Reports that PayPal might be about to offer bitcoin services to its customers has helped lift the price of the leading digital currency.
Coindesk revealed yesterday, citing unnamed sources, that the payments company, which also owns Venmo, would be rolling out support for bitcoin. The plans are said to include a custodial wallet functionality.
The report says PayPal will likely be looking to Coinbase and Bitstamp to provide liquidity, building on its longstanding relationships with the former.
Coinbase clients in the US and Europe are able to withdraw funds straight into their PayPal accounts. Indeed with platform such as global social trading platform eToro it is possible to buy bitcoin with PayPal.
PayPal was an early partner in the Libra project – Facebook’s putative attempt to launch a global stablecoin backed by a basket of fiat currencies and near-cash equivalents.
Along with other blue chip payment firms such as Visa, PayPal withdrew support when the extent of the regulatory pushback became clear and fears that involvement with the project could introduce risks to current business operations where none existed before.
PayPal chasing millennials, digital asset tech know-how
However, if this rumour turns out to be hard news, then it would be a major indication that far from giving up on crypto by backing away from Libra, major players are still circling the space.
As the Coindesk story points out, crypto may increasingly be being seen by certain financial companies as a way of attracting a younger demographic.
Although the likes of Robinhood in the stock trading field and PayPal in payments are very different beasts, they both share an interest in the revenue potential of attracting crypto business.
But deepening involvement in crypto has another advantage, namely it builds up expertise in digital money. That could be hugely important looking to the near future, with the possibility of a host of central banks, in particular the People’s Bank of China, rolling out central bank digital currencies.
Also, the potentialities of crypto-fuelled closed-loop payments systems would be further enhanced by a new digital-first money world, and for the likes of PayPal it would not be just a matter of seizing new opportunities but also of defending its existing turf.
Bitcoin gets a genuine use case says Panxora CEO
Gavin Smith, chief executive of cryptocurrency group Panxora, sees the rumoured PayPal crypto move as providing bitcoin with a genuine use case.
“PayPal’s entry into the market moves bitcoin another step closer to mainstream acceptance. While the first foray is to simply allow the purchase and sale of bitcoin, it sets the groundwork for integration into PayPal’s general suite of payment services. I anticipate that, over time, this will provide what bitcoin desperately needs – some genuine use cases over and above the ‘store of value’ narrative.”
PayPal and Venmo are owned by auction site eBay.
Meltem Demirors – bitcoin goodwill trend will accelerate
But Meltem Demirors, chief strategy officer at digital asset management company CoinShares, is somewhat more measured on what PayPal’s plans might mean for the industry, although she is still generally positive.
“PayPal and Venmo have 300 million users between them so that’s 300 million more users that bitcoin can potentially reach, but does it move the ball forward on what we are trying to accomplish as an industry, not necessarily. From a narrative perspective it’s important.”
Demirors adds: “The more that companies and governments recognise that by embracing bitcoin they can generate positive goodwill – and positive goodwill on the balance sheet, as well as with the bitcoin community – the more that trend will accelerate.”
Uber bitcoin bull, RT economics commentator Max Keiser, sees PayPal chasing Square’s apparent success with bitcoin via its Cash app, although its actual profits on bitcoin trading are minimal, Demirors points out.
“#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,” Keiser tweeted, predicting a “global hash war” to bolster the bitcoin price.
Whatever the veracity of the story or its wider implications if bitcoin on PayPal and Venmo comes to pass, for now the bitcoin bulls are buying the rumour.