Last week, Bitcoin reached highs not seen since July 2019. Why? PayPal made a momentous money decision to accept the leading crypto on its platform.
PayPal users can now:
- Buy, hold, and sell cryptocurrency directly within the PayPal digital wallet
- Spend crypto at any of the 26 million outlets on the PayPal platform
Initially, the cryptos on PayPal are the largest currently on the market: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
Forbes has dubbed this move a “$50 billion stimulus check for Bitcoin”. It could prove a very popular move.
When the news hit last week, Bitcoin abruptly surged beyond $12,500 to hit highs of $13,200, subsequently reaching $13,370 over the weekend.
A Cornerstone Advisors/FICO survey of 3,000 US consumers showed cryptocurrencies are continuing to gain traction amongst PayPal users:
- 60% of Smartphone users have the PayPal app installed on their device
- 14% of PayPal users surveyed already have cryptocurrencies, and 53% of them have used Bitcoin to buy goods and services in the last two years
- 15% of survey respondents plan to buy or invest in Bitcoin over the next 12 months
According to Cornerstone data, American shoppers bought retail products and services worth $31.2 bn using cryptocurrencies in 2019. 74%, or $23.1bn, came from PayPal users.
PayPal’s decision helps overcome two big barriers to mass crypto adoption.
Firstly, vendors have been resistant to cryptocurrencies. A company of this size and scale accepting digital currencies is a sign of retailer confidence. Secondly, it provides a platform where Bitcoin and others can be readily converted into currency for retail payments.
It should be noted that PayPal has not always been so open to crypto use on its platform. Former CEO Bill Harris once said in 2018 that Bitcoin was “The biggest scam ever”.
A change of CEO, however, means PayPal now sees where the wind is blowing and is grasping crypto tightly in its digital hands.
Other investment firms and global firms are moving to embrace cryptos too.
Square Inc., for instance, has put 1% of its total assets worth $50m into Bitcoin. Greyscale Investments has been even more ambitious, putting $1bn towards crypto products off the back of very high Q3 demand.
Another aspect that could power higher trading potential for crypto via PayPal’s decision is contactless payment.
In a world where retail is being buffeted by Covid-19, contactless payment, particularly QR-code driven methods, are becoming more desirable.
Currently, PayPal is developing QR-based payment solutions with 100 large US and European retailers. If it can crack it, then this will drive up payment accessibility.
It should be stressed, however, that cryptocurrencies are inherently volatile. Nothing is every particularly stable in the world of cryptos, so bullish prices could give way to bearish conditions.
Despite this, PayPal’s major moves could have fired the starting pistol on a new crypto boom.
IT
