Not everyone in the crypto industry is thrilled about PayPal’s recent news
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 benefits beyond the immediate price movement.
According to an Oct. 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 onboarded 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.”
Many players in the crypto industry advocate against holding assets on exchanges, which are sometimes subject to hacks, bugs, and general corruption. Even Coinbase, one of the most popular crypto exchanges in the United States, has made waves for crashing when trading turns volatile. In an ongoing situation, Malta-based exchange OKEx hasn’t allowed users to withdraw funds since last week.
Blockchain.com CEO Peter Smith said PayPal’s decision is “highly centralized and inflexible”:
”We saw this with Robinhood, and we’re seeing it again today. Crypto is about financial freedom. It’s modern money that anyone anywhere can truly control. While we’re excited to see a new audience gain access, a non-custodial approach limits opportunity to self-custody your crypto or transact freely.”
The move towards mainstream adoption of cryptocurrency has progressed significantly in 2020, with financial institutions like MicroStrategy purchasing more than $415 million BTC, and Grayscale significantly expanding assets under management in its crypto trusts. PayPal’s decision to custody Bitcoin and potentially offer a cryptocurrency of its own came ahead of the leading digital asset breaking the $13,000 price barrier for the first time since June 2019, and PayPal’s stock rising 5%.
Some players see PayPal allowing its users to make payments in crypto as insignificant in the path to greater adoption, however. “The question is, would someone want to use [Bitcoin on Paypal] for merchant transactions, which is more of an unknown,” said fintech consultancy 11:FS co-founder Simon Taylor in a Reuters interview.
David Birch, director of electronic transactions consultancy Consult Hyperion, agreed, saying he didn’t think PayPal’s move would make “much difference for Bitcoin.”
Crypto PayPal News Sends Asset To New All-Time High, But It’s Not Bitcoin
News breaking today that payments giant PayPal would be supporting cryptocurrencies sent the price of Bitcoin rocketing over $1,000 in a single day. But it was another asset that soared to a new all-time high on the news. Here’s how PayPal’s stock shares also benefitted from supporting the emerging asset class.
Today was a monumental day for Bitcoin and cryptocurrencies. A company that was once vehemently opposed to the emerging asset class, even going as far as to block payments made to and from service providers associated with the financial technology, is now changing its tune.
PayPal, the payments giant, has revealed support for Bitcoin and other “virtual coins” according to a statement.
The company serves over 346 million users worldwide and will let these users spend cryptocurrencies at over 26 million merchants globally.
Bitcoin currently has roughly 187 million users, so the exposure to the mainstream userbase PayPal commands cannot be understated.
Bitcoin sets new 2020 peak following PayPal support news | Source: BTCUSD on TradingView.com
Markets responded in a major way to the breaking bullish Bitcoin news. The leading cryptocurrency by market cap soared over $1,000 in a single day, setting a new 2020 high.
As well as the cryptocurrency market itself performed on the reveal, it was PayPal that set a new all-time high today on the heels of word making rounds.
PayPal stock shares set new all-time high following crypto support news | Source: PYPL on TradingView.com
Comparing the two charts, PayPal and Bitcoin have followed a similar path in 2020, with a steep decline around Black Thursday that was followed by even stronger returns than what started the year.
Assets performing so well during a pandemic and economic recession is the result of the dollar weakening and its buying power falling.
The effects are amplified when the asset the dollar is paired with is performing extremely well. Bitcoin is a scarce asset that is suddenly being sought as a hedge against inflation. The association with the cryptocurrency alone was enough to give PayPal a shot in the arm as well.
But the news may not be all its cracked up to be. Industry analysts fear that because PayPal doesn’t allow users to move the assets to owned personal wallets, the controversy of “not your keys, not your Bitcoin” has muddied the positivity.
Still, it is a major step in the right direction, and these days, it doesn’t require much in the way of positive news, to send the cryptocurrency soaring another $1,000 or more. So even if this does turn into a non-event, the news itself could have been enough to give bulls the confidence to push prices to a higher high finally and confirm the new uptrend.
Featured Image From Deposit Photos, Chart from TradingView.com
Author: By TeamMMG
PayPal’s crypto integration means Bitcoin could triple its user base
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PayPal’s crypto integration may bode well for Bitcoin price as its user base could triple
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Market Analysis Report (22 Oct 2020)
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