions of dollars of value? It makes no sense.
All of this would be a comic sideshow if innocent people weren’t at risk. But ordinary people are investing some of their life savings in cryptocurrency. One stock brokerage is encouraging its customers to purchase bitcoin for their retirement accounts!
It’s the job of the SEC and other regulators to protect ordinary investors from misleading and fraudulent schemes. It’s time we gave them the legislative authority to do their job.
Cryptocurrency Is Accomplishing Paypal’s Original Mission
In a 2014 editorial titled “Bitcoin is the New PayPal,” we made the case that PayPal’s history could provide insight on Bitcoin’s future. Specifically, we argued that, in the short term, the Bitcoin ecosystem would expect a bumpy ride from fraudsters, but with some precautions the various players in the ecosystem could ultimately prevail.
Fast forward three years, and it’s largely mission accomplished. Bitcoin is safe and has entered the mainstream. The fallout from Mt. Gox was short-lived, and the ecosystem is thriving. If you need more proof than Bitcoin’s price soaring this week, then consider the fact that earlier this fall it was added to Google’s payments API.
In some ways our three-year-old editorial is starting to look prescient. Not only has Bitcoin soared past its early stumbles with fraud, but with its current trajectory it really is starting to resemble the new PayPal. And not just in terms of its ubiquity. Yammer cofounder David Sacks — who served as PayPal’s first COO — recently told CNBC:
[Bitcoin] is fulfilling PayPal’s original vision to create “the new world currency.” We actually had T-shirts printed in 1999 with that mission statement. … We believed that, if we could get enough people to participate, money would never need to leave the system. PayPal could become the database of money. … When we got acquired by eBay, that project kind of stopped. But cryptocurrencies like Bitcoin are now fulfilling that original vision.
As Sacks alludes to in his comments, PayPal’s original vision was much more ambitious than just becoming the defacto payment service of eBay. I (Eric) wrote about this vision in my book The PayPal Wars. Here’s my account of a speech given by CEO and cofounder Peter Thiel during a company meeting in late 1999, just a few weeks after PayPal’s product launch:
Everyone in the world needs money — to get paid, to trade, to live. Paper money is an ancient technology and an inconvenient means of payment. …Of course, what we’re calling ‘convenient’ for American users will be revolutionary for the developing world. Many of these countries’ governments play fast and loose with their currencies. … They use inflation and sometimes wholesale currency devaluations … to take wealth away from their citizens. Most of the ordinary people there never have an opportunity to open an offshore account or to get their hands on more than a few bills of a stable currency like U.S. dollars.
Eventually PayPal will be able to change this. … PayPal will give citizens worldwide more direct control over their currencies than they ever had before. It will be nearly impossible for corrupt governments to steal wealth from their people through their old means because if they try the people will switch to dollars or pounds or yen, in effect dumping the worthless local currency for something more secure.
Following on the heels of the late-1990s Asian currency crisis that had slammed many of the region’s developing countries, PayPal’s vision of empowerment and liberation resonated.
PayPal ultimately fell short of its original lofty goals. Rapid adoption by merchants selling on eBay led to a symbiotic but tense relationship between the two companies, which led to eBay acquiring PayPal in late-2002. With the change of ownership came a change in vision, and PayPal pursued a digital wallet strategy for small businesses and later for enterprises. After being spun off as an independent company again in 2015, PayPal is now a payments powerhouse accepted by 325 million active users and 17 million merchants.
While impressive, that’s not a “new world currency.” But where PayPal’s centralized service fell short of its original goals, cryptocurrencies have picked up its mantle.
Built on decentralized blockchains, the crypto movement is shaking up incumbents and rolling out new innovations at an unprecedented rate. Bitcoin — first called an “electronic cash system” in Satoshi Nakamoto’s white paper — has evolved into a store of value for many. Services such as GoCoin have made it viable for vendors to accept not just Bitcoin payments but also a host of other digital currencies like Litecoin and Dogecoin. Ethereum has emerged as the second largest cryptocurrency by market cap as well as the platform of choice for companies to issue their own crypto usage tokens. Crypto wallets have become increasingly easy to use. There’s even a blockchain-based PayPal competitor called UTRUST aiming to upset the legacy incumbent.
So if crypto has the best shot at fulfilling PayPal’s original “new world currency” vision, what comes next? PayPal’s experience offers some clues:
1. The Establishment Will Feel Threatened — and strike back. As PayPal prepared for an initial public offering of its stock in early 2002, regulators from around the country trained their sights on it. The crime? It was a new technology and it evaded easy classification. Don’t be surprised if we start seeing elites like JPMorgan Chase CEO Jamie Dimon (who calls people who buy Bitcoin stupid) advocate for anti-crypto “protections.”
2. Scalability Will Be A Challenge. PayPal grew so quickly in its early years that the website had several high profile slowdowns and near outages. Ethereum is already experiencing similar problems, as founder Vitalik Buterin candidly admits. It’s a challenge that any new blockchain-based protocol will need to overcome if it’s to successfully grow.
3. The Media Will Switch Sides. In its first couple of years, PayPal was hailed in the press as a promising and novel technology. But after the Nasdaq crashed and many dot-coms cratered, the tone changed and PayPal became a high profile target for media criticism. It’s not hard to envision how a prolonged slump in the price of Bitcoin or a string of instances like the Parity wallet freeze could influence media sentiment against crypto.
4. Fraud Will Remain An Issue. Our 2014 editorial, in which we outlined the problems with fraud, applies to all crypto technology, not just Bitcoin.
But in spite of these challenges, there’s real potential for the crypto movement to turn PayPal’s original dream into reality. If it does, the world will be the better for it.
PayPal Bitcoin Rumor Boosts $12K BTC Price Rally Chances
Sudden suggestions that Bitcoin support is coming to PayPal and Venmo is causing traders to reassess the likelihood of a BTC price bull run.
Bitcoin (BTC) coming to PayPal and Venmo may be just a rumor, but some of the cryptocurrency’s best-known names are turning bullish.
As the news hit that the payment processor was allegedly planning crypto buying and selling for its 305 million users, BTC/USD spiked to test resistance at $9,600.
Keiser: Paypal Will Fuel “Global Hash War”
Despite PayPal declining to confirm its plans, a wave of optimism has since flooded social media, with various figures welcoming the move while highlighting its irony.
“Slowly, then suddenly,” the @Bitcoin Twitter account summarized.
For RT host Max Keiser, the move appeared tied to competitive advantage. Square, the sister company of Twitter, rolled out Bitcoin support with great success last year.
“#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,” he tweeted.
“Global Hash War is coming!”
The sense of satisfaction among Bitcoin proponents may well be warranted. PayPal has made a name for itself in recent years as a crypto critic, declining to entertain the idea of supporting it.
At the same time, technical problems and the pitfalls of being a fiat intermediary means that PayPal has, in fact, become a subliminal advertisement for Bitcoin’s benefits. Should the company begin offering Bitcoin, however, those same issues may plague new users.
As noted by developer Jameson Lopp, PayPal may extend its ability to freeze or isolate users and funds without notice to crypto wallets within accounts under its control. Another commentator argued that Square’s implementation is technically no different.
All Eyes On $12,000 Bitcoin
Meanwhile, the news has caused analysts to alter their outlook on Bitcoin price action. A push above $9,600 increases the chances of five figures returning, at which point a breakout to $12,000 is already a firm possibility.
For popular Twitter trader George, current levels provide the last chance saloon for bears wanting to short BTC.
“If you’re a bear, this is where you short imo. Swept the highs right into daily supply. Clean invalidation level,” he revealed on Tuesday.
“I’m in a short here because I think if we start breaking above 9.9k — 10k’s we see 12k+.”
Cointelegraph Markets analyst Michaël van de Poppe agrees. In a video update this week, he repeated his argument that strength in Bitcoin is there for a push towards $12,000, should new resistance levels become support.
The current behavior is similar to the “grinding” seen before Bitcoin’s bullish phase in 2019, he added.
Decred Co-Founder Calls PayPal And Crypto ‘An Odd Combination’
Decred’s co-founder said cryptocurrencies may not fit PayPal’s model.
PayPal could be gearing up to work with crypto assets, according to recent rumblings, although Decred co-founder Jake Yocom-Piatt is unsure of those rumors’ validity.
“It’s hard to say whether these are rumors or not regarding PayPal accepting cryptocurrencies soon,” Yocom-Piatt told Cointelegraph via email correspondence when asked about the rumors.
The Pairing Does Not Seem Like A Fit
Recent news showed PayPal seeking to fill crypto and blockchain-related job positions, while rumors circulated of the platform listing crypto assets.
Although the addition would bring digital assets greater availability, Yocom-Piatt added that the move would not line up with PayPal’s system. “PayPal, specifically, is notorious for depriving its users of access to legitimately-acquired funds on their platform with little to no justification,” he said.
“Users having their funds restricted in this fashion is something cryptocurrencies are designed to prevent, making this integration, if it is indeed in progress, an odd combination,” the Decred co-founder noted.
A report several months ago showed difficulties around users’ PayPal payments, based on different terms flagging transactions and stalling them. “PayPal, along with its subsidiary Venmo, uses a system that automatically flags keywords in the payment memo field that could indicate a violation of U.S. sanctions,” Slate said in the February 2020 article.
The scene around such term flagging remains a difficult conundrum, as security and protection remain important, as is monetary freedom. Although not money-related, a similar situation has plagued the crypto-YouTuber community in recent months, as many top channels suffered bans as a result of content flagging.
Crypto Is The Opposite
Bitcoin, crypto’s pioneer asset, at its core, serves as a method of value transfer and storage, away from governmental control. Users can hold and transfer value themselves, without authorities directly swaying the value of the global, non-governmental asset.
In contrast, payment services such as PayPal use government currencies inside controlled parameters.
“A fiat payment platform notorious for depriving access to funds would be adding support for cryptocurrencies, which are notorious for have no restrictions on funds,” Yocom-Piatt said following up his comment of crypto and PayPal as an odd mix.
The future will tell whether or not PayPal will add the new asset class.
PayPal Dabbling In Crypto Could Make BTC A Mainstream Payment Option
As PayPal is rumored to join the crypto game, what will it mean for the industry and the price of Bitcoin and Ether?
Earlier this month, global payments giant PayPal was rumored to be considering listing crypto assets on its platform, which is estimated to have around 325 million active accounts worldwide.
The company is currently hiring crypto and blockchain specialists, meaning that its potential arrival could be more than a wild guess. But what does PayPal’s apparent interest in crypto mean for the industry, and how well does it align with the company’s principles?
Two Steps Forward, One Step Back
PayPal started to take baby steps toward crypto back in 2013. At the time, David Marcus, then-president of the payments company and now leading the Facebook-backed digital wallet Novi, told Bloomberg that “it’s just a question of whether Bitcoin will make its way to PayPal’s funding instrument or not.”
Several months later, John Donahoe, CEO at Ebay — PayPal’s parent company at the time — essentially confirmed that the payments platform will have to integrate Bitcoin (BTC) one day in order to keep up with the changing financial landscape.
Following bullish remarks from its executives, PayPal partnered with three payment processors in the space in September 2014: BitPay, Coinbase and GoCoin. But PayPal merely tapped some third parties to handle Bitcoin transactions, and did not integrate Bitcoin into its digital wallet or offer to obtain crypto directly via its website.
Soon after the integration, PayPal started to split off from Ebay, and by July 2015, it became a separate public company. Donahoe took over as the payment platform’s chairman, while Dan Schulman became CEO at PayPal.
Schulman’s views on crypto are mixed and arguably more bearish compared to that of Donahoe, who revealed that he owns Bitcoin, but finds cryptocurrencies too volatile to be a convenient medium of exchange in traditional commerce.
At the start of 2016, PayPal appointed Wences Casares — CEO and founder of Bitcoin wallet Xapo — to its Board of Directors, adding some crypto talent to its roster.
In April 2019, the payments giant backed a blockchain startup for the first time, investing an undisclosed amount into Cambridge Blockchain — a fintech firm aiming to leverage the technology to empower users with more control over their digital identities.
However, in May that year, chief financial officer of PayPal John Rainey distanced the company from crypto, saying that it’s still “a little early on” to enter the sector.
However, just one month later, PayPal was revealed as one of the founding members of the Libra Association — a not-for-profit, Switzerland-based consortium behind the Libra stablecoin — but left the organization soon after due to regulatory backlash.
As PayPal’s chief technical officer Sri Shivananda said, crypto developers must follow consumers in order to succeed. “If consumers start to feel like there’s some leverage that they get through cryptocurrencies, everything else will automatically fall in line,” he said.
“PayPal does not comment on rumors or speculation”
On June 22, it was reported that the payments giant is considering introducing direct sales of crypto assets via PayPal and Venmo, citing “three people familiar with the matter.” According to CoinDesk’s sources, PayPal may be working with multiple exchanges to provide liquidity. It is also allegedly planning to offer custodian services, offering users to store their crypto using PayPal’s digital wallet.
When asked to confirm or deny that information, a PayPal representative told Cointelegraph that “PayPal does not comment on rumors or speculation.”
Nevertheless, PayPal’s job listings, posted around the same time, made the rumors somewhat more credible. PayPal advertised for a “crypto engineer” — a person responsible for “new initiatives for PayPal global with a focus on agility, time-to-market and innovation” as well as a blockchain research engineer to work within the company’s newly formed research group.
However, in its latest 10-K form filed with the United States Securities and Exchange Commission in December 2019, PayPal mentioned potential “rapid” developments in blockchain and virtual currencies as a possible risk factor that may negatively affect the company.
The Customer Is Always Right
Experts are generally not surprised by the reports suggesting the payment giant’s crypto expansion, as Alex Mashinsky, CEO and founder of the crypto lending platform Celsius Network told Cointelegraph:
“I don’t see any contradiction to what they already do, their customers have crypto and they want to serve their customers better.” Aaron Henshaw, co-founder of blockchain infrastructure firm and Libra Association member Bison Trails, shared a similar sentiment in an email conversation with Cointelegraph:
“It wouldn’t be surprising that PayPal is looking at an overall adoption of digital assets. PayPal’s mission, to enable everyone to participate fully in the global economy, fits squarely with the promise of digital assets and blockchain technology providing greater access to financial systems around the world.”
In Henshaw’s view, embracing digital assets, which already account for billions of dollars, would just mean that PayPal is “looking toward the future.” John Todaro, the director of institutional research at TradeBlock told Cointelegraph that established mainstream companies are normally guided by potential client interest, not their past remarks:
“I do not think a move by traditional payments companies into the digital currency space necessarily contradicts their previous statements. Early on traditional financial institutions viewed the space with skepticism, as you saw with JP Morgan’s CEO in the past, and you are now seeing these same institutions warm up to crypto and that’s likely because they are seeing real, potential client interest/demand for crypto services.”
Sinjin David Jung, the managing director of blockchain firm IBMR.io, argued that PayPal’s expansion into crypto “was inevitable,” adding that it “will have been well thought out and strategically motivated,” and likely focused on the millennial clientele:
“PayPal coming in means that they have assessed all the legal and regulatory risks along with the competitive benefits of providing crypto.” He went on to add: “This is not a B2B market play, rather, it is definitely directed to grabbing that millennial consumer base.”
So, if the payments juggernaut goes ahead and decides to enter the crypto space after all, who would it have to compete against? According to Mashinsky, PayPal might be too large of a player to clash with any industry firms and might bring a whole new audience to the market: “They have over 270m customers and all of crypto is less than 50m users so the growth opportunity for everyone is that PayPal will double the crypto community and so all boats rise.”
Wayne Chen, CEO of Interlapse fintech firm, suggested that PayPal would have to compete with top-tier exchanges like Coinbase, but its largest rival might be Jack Dorsey’s Square app, as it was also created to provide alternative payment solutions. While according to Jung, the real competitors for PayPal are “really the other fintech wallet apps like Robinhood and Revolut,” and referred to PayPal as their “granddaddy” who has “definitely fallen behind on the innovation front,” adding:
“But with PayPal coming in, this is more a threat to every other fintech crypto app out there who are focused on payments and remittance as their competitive advantage. […] I doubt PayPal will ever run an exchange and their margins will always be better served by acting as the buyer and seller of crypto from exchange sources. If anything PayPal becomes a strong onboarding tool for exchanges such as Coinbase and Gemini.”
Mass Adoption And Market Demand
The most obvious implication of PayPal’s rumored expansion is adoption — if a financial service with 325 million active users starts listing digital assets, it is likely to make crypto more viable in the eyes of the financial mainstream. Mashinsky argued that it will consequently drive the price of BTC and Ether (ETH) up significantly, “as the scarcity of the coins will play a big part when adoption comes.”
Jung told Cointelegraph that PayPal’s arrival might signal the start of crypto’s mainstream adoption and prompt the industry to become more consolidated, largely putting an end to altcoins as a class. He added, “This doesn’t necessarily mean that there will be fewer tokens, in fact, this will likely create a boom in the tokenization of assets and more robust crypto businesses.”
Finally, PayPal may benefit the crypto industry by serving as a bridge to connect crypto audience with traditional finance and onboard new users that have not experienced crypto before, TradeBlock’s Todaro suggested, adding: “In order to gain heightened adoption of digital currencies, there needs to be a bridge between traditional incumbents and these new decentralized crypto services, which we have been seeing.”
Meanwhile, it becomes apparent that PayPal is in demand among crypto users. Earlier this week, Singapore-based blockchain firm Pundi X integrated PayPal support for its point-of-sale device, Xpos. The move followed a Twitter poll asking which mobile payment app they would like Xpos to integrate with first. PayPal received nearly 70% of votes, outstripping WeChat Pay, Alipay and GoPay, among others.
American Pundi X Merchants Can Now Sell Crypto Via PayPal
As the crypto community’s anticipation for PayPal’s exploration into crypto grows, Pundi X has integrated the payments processor for its point-of-sale devices.
Singapore-based blockchain firm Pundi X has integrated PayPal support for its point-of-sale device ‘Xpos.’
PayPal is the first mobile payment gateway to be integrated onto Xpos, and users from more than 30 countries can now accept funds via the payments processor.
The integration will take place over two stages, with U.S-based merchants who use Xpos able to apply for PayPay-based keyed transactions from July 1.
A PayPal app is expected to be integrated onto all Xpos devices within two weeks — completing the roll-out.
70% of Xpos Users Request Paypal Support
Pundi X decided to launch the integration after conducting a Twitter poll asking followers which mobile payment app they would like Xpos to support first.
PayPal received almost 70% of votes, beating out WeChat Pay, Alipay, and GoPay, among others.
The integration brings credit card payments to Pundi X’s point-of-sale system, and allows cryptocurrencies to be purchased via PayPal from supporting Xpos merchants.
Pundi X chief executive and co-founder Zac Cheah emphasized that integrations with leading global firms such as PayPal will help drive adoption blockchain-based services and products outside of the crypto community:
“To be able to support a leading online payment provider in our XPOS devices can give people more confidence in using them, and can move usage of blockchain technology closer to the mainstream.”
PayPal Loves Crypto All Of A Sudden
After shunning cryptocurrencies for a decade, recent job listings for blockchain engineers responsible for “new initiatives” at PayPal global appear to support rumours it will soon offer cryptocurrency sales to users.
PayPal payments are only supported by a handful of crypto exchanges, such as peer-to-peer marketplaces Localbitcoins and Paxful.
Last week, KuCoin’s P2P Fiat Market became the latest P2P platform to support PayPal, introducing the payment gateway alongside support for USD.
PayPal Letter Seems To Confirm Crypto Capability Rumors
Global payments giant PayPal could indeed be developing a crypto-based solution, this document shows.
PayPal has confirmed that it is developing capabilities in the cryptocurrency space, according to a letter to the European Commission.
Originally submitted on March 20, the document was intended as a response to the European Commission’s public consultation on building a European Union framework for markets in crypto assets, whose feedback period lasted from December 2019 through March.
In the letter, the payments giant admitted to “continuously monitoring and evaluating global developments in the crypto and blockchain/distributed ledger space,” stressing that it favors a “harmonized” regulatory approach that wouldn’t compromise innovation.
Further, PayPal addressed its relationship with crypto assets, noting that in 2019, it joined the Libra Association to learn “more about the proposed use of blockchain technologies to provide financial services to unbanked populations across the globe,” but later dropped out because it started to work on its own solutions in the space:
“Since the project’s inception, PayPal has taken unilateral and tangible steps to further develop its capabilities in this area, and therefore — without questioning the value of the project — took the decision not to participate in the Libra Association and to continue to focus on advancing our existing mission and business priorities to democratize access to financial service.”
Earlier in June, it was reported that PayPal was considering introducing direct sales of crypto assets and offering users to store their crypto using the company’s in-house digital wallet.
When asked to confirm or deny that information, a representative for the payments juggernaut told Cointelegraph that “PayPal does not comment on rumors or speculation.”
Around the same time, PayPal announced two crypto-related openings, as it was looking for blockchain and crypto engineers.
PayPal Picks Paxos To Supply Crypto For New Service, Sources Say
PayPal, the fintech giant planning to bring crypto trading to its massive user base, has chosen Paxos to handle the new service’s supply of digital assets, according to two people familiar with the matter.
It’s a plum assignment for New York-based Paxos, which last week launched Paxos Crypto Brokerage and announced its first customer in Revolut US, the American division of the U.K.-based fintech firm that offers bitcoin trading. A formal announcement of the PayPal relationship could come as soon as this week, one source said.
The offering would make PayPal one of the most prominent mainstream companies to offer cryptocurrency purchases, joining fellow publicly-traded payments provider Square and unicorn stock brokerage Robinhood.
It is not clear exactly which cryptocurrencies PayPal intends to offer. Paxos declined to comment for this story. PayPal did not return requests for comment by press time. CoinDesk broke the news of PayPal’s crypto plans on June 22.
CoinDesk reported then that PayPal and its Venmo subsidiary would be bringing direct buying and selling of crypto to some portion of the company’s 325 million users.
The new Paxos brokerage, an API-based solution for making crypto services easy for businesses to roll out, allows cryptocurrency buying, selling, holding and sending capabilities – while handling all regulatory compliance aspects. Paxos, which holds a New York state trust charter, is a qualified custodian, legally permitted to hold gold and digital assets such as bitcoin (BTC) and ether (ETH) on institutional investors’ behalf.
San Francisco-based cryptocurrency exchange Coinbase, which has a longstanding relationship with PayPal, was said to be in line to provide some kind of white-labeled crypto offering. European exchange Bitstamp (which provides crypto liquidity to Revolut in the U.K.) was also mentioned as a contender at the time. Both companies declined to comment for this story.
PayPal playing catchup
The crypto wings of traditional fintech apps are steadily growing in stature.
Crypto is steadily moving from being a pseudo-asset with fringe appeal to becoming a must-have for fintech and challenger-bank apps looking to build revenue and customers.
In addition to Revolut entering the U.S. market with crypto trading, Square, the payments unicorn launched by Twitter CEO Jack Dorsey, has seen its bitcoin trading revenues grow. Square rolled out bitcoin purchases in its Cash App in mid-2018 and reported $306 million in bitcoin revenue in its most recent earnings report.
Meanwhile, Robinhood, the fintech app favored by a new generation of day traders, first offered crypto in February 2018. (Robinhood had over 2 million downloads in the quarter it released Robinhood Crypto, the firm’s highest count ever.)
In a blog post published last week, Paxos CEO Charles Cascarilla said his firm’s new brokerage service could be a “tipping point” for cryptocurrency, suggesting more clients were on the way, “from fintech apps to banks to brokers to e-commerce brands.” In an interview with The Block, Cascarilla said Paxos is prepared to scale its own internal exchange, itBit, to meet the demands of new clients.
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