Is this bitcoin's mainstream moment?
E-commerce giant Paypal has moved to embrace cryptocurrencies in a move that could finally see the mainstream recognition users of Bitcoin and Ethereum have long hoped for.
The New York State Department of Financial Services yesterday granted PayPal a conditional "Bitlicence", which allows it to trade and hold cryptocurrencies in the US where it is based.
PayPal, in partnership with New York-based fintech start-up Paxos, now plans to roll out cryptocurrency support in the coming weeks, which would allow users of the leading Bitcoin, Ethereum and litecoin to buy, sell and hold the currencies on the PayPal platform.'
Digital wallets for holding and trading cryptocurrencies are nothing new, but PayPal's reach with 26 million online retailers using it worldwide could transform use of cryptocurrencies, which have remained obscure to most consumers. The service will initially be available to US PayPal account holders.
Early next year, PayPal plans to make it possible to pay those online retailers using crypto which is when many will consider adopting Bitcoin for the first time. The online retailers will be paid in whatever fiat currency they currently support. The value of a Bitcoin yesterday jumped over ten per cent to around NZ$19,500 on the back of the news.
Paxos will guarantee Paypal and users of the service a guaranteed exchange rate at the moment of the transaction, giving people security that they won't be stung by the often wild fluctuations in the value of cryptocurrencies.
For PayPal the move is the strongest endorsement yet of cryptocurrencies as a legitimate form of financial exchange after it withdrew from Facebook's Libra consortium. PayPal is already active in the digital wallet space with 350 million users of its Venmo wallet worldwide.
It's rival, Square already supports Bitcoin in its Cash app. But PayPal's use in the online world is orders of magnitude greater and the trust in the platform will help drive uptake of Bitcoin in particular.
The move could speed development of central government planning for cryptocurrencies as they seek to maintain their relevance and control in the digital world.
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