PayPal made big waves a few weeks ago with their announcement of entering the Bitcoin sphere. This move, which had been hinted at months earlier, combined with Square’s large purchase of Bitcoin, has played a big role in Bitcoin’s recent skyrocketing price.
Some have been calling PayPal’s entrance to be a huge boon for getting new users into the crypto space. But there are many problems with PayPal’s entrance. Users don’t actually own the Bitcoin, they threaten smaller players that already operate in Bitcoin’s utility, and they don’t have plans to accept Bitcoin payments. PayPal serves to cause a splash, but will likely not leave a lasting positive impact, and in fact might serve to drive new users astray.
PayPal is one of the largest online payment companies in the world. Its reach is enormous, serving a huge percentage of the ecommerce market. When the rumors first broke early in the summer that PayPal was looking into Bitcoin, there was some excitement, as rumors swirled whether PayPal’s implementation would include payment processing. Now, several months later, we have learned that PayPal’s adoption is lackluster, despite their purchasing of a large number of Bitcoin.
PayPal is only allowing the purchase and holding of Bitcoin. While that’s a big step, it doesn’t go anywhere near far enough. Not only has PayPal not created a payment processor for Bitcoin, the fact of the matter is, users won’t actually own the Bitcoin.
Keys won’t be given out, bringing back the chat of “not your key, not your Bitcoin.” PayPal also has a history of taking money from accounts (just search “@PayPal Stolen” on Twitter and you’ll see). That makes PayPal’s objectives suspect. Not to mention, the Bitcoin can’t be transferred to another wallet. They can only be held. That’s an insult to Bitcoin, and frankly quite worrying.
