PayPal made big waves a few weeks ago with their announcement of entering the Bitcoin sphere. This move, which had been hinted at months earlier, combined with Square’s large purchase of Bitcoin, has played a big role in Bitcoin’s recent skyrocketing price.
Some have been calling PayPal’s entrance to be a huge boon for getting new users into the crypto space. But there are many problems with PayPal’s entrance. Users don’t actually own the Bitcoin, they threaten smaller players that already operate in Bitcoin’s utility, and they don’t have plans to accept Bitcoin payments. PayPal serves to cause a splash, but will likely not leave a lasting positive impact, and in fact might serve to drive new users astray.
PayPal is one of the largest online payment companies in the world. Its reach is enormous, serving a huge percentage of the ecommerce market. When the rumors first broke early in the summer that PayPal was looking into Bitcoin, there was some excitement, as rumors swirled whether PayPal’s implementation would include payment processing. Now, several months later, we have learned that PayPal’s adoption is lackluster, despite their purchasing of a large number of Bitcoin.
PayPal is only allowing the purchase and holding of Bitcoin. While that’s a big step, it doesn’t go anywhere near far enough. Not only has PayPal not created a payment processor for Bitcoin, the fact of the matter is, users won’t actually own the Bitcoin.
Keys won’t be given out, bringing back the chat of “not your key, not your Bitcoin.” PayPal also has a history of taking money from accounts (just search “@PayPal Stolen” on Twitter and you’ll see). That makes PayPal’s objectives suspect. Not to mention, the Bitcoin can’t be transferred to another wallet. They can only be held. That’s an insult to Bitcoin, and frankly quite worrying.
PayPal’s movement seems to actually try to stifle the big thing that Bitcoin holds dear: the decentralization. Instead, Paypal is seeking to centralize its power over a subset of Bitcoin. This will affect the new user, who won’t have access to greater knowledge about Bitcoin.
With PayPal’s vast market, there’s bound to be people who were interested in accepting Bitcoin at their store after hearing about it from PayPal. Now, they are met with the idea that Bitcoin is useless, it can only be held as an investment. But that’s the farthest from the truth. Bitcoin is one of the greatest, easiest to use, and safest forms of currency.
New users have to be shown the benefits that Bitcoin can offer. Perhaps PayPal can pave the way by getting new users’ feet in the door, but the Bitcoin Community has to do their part to educate these new users.
We have to push small Bitcoin businesses, whether they want to use Bitcoin as a payment, by using websites like Accepted Here, or whether they want to accept bitcoin on their stores, by using payment processors like Blockonomics.
Only then, by using tools like Blockonomics, will users see how Bitcoin is easy to use, and very secure through things like direct to wallet transactions. The key to use PayPal to help Bitcoin is to take those new users and convert them.
If we don’t convert these new users, they will be lost forever to PayPal’s attempts to exert power on a new side of the internet. PayPal can be a net positive for Bitcoin, but it can very easily become a huge problem for Bitcoin adoption. It is something to be weary of.