Although large companies such as Robinhood and Square have also announced the integration of cryptocurrencies before, in terms of user scale, the entry of PayPal may be the most important market event after Facebook released Libra.
Written by: Paul Veradittakit, Partner, Pantera Capital
Translator: Lu Jiangfei
I want to share some thoughts about PayPal’s involvement in the cryptocurrency industry and what this means for the entire cryptocurrency industry, but before starting this article, I would like to talk about the 2020 U.S. presidential election, because these days happen to be Election day, and this year’s election seems a bit “long.”
My colleague Joey Krug (Joey Krug) is one of the co-founders of Augur, the company was founded in 2015, is a decentralized prediction market, and is also the first initial coin offering (ICO) on Ethereum One of the projects. You can think of the prediction market as a valuable source of data, because every user uses “real money” to submit a prediction of the outcome. At present, we have begun to see many prediction market use cases in the market, such as sports games, elections, and stock prices.
The advantage of a decentralized prediction market is that it can create a market on a decentralized infrastructure (that is, Ethereum), so it can run without relying on a “centralized intermediary” on smart contracts. Although smart contracts can be automatically paid through code, But the data that determines the final result comes from various reporters. Native tokens can incentivize the creation of prediction markets and improve the accuracy of data reporting. As cryptocurrencies enter this market, more and more users will benefit from it.
Facts have proved that in terms of market competitiveness, the 2020 US presidential election is like the “Super Bowl” of the prediction market. The cryptocurrency derivatives exchange FTX, and prediction markets like Polymarket and Augur have attracted hundreds of people. Ten thousand dollars in funding. More importantly, many people find that the results of many early polls in the US presidential election this year are actually inaccurate. Instead, the data sources for predicting the market are much more accurate.
The picture below is the 2020 US presidential election prediction market launched by Polymarket:
The following figure shows the trend of TRUMP tokens launched by the cryptocurrency derivatives exchange FTX:
You will find that it seems to be a better way to understand the accurate information of the US presidential election in the prediction market, because the election trend is updated based on real-time analysis, crowd perception and fund betting data. Not only that, cryptocurrency can also achieve greater access rights, higher accuracy/transparency, and more economic equality. So far, the 2020 US presidential election has staged a thrilling “tug-of-war”. Although Donald Trump is “opening high”, now people seem to be turning back to Joe Biden to see what happens next What must be very interesting!
Let’s take a look at PayPal. Recently they announced a new service that allows customers to buy, sell, and hold cryptocurrency directly in their PayPal account. This service is very important because PayPal is a payment company with 300 million active users, which means that people can use cryptocurrency to make purchases at the 26 million merchants that have established partnerships with PayPal. Although large companies such as Robinhood and Square have also announced the integration of cryptocurrencies before, in terms of user scale, the entry of PayPal may be the most important market event after Facebook released Libra. It is reported that the PayPal encryption service will first be launched in the United States, then expanded to the global market, and finally will support the micropayment software Venmo.
What does PayPal’s entry mean to the cryptocurrency industry?
I believe that the PayPal encryption service will benefit the entire cryptocurrency industry, so for those who are more familiar with the cryptocurrency industry, I suggest buying a little cryptocurrency now. Just like if you play a game, the first step is to buy a skin in the game, and then gradually learn about other features in the game. The entry of PayPal has the same effect. More people will start to learn how to understand the operation of cryptocurrency. Its use case, once it happens, people will use cryptocurrency in more applications.
Since the user base using PayPal is very large, this entry can reduce the friction between cryptocurrency and cryptocurrency, and promote more merchants to accept cryptocurrency payments, as the PayPal service is integrated into more decentralized applications Among them, more and more users are bound to be more likely to use cryptocurrency.
So, what does it mean for Pantera Capital and its investments?
At this stage, Pantera Capital has made considerable investments in the fields of exchanges, wallets, custody, trading, lending and payment. These investments have provided support for many crypto industry solutions and further promoted fiat currencies globally. Interact with cryptocurrency and integrate cryptocurrency into more financial use cases. In addition, Pantera Capital has also invested in projects in other vertical fields. These projects are actively promoting network expansion and providing security and services for digital wallets. These projects will not only become potential partners of PayPal, but may even be PayPal in the future. Acquisition.
In any case, because PayPal pushes cryptocurrency to more users, Pantera Capital’s investment in decentralized financial applications will also benefit from it. These areas cover decentralized trading platforms, prediction markets, games, and non-homogeneity. Tokens (collectibles) etc. In the past, the entry of legal currency and cryptocurrency has always been one of the biggest obstacles to the popularization and application of cryptocurrency, but with the entry of PayPal, this problem seems to be effectively solved.
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