PayPal To Allow the Use of Cryptocurrency
PayPal plans to allow users to hold, buy, sell, and shop with cryptocurrency. PayPal Holdings Inc (PYPL) announced that it will now give its nearly 350 million active users the ability to hold, buy, sell, and shop with Bitcoin and other cryptocurrencies directly in PayPal accounts.
(Investopedia) PayPal noted in its press release that “The migration toward digital payments and digital representations of value continues to accelerate, driven by the COVID-19 pandemic and the increased interest in digital currencies from central banks and consumers.”
In this release, PayPal went on to say that “it plans to significantly increase cryptocurrency's utility by making it available as a funding source for purchases at its 26 million merchants worldwide.”
This news pushed Bitcoin and other altcoin prices higher Wednesday, with Bitcoin increasing as much as 8% intraday and up to $12,900 at some points.
The news is of most significance for those seeking crypto adoption as it gives millions of people the ability to use cryptocurrency as a form of payment while also giving merchants the ability to accept it.
PayPal specified that it would initially support Bitcoin, Bitcoin Cash, Ethereum, and Litecoin, but Chief Executive and President, Dan Schulman, hinted at widening its offering by saying that “we are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role.”
PayPal also intends to expand these features to its payments app, Venmo, and ‘select international markets in the first half of 2021.’
PayPal intends to make payments with cryptocurrencies available early next year, adding to the growing list of payment and investment apps that allow the purchase and use of cryptocurrencies.
The news of PayPal's integration of cryptocurrency payments is especially compelling as it comes in the wake of Square’s (SQ) Bitcoin investment and a growing trend of companies assets being converted to Bitcoin in order to hedge against inflation and the lowering purchasing power of the US dollar.
In August, business analytics and mobility platform, MicroStrategy (MSTR) started a trend by purchasing $250 million worth of Bitcoin. It then purchased another $175 million in September. Shortly after, Square, a payment company and competitor to PayPal, reallocated 0.1% of its market capitalization, or $50 million, into Bitcoin in early October. Since then the trend has grown. Now there are thirteen publicly traded companies that hold Bitcoin.
Past sentiment toward Bitcoin and other digital assets, mostly among wall street and the finance world, has largely been negative. One of the more common arguments against Bitcoin and cryptocurrencies is that they are mostly used for criminal transactions and money laundering. While it is true that these assets can be and are being used for this purpose, companies and individuals seem to be adopting them at faster rates.
Financial technology companies like Square, PayPal, Robinhood, and more have shown a level of confidence in these digital assets by letting their users purchase and hold them. Companies like MicroStrategy and others have found value in Bitcoin as a way to harbor value away from inflating fiat currencies.
The greater acceptance of these assets and the seemingly growing trend of institutional Bitcoin purchases suggests further adoption.