PayPal allows Bitcoin and crypto spending

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Mar 8, 2021


Recently, PayPal, one of the leaders in the market of digital financial operations, made a significant announcement regarding the peculiarities of its functioning. Hence, the company informed the broad public about integrating the possibility of conducting trade operations with virtual currencies using personal PayPal accounts that its customers would soon enjoy.

This news was a natural result of the growing popularity of crypto, especially Bitcoin, which reached its peak value several times over the past few months.

As PayPal claimed, the people who use the platform’s services will get the opportunity to utilize virtual currency for their vending operations with more than 26 million counterparts accepting PayPal as a reliable provider of transactions. The company announced its plans to integrate cryptocurrency-based payments into its system on the United States territory within the few weeks or months at longest.

The announcement was made in October as a response to Bitcoin reaching its peak of over $12,000 per unit. Currently, the price of this crypto coin has grown dramatically even compared to this indicator, having reached over $49,000 per unit and, hence, indicating that PayPal’s decision was more than relevant in the current economic conditions.

The company did not limit the range of crypto coins it plans to integrate to Bitcoin only. The other coins that are to be implemented into PayPal’s system include Litecoin and Ethereum, which are also relatively popular among the crypto enthusiast.

However, the possibility to use them in the trading operations will be introduced later, as Bitcoin is currently the company’s central priority.

Apparent benefits and potential pitfalls

For a long time, cryptocurrencies have been a rather “underground” payment method widespread among enthusiasts but not the broad public. One of the primary reasons for this situation was the unstable nature of coins, which could fluctuate radically in value to an extent unmatched by any other asset.

Overnight, they could rise or fall in price several times. While reducing the popularity of cryptocurrencies as a means of payment, this characteristic has simultaneously increased their value for investors. Using various reputable platforms such as, traders managed to earn significant profits from fluctuations in cryptocurrency prices.

However, despite its high investment potential, cryptocurrencies were originally created as a means of payment. PayPal’s decision means that, after many years spent in the role of an investment asset, cryptocurrencies got one step closer to being utilized for their direct purpose.

By giving Bitcoin and other coins a chance, PayPal also plans to conduct a kind of educational campaign for its users to acquaint them with the nature and peculiar features linked to using cryptocurrencies.

In theory, the strategy of the company looks valid. However, some experts doubt its long-term efficiency. For instance, blockchain specialist David Gerard claimed that the company’s plans are suspiciously reminiscent of creating a simple day-trading market.

He doubted whether it would be feasible to implement crypto into the system in the absence of a predictable base of users who will appreciate this feature. According to the expert, in the form in which it is now planned to have, PayPal cryptocurrency integration looks more like an investment gambling than a serious enterprise.

This remark is all the more relevant given the large number of influential agents who may impact crypto coin price fluctuations. Gerard concludes that the whole venture will not increase the popularity of cryptocurrencies but merely allow existing holders to perform more operations with their coins’ involvement.

Using cryptocurrencies as a payment instrument

Using cryptocurrencies as a means of payment at a digital platform is not something PayPal pioneered. Before, several other companies of a smaller scale offered such an option to their users. For instance, Revolut and Square Cash, two companies involved in similar operational activities as PayPal, implemented this practice. The difference is that PayPal belongs to the scope of the most impactful players in this market. Therefore, the strategic decisions it makes are not left unnoticed, influencing the whole industry.

Speaking about the mechanism that it will use to provide crypto-based payments, PayPal explained that it would convert the virtual coins into the national currencies relevant to the counterparties’ operations and locations.

Therefore, the party to which the payment is sent will not obtain the crypto coins but only their monetary equivalent. The company is committed to creating the most favorable conditions for the parties, ensuring correct conversion and lack of excessive fees for the operations.

One of the other controversial themes connected with cryptocurrencies is the issue of their regulation. Due to their low traceability and questionable conditions of their use in the past (crypto coins have often been utilized to pay for illegal operations), their regulation is advocated by many experts and organizations.

In this regard, PayPal secured itself by obtaining a conditional license from the New York State, allowing the company to get involved in crypto-related operations.

It is worth noting that, in the past, PayPal has already dealt with the integration of cryptocurrencies in its operations. In particular, the company entered into a conventional partnership with Facebook to integrate its Libra crypto coins.

However, this venture was unsuccessful, and a few months after its conclusion, PayPal ended its partnership with Facebook. For cryptocurrency enthusiasts, it is only to be hoped that this time the company manages to complete its crypto-initiative and does not give up halfway in the implementation of his ambitious plan.

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PR Manager

Press release about recent ICOs, announcement from startups, new cryptocurrency launch by firms and unlike.

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