October 26, 2020
What's up everyone!
If you're always looking at the chart of bitcoin over the past few days, you will notice a sudden surge of with the cryptocurrency hitting around $13k per coin.
So what happened?
Just a couple of days ago, the popular payment application Paypal just announced that they will be accepting cryptocurrency with the system buy, sell and pay for their 346million users.
The reason why the sudden surge is the additional 346million people that will increase in the demand for bitcoin.
Lets look on what have Paypal have said:
"The migration toward digital payments and digital representations of value continues to accelerate, driven by the COVID-19 pandemic and the increased interest in digital currencies from central banks and consumers.
To increase consumer understanding and adoption of cryptocurrency, the company is introducing the ability to buy, hold and sell select cryptocurrencies, initially featuring Bitcoin, Ethereum, Bitcoin Cash and Litecoin, directly within the PayPal digital wallet. The service will be available to PayPal accountholders in the U.S. in the coming weeks."
So what are the advantages?
We will be able to buy and sell bitcoin and other cryptocurrencies that are mentioned using paypal system. And in year 2021 you can pay merchants, so basically we will be able to trade bitcoin with paypal. Kind of like we'd be able to do with Robinhood; buying low, selling high or at least that's what we're supposed to do.
And starting in 2021, we'll be able to use bitcoin balance to pay merchants however the transactions will be settled in fiat currency with those merchants, so the merchants actually won't be able to tell the difference. They won't probabaly know we've paid in bitcoin because what they receive will be regular currency.
Also in 2021, it'll be rolled on Venmo app, so we'll be able to probably be able to use it to pay friends and i think transferring money internationally is probably where it will be useful for avoiding international wire transfer fees.
For now there will be no fees on buying and selling.
Here is what they say:
"There are no service fees when buying or selling cryptocurrency through December 31, 2020, and there are no fees for holding cryptocurrency in a PayPal account."
It all sounds great, doesn't it? But there's one catch, Well, definitely it's not a pyramid scheme but there is one big disadvantage to buying our bitcoin through paypal and that it is a custodial service. They hold our cryptocurrency for us and we do not get the private keys to our coins and this kind of fundamental. It goes against everything they say in the cryptocurrency community.
Not your keys, Not your coins
Currently we can hold, buy and sell crypto within the paypal system. We won't be able to transfer our cryptocurrency balance out into our own crypto wallet. This is kind of essential with someone who is investing in cryptocurrency for long term because some exchanhes have been hacked in the past. The only true surefire way to keep your bitcoin balance safe is to have it in a private hardware wallet in your possesion.
We also cannot transfer crypto balance into paypal and paypal has kept a line in it's terms and conditions that forbids paypal users from transactions the currency exchanges or check cashing businesses which is kind of hypocritical because buying bitcoins is basically a currency exchange.
So does paypal truely care about crypto or just trying to gain control of a market that they see a lot of potential?
I think paypal have noticed the popularity of bitcoin on apos such as Robinhood and they're thinking that if Robinhood traders attitude to bitcoin is anything like towards bankruptcy. They could stand ato make a lot of money.
If you're just a someone who just wants to dobble in crypto, check it out to do a bit of trading and stuff like that. Then by all means to use paypal's system or robinhoods or the cash app crypto system, etc.
But if you are a large investor of cryptocurrency or if you're someone who values privacy, don't give all the information on your crypto dealings to the world's biggest online payment platform. Do it to a normal way, go to exchange, buy or sell crypto and keep you bitcoin balance onto your hardware wallet.
Any suggestions or reaction, please leave a comment below.
Liking and upvoting the article will be a big help for my motivation to write more.
Great one