PayPal may be a Thing of the Past; Bitcoin may be a Thing of the Future
This article throws some light on changing trends in the digital transaction domain right from the heydays of digital cash to the current situation of PayPal. It then tries to show how ‘peer to peer’ transaction is getting popular exponentially to bring in the concept of Bitcoin that is a truly digital P2P currency. The notable point of the write-up is that services offered by PayPal and similar parties are all ‘third party’ and profit-oriented, commission-based services that will have no takers as P2P services in case of Cryptocurrencies is Zero. Wow!
When everybody is thinking about cash becoming a thing of past and when digital money is trending everywhere, PayPal is growing rapidly which is quite a natural outcome given the use of digital cash is on the rise exponentially. That is not a matter to ponder over when we talk about a future where PayPal itself may become a thing of past. Even though this does not seem to be a certain probability, let us tell you why PayPal CEO Dan Schulman should start getting worried.
But, before we do that, we think it will be appropriate to start the story from the history (in brief) not only because it is necessary to know about the start if we want to imagine the end but also because knowing about the history will let us visualize a truth that won’t be so apparent if we just provide the final situation of what digital transactions would look like say a decade and a half from now.
The Brief History of Digital Cash
Let’s begin with one of the most talked-about tools that changed how people spend their money to purchase goods and services, the credit cards. The credit of inventing a protocol to allow people to spend on credit goes to Diner’s Club that introduced the first merchandise credit card in 1949.
Soon, the advantages of transactions in credit became a popular business and seeing the opportunity of earning by levying interests, Bank of America brought the first common credit card and later reinvented Visa in 1958 into the market. MasterCard was later introduced by a network of banks in 1966. As is obvious, cashless transaction possibility soon became popular as the idea of carrying lesser cash and yet having enormous shopping capability with palpable security was something people liked very much.
The idea of a cashless society shifted from cards to the web with the advent of the internet. With the very first completely legitimate online sale taking place in August of 1984 when data encryption software was utilized to send the credit card details securely, the concept of internet money became a reality. In October of 1994, Stanford Federal Credit Union started offering online internet banking services for the first time, letting people have the luxury to manage their assets online.
That was the beginning of a completely new financial era as transferring and transacting money became a matter of a few clicks, and given the process of technological advancement, electronic money became a safe, secure and robust method of the transaction within a very short span of time. Fuelled by the secure method of public key cryptography, the online money transactions became a reality and with further growth of the internet, transferring money worldwide via online platforms gained momentum unprecedentedly.
The Brief Story of PayPal’s Bloom
The idea of changing the way money transfers work was set up by Elon Musk with a firm called Confinity in 1998. Although Confinity had to go through a Roller Coaster ride, Musk realized that the idea had enough potential. This led to Musk’s online banking firm X.com merging with Confinity in 2001 and PayPal was born.
In 2002, eBay bought PayPal for $1.5 billion and PayPal became eBay’s default payment setting. After acquiring VeriSign and partnering with MasterCard in 2007, PayPal became a popular online money transaction platform of the 21st century. Many acquisitions, such as those of IronPearl, Braintree, and Xoom led the company to grow exponentially within the first two decades of the century and it soon became a name everyone who has even a little knowledge about internet money transfers is aware of.
In a span of two decades, PayPal grew by leaps and bounds because the idea of internet money had gradually started to gain popularity. This occurred mainly for two reasons; first, the expansion of internet had made virtual employment and thereby virtual borderless money transfer a reality and second, the nature of money had started to change with the advent of ‘peer to peer’ money transfers becoming a reality.
Here’s why PayPal rightly seized the idea of ‘peer to peer’ money transfer.
The Story of PayPal.Me
PayPal started a benchmarking service called PayPal.me, to revitalize its old-by-Internet-standards payment platform in 2015. PayPal.Me makes it extremely easy to request money without ever having to use a mobile app or signing into PayPal’s website. This was the beginning of the growth of ‘peer to peer’ money transfers although the idea had been made more versatile by the so-called cryptocurrencies that really started getting popular with the introduction of Bitcoin in 2009.
PayPal.me is a simpler option for users to request money and get paid. Although the idea was similar to Venmo, a mobile transaction app, the process was made much simpler by PayPal for its users to get money transferred directly from one party to their own accounts. As is obvious, it showed that the trend of online money transfer was undergoing a palpable shift that was more of a demand of the times than being another way to grow the presence of PayPal on the web.
Now, Here’s why PayPal won’t Exist
As mentioned above, ‘peer to peer’ transactions has become a much-felt reality for all the financial and money transfer services at the end of the second decade of the 21st century. It is needless to mention that within the very first decade of introduction, Bitcoin and other popular cryptocurrencies have totally changed the notion of ‘peer to peer’ transactions. Although PayPal wants to grab the opportunity to pay respect to a timely trend, there are many loopholes in PayPal’s attempts when compared with Bitcoin.
Firstly, the cryptographic technology Bitcoin uses for its transaction called Blockchain is completely a game-changer. It is so robust and strong that the proven technology is being adopted by most of the futuristic financial bigwigs the world over. Nonetheless, even when Bitcoin is not being accepted by those very firms as they believe it to be fraudulent and too volatile, the world’s most popular cryptocurrency is slowly displacing PayPal from its position.
The real reason why PayPal won’t be successful in the competition with Bitcoin is that PayPal is itself a ‘third party’ that is a profit-oriented firm. Although, the commissions it levies on transactions are at the lower-end when general fiat money transaction fees by other banks and financial institutions are considered, in case of Bitcoin it is zero. So, will anybody pay a commission to PayPal if they could get the transfers done without even having to think about any commission? No.
That is a reason why no ‘third parties’ would exist or stay competitive on the web or digitally within a decade and a half in the future. That idea of no ‘third party’ is championed by Bitcoin and even if the acceptance rate is not quite huge right now, it will surely become a trend within a short span because it is futuristic, cost-effective, utilitarian and holistic in nature.
That is why, even when we do not have any anguish over PayPal’s success, we forecast that it will be a thing of past one day or the other. That ‘one day’ can be any day.
Sincerely yours,
