Paypal Jumps into Bitcoin; Will More Fees Lead to More Safety for Holders?
Bitcoin prices surged earlier in the week after PayPal jumped into the cryptocurrency business, but not everyone in the crypto industry is thrilled with the news.
Good News for Bitcoin Investors?
PayPal is planning to launch its own cryptocurrency service, allowing people to buy, hold and sell digital currency on its site and applications. The move by the online payments company marked a significant milestone on the path to mainstream adoption of cryptocurrencies such as bitcoin. The reception by bitcoin investors was mostly positive as prices rose 5% on the news.
The efficiency, speed and resilience of cryptocurrencies give people financial inclusion and access advantages, said PayPal President and CEO Dan Schulman, who described the eventual shift from physical to digital currencies as ‘inevitable.’
Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange,” Schulman said in a statement.
Some Don’t See Benefit of Paypal’s Move
Cointelegraph.com wrote, “While many in the industry were pleased with Bitcoin’s surge past $13,200 following an announcement that PayPal intends to integrate crypto into its network, some fail to see any benefit beyond the immediate price movement.”
According to an October 21 blog post from Satoshi Labs, the team behind the crypto hardware wallet Trezor, PayPal’s push to start selling Bitcoin (BTC), is ‘probably not because they want to spur healthy adoption.” Their arguments are similar to ones made by many crypto holders against storing digital assets on exchanges, i.e. “not your keys, not your coins.”
“If millions of newcomers are on boarded to Bitcoin by PayPal, there could be a very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency,” stated the blog post by SatoshiLabs. “No one should consider money held entirely by a third party as owned by them. Time after time, exchanges have lost user funds, often leaving them with no recourse.”
“Long-term, if PayPal proceeds without consulting the community and letting their users control their own keys, it offers no value to the space. The greatest risk is that the clout they carry in traditional electronic payments will be interpreted as expertise in crypto. This would threaten the expert advice so carefully crafted by our community, which could be drowned out by the misinformed masses that PayPal brings to the space.”
The news may be good for PayPal shareholders because jumping into the cryptocurrency business will open up another income stream, which should lead to greater profits. However, buyers of Bitcoin who place their holdings on the PayPal platform have to be aware of the risks of exchange-held coins. Once again, it becomes a case of buyer-beware.