PayPal Holdings Inc. has made announcement of an upgrade to its payment system that will enable its customers to buy, sell and hold bitcoin alongside popular altcoin directly from users’ digital wallets. The program rolled out in the United States on Wednesday and will be available for users to shop at its 26 million merchants on its platform worldwide in the coming weeks. PayPal is looking to expand the services to other countries and its subsidiary, Venmo in early 2021.
How It Works
Paypal account will be allowing customers with cryptocurrencies wallet to either buy, sell, hold or shop at their conveniences. Some of the digital currencies that will be supported include Bitcoin (BTC), LiteCoin (LTC), Bitcoin Cash (BCH), and Ether (ETH) among others. This milestone has been made possible due to the partnership that Paypal entered with Paxos Trust Company
For shopping, users will be allowed to use either fiat currency balance or cryptocurrency balance in their wallets. However, since cryptocurrencies are volatile, merchants often decline crypto payments. To solve this issue, PayPal will settle the payments made to merchants by crypto with a fiat currency equivalent.
Migration to Digital Assets
In their statement earlier today, PayPal noted that more payments were moving to digital payment platforms as more interest grows towards digital assets. More users and financial institutions, including central banks, are looking to venture into digital asset operations and the COVID-19 pandemic has accelerated this move further.
Notably, PayPal is not the first to launch services of this kind. Square already has such services on its platform. However, the entry by such a big market player is of significance to the industry. Already, PayPal’s stock has climbed over 3%. Also, crypto markets have responded upwards, with BTC moving above $12,700.
The migration to digital assets can hardly be avoided, given the advantages, it brings to the industry. Advantages include increasing access to financial services, speed, efficiency, and resilience, financial services. These will expand to remote areas and offer agility in processing transactions. For instance, payments such as government stimulus checks will reach citizens faster and securely.
PayPal’s decisions in the past regarding cryptocurrencies have often led to crypto sell-offs, and drop in crypto value. For instance, when PayPal fell out of Facebook’s Libra project, crypto markets dropped. Today’s decision is different and more financial institutions will be entering the crypto race. Crypto enthusiastic has termed this move as a major stable that will increase adoption of cryptocurrency into the public domain.
For Bitcoin short-term (intraday basis) it’s funny to note that Paypal announcements have often led to a sell-off, obviously not something to base a decision on but I just thought.