PayPal made it’s long awaited move into cryptocurrencies, announcing Wednesday that its over 300 million users will be able to buy and hold Bitcoin, Litecoin, Ethereum and a few other cryptocurrencies and to shop at its 26 million merchants with crypto. PayPal Users are still not able to transfer cryptocurrencies to each other, but it’s an easy way for users to get started in Bitcoin. So what does this news mean for the wider cryptocurrency industry?
PayPal’s news is a major development for one of the oldest and original internet payment solutions that began in the late 90’s as a popular payment platform for Ebay. PayPal already owns Venmo and Braintree and is one of the leaders in the digital payment space. The news that PayPal will allow users to easily buy and hold Bitcoin and other cryptocurrencies legitimizes Bitcoin as a desirable mainstream asset. It increases the trust factor of Bitcoin and should lead to even more institutional and retail adoption. Bitcoin prices moved up from $12,000 to around $13,000 on the news.
Pros and Cons of Bitcoin On PayPal
Cryptopotato wrote a short summary of the good and bad with the PayPal news. The main downsides to buying Bitcoin on PayPal is the high fees (1.5-2.5% with 50 cent minimum charge) and the restrictions on withdrawals. PayPal will still control your Bitcoin and users lose the most powerful feature of Bitcoin that allows people to finally have full control over their money without freezes or limits. PayPal is notorious for freezing accounts. For casual users and for convenience PayPal will enable a larger demographic speculate and hold on to Bitcoin which is an important first step towards mainstream adoption.