PayPal, Blockchain and The New Privacy Sandbox. But Will It Really Have An Impact?
I’ve always been a bit leery of PayPal. Accounts being mysteriously frozen. A haven for identity thieves and hackers. Honestly, I’ve heard it all over the years.
And then there’s the funny conversation I had a few years ago with a tax agent I randomly met in a hotel lobby in downtown Denver. She admitted to me that her IRS agency had recently figured out that people were hiding money in PayPal accounts.
“How interesting,” I thought at the time. But from the sounds of things, PayPal is now in bed with the IRS.
Cambridge is a firm that assists financial institutions in navigating the rough waters of data privacy rules. The startup’s value proposition? Providing individuals with greater controls over their online identities without the need for a middleman like Facebook.
The appeal for Paypal is that it will allow their platform users to not only authenticate their identities but control access to their identifying information.
Blockchain’s value in delivering unmatched privacy controls for financial services companies like Paypal is significant amid an environment where data and privacy breaches have accelerated in frequency in recent years. It also underscores how investments like that of PayPal offer great promise in terms of Blockchain advancement and influence in the world of personal finance and business commerce
Prior to this recent announcement offering a glimpse of how it might engage blockchain for future projects, PayPal’s only known flirtation with blockchain was a patent filed in March 2018 designed to accelerate cryptocurrency transaction rates and boost employee participation in digital tokens executed on a blockchain.
For more on this groundbreaking move, we turned to Arran Stewart, Chief Visionary Officer of blockchain recruitment platform Job.com. Steward is a highly regarded entrepreneur and tech innovation influencer who has been featured in Reuters, Wired, Inc., and International Business Times, among many other publications.
He was kind enough to respond to me with his thoughts by email. Here’s what he had to share:
Why is this news of PayPal’s blockchain investment in Cambridge so significant?
Paypal has made this small investment as a first step toward harnessing the power that blockchain provides for security. In this instance, Paypal is using blockchain to verify user accounts, complete KYC and create a distributed ledger amongst other web or app-based financial service providers, like Venmo.
And the impact of this development?
The impact will be that it will become easier and more efficient for honest users on the web to open accounts with the Paypal platform, as sensitive data will be shared on a blockchain ledger, allowing multiple online based, financial service solutions providers to verify information and cross check with one another using the secure access granted by blockchain.
In a digital world, fraud has become increasingly easier as there are fewer financial and banking transactions that take place in person. These days everything is done online, but this leaves room for the sophisticated online fraudsters to use other angles to create illegitimate accounts. Blockchain, in short, will help to solve this.
Identity management solutions have been garnering increasing attention over time. In your view, how does Blockchain address pressing this pressing issue?
If shared, blockchain can be a ledger of record for all financial institutions to use. If a user has completed KYC on one trusted financial platform that is trusted like PayPal, Venmo could access and cross-reference that data to verify users on their platform. And because the information on the blockchain is immutable, tamper-proof and only accessible through private keys that users can control access to, it gives consumers a bit more control over their online identity. This helps to keep their information secure while reducing fraud.
What other sorts of emerging trends do you think we’ll see in terms of the intersection between blockchain and payment solutions over the next 12–18 months?
The biggest one we hope to see is the potential use of cryptocurrency as a payment option on platforms like Paypal. While the reality is that we may not get to that in 18 months, the sheer fact that PayPal has invested in blockchain to increase the security and efficiency of their customer account opening process is a strong indicator that this technology could serve them in other ways. The blockchain could then open new avenues (or just improve existing ones) for payments and transfer processing. And who knows, it could even lead to an exchange one day.