In nine years, PayPal and Bitcoin have truly come together.
In 2011, in order to survive, WikiLeaks, which was struggling both internally and externally, began to turn to Bitcoin donations for help, and Bitcoin’s popularity rose instantly. Satoshi Nakamoto was worried that the sudden heat would destroy the new thing of Bitcoin. For some reason, he chose to disappear and leave Bitcoin to the world.
On October 23rd, a tweet from Bitcoin core developer Jameson Lopp evoked an affair between PayPal and Bitcoin. In Jameson Lopp’s view, PayPal’s move to close the WikiLeaks account at the time paved the way for Bitcoin to prove its value to the world.
On October 21, Reuters stated that PayPal will enter the cryptocurrency market, allowing customers to use the company’s online wallet to buy, sell and hold BTC, ETH, BCH, LTC and other cryptocurrencies.
As soon as the news came out, Bitcoin rose sharply.
According to data from the Huobi platform, on the evening of October 21, Bitcoin rose all the way from around US$11,800 to around US$12,800, and rose by US$1,000 in a short time. At the same time, the global market value of cryptocurrencies has soared from US$373 billion to US$384.8 billion.
As a world-class payment giant, PayPal’s move is undoubtedly a big plus for the cryptocurrency market. The $11.8 billion increase in market value is the response of the cryptocurrency market to PayPal’s entry.
What kind of grievances PayPal has with Bitcoin, and what impact will PayPal’s entry have on the cryptocurrency market?
The grievances between PayPal and Bitcoin
As early as 2013, David Marcus, then CEO of PayPal, considered whether to support Bitcoin transactions in PayPal.
However, PayPal did not follow the idea of David Marcus and took steps toward the cryptocurrency field. Instead, David Marcus, who parted ways with PayPal, created “Libra” on FaceBook.
The reason may be that the early bitcoin market was not mature enough and there were many risks in supervision. For Bitcoin, PayPal has acted very cautiously and even harshly.
At that time, some users’ accounts were officially frozen by PayPal for trading Bitcoin.
In the email to the user feedback, PayPal stated: According to our current user funding service policy, PayPal cannot be used for transactions including Bitcoin mining machines, Bitcoin, and Litecoin.
However, in September 2014, Braintree, a subsidiary of PayPal, announced that it would accept Bitcoin payments and transactions. Users can open an account at Coinbase, and then link the new account to Braintree.
Subsequently, PayPal also announced the cooperation with BitPay and Coinbase to make it possible for merchants to collect Bitcoin by integrating merchants in the PayPal system with the PayPal Payments Hub.
But on the official website, PayPal does not recognize that Bitcoin is treated as a currency: “This cooperation does not mean that our digital wallet has added Bitcoin as a currency, nor does it mean that Bitcoin payments will Processing on our secure payment platform.”
In less than a year, PayPal cut off its cryptocurrency-related businesses and “actively freezes any accounts related to cryptocurrencies.”
In 2017, the wave of cryptocurrencies was surging, and PayPal once again reiterated its position: It is forbidden to trade cryptocurrencies on its platform. Once discovered, the account will be frozen for 180 days.
In March of the same year, PayPal’s then CEO Bill Harris pointedly pointed out in an interview with CNBC that Bitcoin is a huge “uploading” scam. Its scale is unprecedented: “Transaction time is slow and facing The challenges and volatility of Bitcoin also make Bitcoin useless as a payment mechanism and absurd as a store of value.”
Perhaps it has inherited the views of the former CEO. The current CEO of PayPal, Dan Schulman, also stated in public that digital currency is not currency now, and it is not clear where digital currency will go.
Until 2019, some media reported that Bitcoin’s 2018 annual transaction volume was 1.3 trillion US dollars, far exceeding PayPal’s 578.65 billion US dollars.
Perhaps PayPal at this time has finally realized that the era is prosperous, and Bitcoin and the crypto market it represents have huge potential. In the end, he made up his mind to move towards the field of cryptocurrency and blockchain again.
In March 2020, PayPal began to openly recruit experts in the field of cryptocurrency and blockchain. In July, a person familiar with the matter revealed that PayPal had chosen to cooperate with Paxos Encrypted Economy.
Until recently, PayPal finally officially announced its entry into the cryptocurrency industry.
Dan Schulman said in an interview that PayPal hopes that the service will encourage the use of virtual digital currencies on a global scale and prepare a network for new digital currencies developed by central banks and enterprises.
In addition to the upcoming support for cryptocurrency transactions, PayPal also stated in a statement that from 2021, PayPal users will also be able to use cryptocurrency to shop at 26 million merchants on its network.
In addition, PayPal also stated that in the next few weeks, U.S. account holders will be able to buy, sell and hold cryptocurrencies in their PayPal wallet. It plans to expand to Venmo (payment software) and some countries in the first half of 2021.
The payment giant, hesitated repeatedly, turned thousands of times, and finally re-selected cryptocurrency on October 21.
PayPal gangster who loves cryptocurrency
In fact, payment companies have always had a complicated attitude towards Bitcoin as a representative cryptocurrency, because to a certain extent, this “distributed accounting” technology will rob centralized payment companies for their jobs.
Not to mention, when PayPal was founded, its wish was to create a new currency. This is similar to Bitcoin.
“PayPal tried to create a new type of currency, but we failed. We only created a new type of payment system.” PayPal founder Peter Thiel once pointed out in an interview, “I think Bitcoin is in creating a new type of currency. It has been successful.”
This has also been confirmed by PayPal co-founder Luke Nosek. He said at the World Economic Forum in 2019: “A lot of people don’t know this, but PayPal’s original mission is to build a global currency that is not subject to those Corrupt banks and government intervention due to currency devaluation.”
PayPal was established in 2000, and its predecessor was Confinity founded in 1998 by Max Levchin, Peter Thiel and Luke Nosek. As mentioned above, PayPal hides the lofty ideals of Peter Thiel and others.
Although the ideal of creating a new currency was shattered, PayPal was very successful as a payment tool.
Since February 2000, the number of users of PayPal has increased by an average of 5% to 7% per day. In just two months, the number of users has increased from 100,000 to 1 million. In the following two years, the number of PayPal users exceeded 13 million, and the revenue from transaction fees alone exceeded $100 million.
However, the early rapid expansion also exposed PayPal’s own problems, such as burning a huge amount of money to seize the market, leading to financial crisis.
In addition, because of PayPal’s high dependence on the e-commerce giant eBay, PayPal is always shrouded in eBay’s cloud. After all, many payment tools under eBay have long looked at PayPal.
In order to overcome difficulties, the PayPal team often stayed up late to work together during that time, and it was this experience of working together that allowed them to establish a certain trust and bond relationship, which also laid the foundation for the emergence of the PayPal gang.
In the end, the trend was irreversible. In July 2002, PayPal sold itself to eBay for a high price of $1.5 billion. Although not everyone was satisfied with the decision to be acquired by eBay, Peter Thiel still decided to sell PayPal after various investigations.
After the sale of PayPal, due to changes in the organizational structure and corporate culture, the old veterans left eBay one after another with the distributed dividends. Some became investors and started investing in startups, and some started another entrepreneurial journey.
The PayPal Mafia (PayPal Mafia) gradually formed and surfaced.
Since PayPal was acquired, people who left PayPal participated in the creation or investment of almost all well-known technology companies in the world, including Facebook, YouTube, Tesla, LinkedIn, Yelp, Flickr, Mozilla, Airbnb, etc., and these companies later reached valuations Billions, even hundreds of billions of dollars.
These people include Tesla founder Elon Musk, YouTube founding member Steve Chen, LinkedIn founder Reid Hoffman.
Among them, of course, the gang godfather, Peter Thiel, is indispensable. His identity as a venture capitalist may be better known and he has cast many unicorns. He invested $500,000 in Facebook in the early days to obtain a 10% stake, which is now worth billions of dollars.
It is worth noting that David Marcus, the head of the Facebook blockchain team that created the FaceBook cryptocurrency project “Libra”, is also a member of the PayPal gang.
It can be said that if you don’t understand the PayPal gang, you won’t understand Silicon Valley.
Interestingly, compared with PayPal’s hesitant and repeated attitude towards cryptocurrency, the PayPal gang is more tolerant of cryptocurrency.
Among them, Peter Thiel has always been bullish on Bitcoin, and has repeatedly stated that Bitcoin will become the future global currency, and even replace gold as a store of value substitute;
Elon Musk has been interacting with Dogecoin and even changed his Twitter identity to Dogecoin CEO;
Reid Hoffman even acted as a torchbearer in the Lightning Network Torch Relay in 2019.
The PayPal gang’s attention to cryptocurrency has never stopped. Nowadays, PayPal has also entered the game personally, and its impact cannot be underestimated.
Can PayPal help Bitcoin again?
If nine years ago, PayPal closed the WikiLeaks account and assisted Bitcoin by chance. Today, its clear attitude towards Bitcoin may be better explained by Jameson Lopp’s words: paving the way for Bitcoin to prove its value to the world.
With 346 million users worldwide and the support of 26 million merchants, the powerful strength and resources make people look forward to the combination of PayPal and Bitcoin.
First of all, it is the huge market size.
Data shows that Bitcoin currently has more than 187 million users. Compared with PayPal’s 346 million users, there is still a big gap. PayPal’s entry can push Bitcoin to a wider public view.
Second, there are broad application scenarios.
Although in the initial stage, users can only buy, sell and hold Bitcoin through PayPal, but PayPal announced that it will add cryptocurrency shopping functions in 2021.
By then, as many as 26 million merchants will open their arms to cryptocurrency, and the application scenario of this scale is unprecedented in the history of cryptocurrency.
If it can be realized, it will undoubtedly push Bitcoin and the entire cryptocurrency market to a new level.
In addition, the entry of PayPal will allow cryptocurrencies such as Bitcoin to be further recognized in the mainstream financial sector.
Just like Tesla is to the automotive field, Alipay is to the traditional financial field. PayPal personally enters the game, and may become a “catfish” in the world of financial payment.
The emergence of Tesla has stimulated the vigorous development of new energy vehicles, while the emergence of Alipay has brought about changes in China’s payment methods.
Under the influence of the “catfish effect”, in the future, more companies will choose to accept cryptocurrency.
As Chamath Palihapitiya, Chairman of Social Capital, said: “After PayPal released the news of supporting Bitcoin, major banks are meeting to discuss how to support Bitcoin. This is no longer an option.
But at the same time, we should also note that PayPal’s cryptocurrency path will not be smooth sailing.
Prior to this, Microsoft started accepting Bitcoin payments as early as 2014. However, out of consideration of the unstable state of Bitcoin, the payment method of cryptocurrency, mainly Bitcoin, was finally suspended.
In 2018, Visa also terminated its agreement with prepaid card issuer WaveCrest, resulting in the unusable bitcoin debit cards of companies such as Bitwala, BitPay, and Cryptopay.
First, the price of Bitcoin is extremely unstable, and second, cryptocurrencies are facing regulatory issues.
Some analysts said that PayPal’s launch of a new virtual currency service is a market behavior, indicating that cryptocurrency may be accepted by market institutions, but it does not mean that it will be accepted by regulation.
The stablecoin “Libra” that once carried Facebook’s ambitions has suffered rounds of inquiries and supervision, not to mention PayPal.
In terms of payment, cryptocurrency has many risks, especially in the field of anti-money laundering. It is understood that in May of this year, PayPal was investigated by the Australian financial regulator for possible money laundering transactions. And if PayPal really supports Bitcoin and other cryptocurrencies as a means of payment, it will undoubtedly be targeted by the regulation.
In short, no matter whether PayPal’s cryptocurrency practice is smooth or successful, it is a commendable thing for now.
At present, there is still a period of time before PayPal launches cryptocurrency transactions. Perhaps you should be patient, wait for it to arrive, and observe the market’s response.
