Paypal and the bitcoin

Sajjad Hussain
Oct 26 · 4 min read
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PayPal not only supports the buying and selling of bitcoin on the platform, but also recently plans to acquire cryptocurrency custodian BitGo. All this proves that it is serious to deploy cryptocurrency PayPal.

This action allowed the price of Bitcoin to break through the high of $13,000. After the price of Bitcoin was over, many Bitcoin loyalists began to think about the real impact of PayPal on the industry. They pointed out that this incident was not as optimistic as they thought. And it is recommended that you do not buy and sell Bitcoin on PayPal.

On October 21, 2020, PayPal announced that it will launch a digital wallet for buying, selling and storing Bitcoin, Ethereum, Bitcoin Cash and Litecoin. This confirmed the rumors in the first half of this year and was regarded by insiders as a very important milestone.

This may really be a milestone, after all, PayPal will affect millions of users who have never considered cryptocurrency before. While changing people’s old ideas, it also makes users think that PayPal is the leading authority in the cryptocurrency field.

In the second quarter of 2020, more than $221 billion of transactions were completed through Paypal, but its reputation is not very good: Paypal has been known for “frequently” freezing user funds and reviewing payment methods that conflict with itself. Joining Bitcoin means Paypal has really started to change? It’s not that simple.

1. Is Paypal’s actions a good thing for Bitcoin?

Prior to this, PayPal was a well-known “cryptocurrency opposition.” In 2018, its former CEO Bill Harris called Bitcoin “the biggest scam ever.”

Now this sudden change is surprising, especially when listed companies like Microstrategy and Square have begun to announce that they have bought Bitcoin. We have been looking forward to the large-scale use of Bitcoin, so should the Bitcoin community actively embrace the arrival of PayPal?

In fact, well-known brands like PayPal started to support Bitcoin not because they really wanted to encourage people to accept Bitcoin . Some information was mixed in the PayPal press release:

First of all, this service is fully managed, which means that users will not have their own private keys;

Second, PayPal intends to “ provide educational content to account holders to help them understand the cryptocurrency ecosystem.”

Anyone who knows Bitcoin will not agree to hand over their private keys. Presumably, in the future user education of PayPal, they will also directly ignore the basic rule of “not your private key, not your Bitcoin”.

If millions of new users purchase Bitcoin through PayPal, a very serious information gap may appear, which will jeopardize their experience and break the rules of cryptocurrency. In the user’s Q&A statement, PayPal directly pointed out: “The encrypted currency purchased on PayPal belongs to you, but PayPal does not provide a private key.”

The experience of exchanges being stolen from time to time tells us that no one should treat funds held by a third party as their own, not your private key or your currency.

For some people, PayPal’s rules can avoid supervision and funds are guaranteed. New users may even find it more comfortable than dealing directly with exchanges. However, certain functions of cryptocurrency are also restricted- PayPal Users cannot transfer their cryptocurrency assets from their PayPal account to other accounts, nor can they transfer their own cryptocurrency to their PayPal account.

2. PayPal wants to position itself as a leader in cryptocurrency?

With the entry of PayPal, it will be closely watched by other companies, institutions and consumers. Although PayPal can boast that it is professional in the field of “digital payment”, it cannot change history. In the past, PayPal always took tough measures against users who buy currency on exchanges, on the grounds that the policy prohibits “involving currency exchange or check cashing.” Business” transactions.

This clause is still in PayPal’s usage rules, which also indicates that PayPal intends to restrict users, prevent users from withdrawing assets to a secure wallet with key control, so that they can only use cryptocurrency on the PayPal platform, and by the way it is also restrained. The effect of peer competition.

Regarding the fact that PayPal supports cryptocurrency payments, there is only one thing worth celebrating with Bitcoin hold promoting price increases. However, in the long run, if PayPal does not let users control their keys, it will not be of much value to the Bitcoin community.

The greater risk is that PayPal’s influence in the field of traditional electronic payments will be interpreted as being very professional in cryptocurrency technology. If PayPal makes wrong suggestions in the future, it may directly mislead the public and cause the entire Bitcoin user group to be biased.

PayPal is very welcome to join the idea of ​​Bitcoin payment, but they are never expected to lead this field. If you can, I urge everyone not to exchange bitcoins on PayPal. There are many other places where you can buy cryptocurrencies and let you have complete private keys. Although PayPal has made concessions to Bitcoin, the Bitcoin community should pay more attention to user education and popularization at this time to prevent new users from falling into the trap set by Bitcoin opponents.

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