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PayPal officially joined the cryptocurrency market on Wednesday, allowing customers to buy, sell and hold virtual coins using the U.S. digital payments company’s online wallets. PayPal customers will also be able to use cryptocurrencies to shop at the 26 million merchants on its network starting in early 2021, the company claimed in a statement.
The company, jointly founded by Elon Musk, hopes the service will encourage global use of virtual coins and prepare its network for new digital currencies that may be developed by central banks and corporations. President and Chief Executive Dan Schulman said as much in a recent interview: “We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role”. The involvement of central banks is seemingly key, as that will do much to allay any prior security concerns regarding cryptocurrencies.
U.S. account holders will be able to buy, sell and hold cryptocurrencies in their PayPal wallets over the coming weeks, the company said. It plans to expand to Venmo and some regions in the first two quarters of 2021. Other mainstream fintech companies, such as mobile payment provider Square Inc and market trading app firm Robinhood Markets Inc, allow users to buy and sell cryptocurrencies – but PayPal’s launch is noteworthy given its vast reach. Gambling options which allow the use of cryptocurrency can be seen on the Casino Zone crypto casinos page.
The company, based in San Jose, California, has 346 million active accounts around the world, processing USD 222 billion in payments in the second quarter of 2020. Cryptocurrencies tend to be volatile, making them attractive to speculators, but a lot less appealing to merchants and shoppers. Transactions have been slower and more costly than other mainstream payment systems, but the involvement of PayPal could, at the very least, help to improve the general perception of digital currencies moving forward. In response to the news emanating from PayPal, Bitcoin’s value rose significantly, breaking the USD 12,000 mark last month.
Cryptocurrency payments on PayPal will be settled using fiat currencies, such as the U.S. dollar, meaning merchants will not receive payments in virtual coins, the company said. Several central banks around the world have expressed their intention to develop digital versions of their currencies in the coming years, while Facebook led the creation of a cryptocurrency project called Libra in 2019. PayPal was a founding member, but after Libra failed to gain much traction, they quietly bailed of the project.
According to Paypal, which has secured the first conditional cryptocurrency license from the New York State Department of Financial Services, they will allow purchases of bitcoin and other cryptocurrencies called ethereum, bitcoin cash and Litecoin from the outset. Its partnership with Paxos Trust Company allows the firm to offer this service.
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” PayPal CEO Dan Schulman said in a press release. “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.”
The news will be welcomed by users everywhere, as Bitcoin, in particular, is surging in popularity. As much as anything, it is a tacit endorsement of digital currency, on the whole, a move which will surely increase the desire of central banks to develop coins of their own. PayPal’s decision has the potential to revolutionise the future of banking.