I get it - Never Buy Bitcoin Through PayPal!
Lecture received. I'm buying a TREZOR and a LEDGER right now, I promise!
But...certainly I am not alone in having stepped into the world of crypto due to PayPal, am I?
In this post I want to speak to you as one of those insufferable noobs who bought crypto on PayPal. I want to explain why I did it, why I think it was a great idea, and speculate a bit on how PayPal's crypto experiment might change the crypto world forever. If you believe that we are at the very beginning of a wholesale transformation of the crypto space, you will want to know a little bit about how "late-early adopters" like me think.
Why would you ever buy crypto on PayPal????
Please bear with me for a moment. I'm not a coder and I don't use technical analysis. I used to get all my Bitcoin news from CNBC stories on my newsfeed, and even then it was mostly warnings that it was a house of Pokemon cards waiting to collapse. In the Year That Opened The Gates of Hell (aka 2020), my change of heart first started happening because of that sneaky crypto gateway drug BRAVE browser. The next step was hearing about credit cards (a former hobby of mine) that would reward you in Bitcoin (hi BlockFi, when you gonna call me?). But the final push came from a news story about PayPal letting users buy BTC right in the app. Hmm, this I had to see.
As I described in another post, my first foray into Bitcoin back in 2013 was confusing, complicated, and I more or less expected to have my identity stolen within the first minute. PayPal is easy. And familiar, and pretty quick, and I didn't need to take a photo of my passport. On top of this, it does a good job of notifying users of transaction status, and it even has a comforting little blurb on each of the cryptos you can put money into. Yes, I know I never really owned BTC or ETH on PayPal, more like I had a claim token for each...we can call them ppBTC and ppETH. But it got me going quickly, professionally, and in an environment I already trusted. PayPal occupies a privileged space in consumer minds due to its familiarity, perceived trustworthiness, and safety. That space makes it much easier for mild skeptics to enter cryptoworld. I wouldn't do it again, but I have no regrets!
How can you think was it a great idea to buy crypto on PayPal???
Buying BTC and ETH on PayPal was either the best stupid idea (if the crypto space continues to appreciate) I ever had or the worst (if I got here just in time for the bubble to burst). But it was the winter holiday season, I missed seeing my family, I was bored of everything else, and I was in lockdown with nothing to do. Putting some money into BTC and ETH was...fun! The value of my "investment" went up, it went down, all over the place. I got to joke with friends and family that I was a Bitcoin Dozenaire, with dozens of dollars invested.
But the serious gift of a PayPal hosted BTC stake was that I started paying attention. I read more, I looked at charts, I noticed when institutional investment started to include companies I had heard of. And all that paved the way for me to start to build the knowledge base necessary to begin the process of creating an investment approach (I'm not good enough to have a strategy, per se) and to look at how I would execute that approach.
If you are new to this world, you know how confusing and berserk it can seem. If you feel comfortable within this space, though, you probably have forgotten just how specialized and advanced your knowledge is. You've lost people like me the second you start talking about wallets! I didn't need a wallet to get started on PayPal. I barely needed a brain! But my initial $50 in BTC and $50 in ETH invested through PayPal, no matter how stupidly, has created a sustained engagement, and an incentive system to keep me learning and keep me trying to help others get stoked and staked. That is good for everyone, because the alternative is Godzilla vs King Kong and the little people getting stomped into jelly!
How might PayPal change the cryptoworld forever?
Elon, Microstrategy, Winkelvai, Greyscale...now Tesla, Mastercard, Visa, NY Mellon Bank, and of course PayPal. The Monsters are coming. Heck, they're already here. They have their own agendas, but at a certain point, they will make huge moves that will buffet the rest of us, forcing us to adjust as they hunt for profits. And Monsters hunt in packs.
What is key about PayPal (and Mastercard and Visa) is that it gives us a sense of another lurking force that may or may not counterbalance the monsters...noob retail investors.
Let me start by reiterating, that I likely represent a few million potential new bit players in the crypto space. I am a non-expert investor who has a regular job, has attained reasonable status and security in that domain, and has been following a pretty conservative buy-and-hold strategy weighted toward growth stock funds, with most of my investments made through my 401k. I am not rich by any stretch of the imagination, but I am on track to have a comfortable enough retirement barring catastrophe. Like I said, there are millions of me and we are starting to feel like we need to take crypto, or at least Bitcoin, seriously.
As you will see, PayPal is super common for online shopping, so it might come as a shock that even just using PayPal to make real world purchases or transfer funds is not completely normal. Among the people I know in my demographic, I'd guess only about 10-25% do this. I still get "wow, I didn't know you could do that" comments when I pay with my phone. True story! So, PayPal is a niche, and within that niche, Bitcoin is a niche-y niche. Keep that in mind as I slam you with a data blitz.
- there are more than 325 million active PayPal users, increasing steadily, perhaps even accelerating!
- PayPal has a referral system, so 325 million people are incentivized to sign others up
- 87.5% of online buyers use PayPal - just let that sink in a bit, because you can use your crypto balance to pay. Yep, suddenly there is potential for 87.5% of online buyers to burn BTC buying kitten jigsaw puzzles
- the average PayPal user has $485 in their accounts, just sitting there. Let's see, if you multiple $486 times 325,000,000 you get HOLY CRAP!
(Are you starting to get the picture?)
- 43.9% of PayPal users are from the US which would correspond roughly to about half of all US adults, mostly using it for online shopping I would guess
- 26% of US consumers say PayPal is the safest payment option, and is closing the gap with credit cards
These last two points seem too narrowly focused, but here is why I think they are important. First, the US is a consumer society. We are brainwashed from 1 minute after birth to buy crap we don't need. Heck, even after the terrorist attacks of September 11, President Bush told us that our patriotic duty to protect America was to get back to shopping! Don't we want those consumers buying our crypto? Second, being involved with crypto as an American is a pain in the ass. There are the tax implications, there are the heavy-handed Know Your Customer requirements, there are threats of more regulation or interference, and we can't do a lot of the very cool things I keep reading about, such as earning CEL in interest or participating fully in the BSC. For many, many people in the US, PayPal will be the most sensible way for them to be Cryptocurrency Consumers. Period.
My key predictions concern hugely increasing consumer volume ignited by PayPal (and other touchless payment entrants to this space). From there, we can extrapolate. These are my opinions and are practically just random guesses. These are not investment tips, and I only offer them to spark conversations. I am not an expert. That was my last disclaimer:
- High volume days will be followed by higher volume days. There might not be any more low volume days until prices completely tank.
- Recursive cycles of follow the leader will shape the main crypto markets as institutions follow consumer sentiment and consumers follow institutional investment
- Free-range BTC, and to a lesser extent ETH, will become endangered species
- Consumers will dabble in PayPal's altcoin offerings, so keep track of what they include
- Gas fees will suck even harder, low money ETH based tokens will be financial suicide to move
- More and more Noob investors will "graduate" to chasing down small cap altcoins
- Misinformation about crypto will get louder as the audience grows, and as the naivety and laziness of the audience grows. This will create sporadic bursts of incredible volatility.
- Big Money will pay math and data geniuses a LOT to help them trade on misinformation campaigns. They will make a killing. (so will you if you are a math or big data genius)
- It will be harder and harder to get easy access to premium crypto (BTC, ETH), but because of the volatility and the Monsters, that does not necessarily mean they will be good investments
To me, it feels like I was too late to the party. Like instead of seeing the first Lollapalooza (which I did of course), seeing Jane's Addiction play Vegas. I am jealous of all of you who have been in this space for awhile. I think the cryptoworld will change forever in 2021. Even so, I still see lots of opportunity to have fun and execute my investment approach.
What do you think?
***Full disclosure, I of course have small amounts of BTC and ETH, but I also have a few shares of PayPal stock, so take that into consideration.
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Exchanges and Wallets I Use and Enjoy
BlockFi -- https://blockfi.com/?ref=12bc0247
Celsius -- https://celsiusnetwork.app.link/160685ab0a
eToro -- https://etoro.tw/2KjXsOn
Gemini -- https://gemini.com/share/zqegnlh9
Faucets and Sites I Personally have Earned Crypto
Cointiply -- http://cointiply.com/r/p9Gyy
BetFury -- https://betfury.io/?r=601502337521da79ce95370b
Earn Tokens with Real Value for Free...Not Much, But Free!
Presearch -- https://presearch.org/signup?rid=2078735
Fun, Free, and..."Maybe They'll Pay Off Someday" Sites
FreeBitCo.in -- https://freebitco.in/?r=41144131
FreeEthereum.com -- https://freeethereum.com/?ref=120579
Pi Network -- https://minepi.com/PopPop6
