PayPal announced its entry into the cryptocurrency market few days ago, according to multiple reports. With that, PayPal customers will be able to use cryptocurrencies to buy in the 26 million merchants in its network starting in early 2021, the company said.
The new service makes PayPal one of the largest companies in the US providing consumers with access to cryptocurrencies, which could help Bitcoin and competing cryptocurrencies become more widely adopted as viable payment methods.
Initially supported tokens will include Bitcoin (BTC), Ethereum (ETH) Bitcoin Cash (BCH) and Litecoin (LTC), the company said.
The big payments brand partnered with Paxos to provide the service and obtained a conditional cryptocurrency license from the New York State Department of Financial Services, commonly known as a BitLicense.
In addition to crypto payments, PayPal users will also be able to buy cryptocurrencies directly through the app. Therefore, PayPal will offer a cryptocurrency wallet, allowing users to buy, sell, and hold cryptocurrencies through PayPal applications.
The San Jose, California-based company hopes the service will foster the global use of cryptocurrencies and prepare its network for new digital currencies that central banks and businesses can develop, said President and CEO Dan Schulman. In an interview.
"We are working with central banks and thinking about all forms of digital currencies and how PayPal can play a role," he said.
US account holders will be able to buy, sell and hold cryptocurrencies in their PayPal wallets for the next several weeks, the company said. PayPal plans to expand the service to its peer-to-peer payment application Venmo and a few other countries during the first half of 2021.
The ability to make payments with cryptocurrencies will be available from the beginning of the following year, the company said.
Other traditional fintech companies, such as mobile payments provider Square Inc and stock trading app company Robinhood Markets Inc, allow users to buy and sell cryptocurrencies, but PayPal's launch is notable given its size.
Bitcoin reached its highest level since July 2019 in the news. Lastly, it was up 4.8% to $ 12,494, bringing the original and largest cryptocurrency growth on the market above 75% for the year.
Players in the crypto market have said that PayPal's size means that the strategy will be an advantage for bitcoin prices.
"The impact on prices will generally be positive," said Joseph Edwards of Enigma Securities, a cryptocurrency brokerage in London. "There is no comparison in terms of potential exposure between the benefit of the PayPal offer and that of any previous similar offer."
Bitcoin and other cryptocurrencies have struggled to establish themselves as payment methods widely used despite having been around for over a decade. The volatility of cryptocurrencies is attractive to speculators, but it presents risks for traders and buyers. Transactions are also slower and more expensive than other traditional payment systems.
PayPal believes its new system will solve these problems, as payments will be settled using traditional currencies, such as the US dollar. This means that PayPal will handle the risk of price fluctuations and that merchants will receive token payments.
With this, PayPal has also withdrawn from Facebook's Libra project, as he was one of the first founding members of the Libra association. This project should eventually allow its two billion users to buy goods or send money as easily as an instant message. But difficulties encountered with regulators skeptics around the world have led some of your partners to reconsider their support for this project. So in October 2019, PayPal decided to withdraw from the list of companies that supported this project.
This PayPal withdrawal made the company the first member to leave Facebook's Libra association.