PayPal Will Support Cryptocurrency: What Are The Pitfalls In This?
Soon it will be possible to pay an invoice or purchase with Bitcoins via PayPal. But why is not everything so clear with Paypal’s crypto integration, and where are the vulnerabilities in this collaboration?
PayPal will add crypto support by early 2021
The largest payment system PayPal is finally entering the cryptocurrency market. The company announced the addition of cryptocurrency support to its pool of options: by early 2021, users will be able to buy, sell, pay for purchases, and store Bitcoin, Ethereum, Bitcoin Cash, and Litecoin on their digital wallets.
PayPal’s decision to join the crypto market became known a few months ago. The fintech giant has already received a special license Bitlicense, which regulates the activities of companies with virtual currencies. Thanks to this, users will be able to use cryptocurrency to pay for goods at 26 million outlets. Of course, it is not yet possible to pay for the purchase of a new phone directly with Bitcoins, but the instant conversion of digital coins into dollars will do the trick.
For now, cryptocurrency support will only be available to users in the US. After launching locally, PayPal plans to expand internationally by linking this feature to Venmo’s payment app.
What’s wrong with PayPal crypto integration?
Crypto enthusiasts have reacted ambiguously to PayPal’s decision. On the one hand, the joining of the largest financial monopolist to the crypto market can become an additional driver for the popularization of crypto in the world. It is another signal that cryptocurrency is with us for a long time, and it is time for skeptics to reconsider their attitude towards it. On the other hand, this is just the tip of the iceberg. What then remains under the water?
The integration of cryptocurrency into the PayPal system is contrary to the idea of decentralized financial management. PayPal, with its internal censorship of payments and partial dependence on US regulatory policy, will not be able to abandon long-standing restrictions. Users are most likely to face the problem of taxation of transactions with cryptocurrency. It is unlikely that anyone can like it.
Also, PayPal is not ready to let go of the “bridle of control”, even if it concerns the “freedom-loving” cryptocurrency. The purchase, sale of a crypto must be made exclusively through a user account on the PayPal platform. There is also a question for conversion since PayPal dictates the need to transfer cryptocurrency to US dollars for peer-to-peer crypto transactions.
It is too early to say whether PayPal can become the new gateway for selling cryptocurrency. But PayPal’s support for cryptocurrency may force other giants such as eBay, Visa, Mastercard, and Mercado Pago to take entirely new initiatives towards digital currencies.