While some experts view the PayPal announcement as the first step to mass adoption, others are not as optimistic
PayPal’s Wednesday announcement revealed its intention to integrate crypto into its network has sparked a powerful rally, driving Bitcoin’s price past the $13,000 mark. Currently sitting at $13,021.17, Bitcoin price has rallied nearly 10% since the announcement, marking a new 2020 high.
Bitcoin is now closer than ever to overtaking PayPal as the 21st biggest asset by market capitalisation. While many in the industry are pleased with the announcement that led to Bitcoin’s surge, some experts fail to see any benefits beyond the immediate price movement.
Lanre Jonathan Ige, a researcher at Amun AG explained that the emerging trend of large-sized Bitcoin investments will bring institutional investors to Bitcoin.
He added that PayPal may bring mainstream audiences up to speed, with the cryptocurrency acting as an investment vehicle in the present and as a payment method in the future, benefiting the crypto community’s mass adoption interests.
While PayPal only enables users to buy, sell, and hold Bitcoin at the moment, the company has announced that it could add cryptocurrency as a payment option by 2021. Such a move could greatly improve Bitcoin’s credibility as a payment and remittance mechanism.
Further, transacting through PayPal and other centralized platforms could be the key to Bitcoin’s mass adoption strategy. Centralized transactions could alleviate congestion in Bitcoin’s blockchain, enabling it to be used for transactions that require more safety, transparency or immutable proof of ownership.
However, not everyone in the crypto industry viewed this as an important milestone. According to a blog post from Satoshi Labs, PayPal’s push to start selling Bitcoin (BTC), is “probably not because they want to spur healthy adoption”.
In the blog, the team behind the crypto hardware wallet Trezor explained that if mass adoption is achieved through PayPal, it could lead to a “very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency.”
Blockchain.com CEO Peter Smith said PayPal’s decision is highly centralized and inflexible. “While we’re excited to see a new audience gain access, a non-custodial approach limits opportunity to self-custody your crypto or transact freely,” he added.
While Bitcoin’s move towards mainstream adoption has progressed significantly in 2020, some players questioned the argument that PayPal enabling crypto payments will drive greater adoption.
“The question is, would someone want to use [Bitcoin on Paypal] for merchant transactions, which is more of an unknown,” said fintech consultancy 11:FS co-founder Simon Taylor in a Reuters interview.
Written by Harshini Nag