PayPal Brings New Opportunities for Bitcoin Trading Through Its New Feature
Bitcoin trading has become even more easier and accessible after PayPal recently announced that it has adopted cryptocurrencies on its platform. This means that people can now buy, sell and hold cryptocurrencies like Bitcoin by using their PayPal accounts. This is good news for those in the business of bitcoin trading or any other cryptocurrency trading. One could call this an important milestone in the future of cryptocurrencies.
This means that cryptocurrencies have now become even more accessible and are now on their way to becoming more mainstream. This also brings many more opportunities for bitcoin trading. In this article, we are going to discuss what this new service is, its effects on cryptocurrency and how bitcoin has been affected by it.
What is This New Service?
This new service launched by PayPal basically allows its users to be able to buy and sell cryptocurrencies such as bitcoins directly from their PayPal account. This service is not going to be limited just to bitcoin but support for other cryptocurrencies such as Ethereum, Bitcoin Cash and Litecoin, etc. will also be available. PayPal digital wallet could be used to store these cryptocurrencies. PayPal also announced that in 2021 it plans to allow users to use cryptocurrencies as a method of payment at its 26 million merchants around the globe.
One can say that this announcement has made PayPal one of the most significant companies to provide support for cryptocurrencies in the financial sector. Although Square (a competitor of PayPal) did launch support for bitcoin back in 2018, PayPal has entered the market with support for other cryptocurrencies as well as bitcoin giving it more of an edge. PayPal also intends to extend support to Venmo, its money sending subsidiary, and to international markets in 2021.
PayPal has become a major digital wallet and cryptocurrency exchange through this move. According to PayPal once it launches support for the user to use their cryptocurrency holdings to make purchases at its merchants, fiat currency will be used in order to settle transactions at its platform. This way the merchants will not have to transfer cryptocurrency to dollars after a transaction. The New York State Department of Financial Services has granted Pay Pal a conditional Bitlicense which is the first such license granted. This license is necessary for any service that wishes to trade in bitcoin.
This is not the first venture made by PayPal in this area either. PayPal was once a partner in Facebook’s Digital currency Libra but it pulled out after a few months as the scheme was very controversial and had started to attract the attention of financial regulators of different countries.
Some concerns have been raised regarding this new feature. The biggest concern has been regarding the extremely volatile nature of cryptocurrencies. There is discourse as to whether cryptocurrencies are or are not stable enough to be used over the traditional currency as a method of payment for goods. For instance, bitcoin has fluctuated with a lot of volatility over the past few years. Even if it has been stable for the last few months the value of bitcoin is still susceptible to volatile fluctuations.
According to PayPal, this move was driven by the CPOVID-19 as it necessitated the need for digital payments of all types. PayPal is also not providing customers with keys. PayPal says not providing keys serves as a loss-prevention tactic and there is merit to this statement. As a person loses all of his cryptocurrency in an account if he loses the key, PayPal not providing customers with keys makes sense. But not providing customers with keys also means PayPal has more control over how a customer can wield his cryptocurrency.
Another thing of note is the fact that users are not able to transfer cryptocurrency from one account to another account regardless of it being on or off PayPal. This means the customer is only limited to buying, selling, and holding the cryptocurrency.
How Does It Affect Cryptocurrencies?
PayPal adopting cryptocurrency will have a big impact on the market. It is very beneficial for those who are in the business of cryptocurrency trading like bitcoin trading. One could call this a game-changing moment in the history of cryptocurrencies. This is a huge step in making cryptocurrencies more mainstream and wide scale. And cryptocurrencies becoming more mainstream is a sort of holy grail for bitcoin enthusiasts. So, when a fintech titan such as PayPal supports the buying selling, and holding of cryptocurrencies as well as enabling it as a payment method on its platform, it will cause a wider acceptance of cryptocurrencies in public eyes.
That brings us to the second point. Cryptocurrencies are still not trusted by a large population but this step by PayPal can help change that view. Although there is controversy surrounding whether the use of a decentralized digital currency for mainstream everyday transactions is good or bad, the provision of this feature by PayPal has proved to be quite profitable for some traders. All in all, this step by PayPal should achieve the goal of making cryptocurrencies more mainstream and wide-scale as well as making them more trustworthy in the eyes of the everyday user.
Effects On Bitcoin
Since the announcement by PayPal bitcoin’s price has increased dramatically. This surge was driven mostly by PayPal and Square. This adoption of cryptocurrencies by PayPal is big news for bitcoin. As said before this will allow bitcoin to become more mainstream and become more trustful in the public eye. And as can be seen, by the surge in price it seems to be exactly what is happening. This also means that bitcoin trading can now become even more widespread. Although the service is only limited to the US for now when in the future it becomes internationally available it will make bitcoin trading even more accessible.
Should You Invest in Bitcoin?
Bitcoin is very volatile and that is what makes it such a profitable investment. This can mean incredibly high returns but it can also mean that you can lose your investment. Bitcoin trading can be very lucrative but it also carries its risks. So, ensure that you do your research and you know what you are doing before investing.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes