PayPal recently announced the launch of its crypto-payments mechanism. The previous summer it was a surprise to add Cryptocurrency trading options for the four top cryptocurrencies (Bitcoin, Bitcoin Cash, Ethereum, and Litecoin) and this was one of the decisive factors that pushed the whole market upwards.
However, PayPal offered only a custodial service locked for transactions outside of PayPal. Users of PayPal can't withdraw or deposits the supported cryptocurrencies. PayPal doesn't give public or private keys and the wallet mechanism is custodial and very restrictive.
PayPal should plan to allow deposits and withdrawals, otherwise, there is no meaning in this.
Not your keys, not your crypto
The private key is the quintessence of any cryptocurrency. Without control of the private keys, there is no financial freedom. When PayPal and any third party don't give access to the private keys, then most of the cryptocurrency advantages over the traditional finances are lost.
We just lose the ability to transact with anyone in the world and a third party becomes responsible for authorizing our transactions. PayPal is just a centralized entity that is processing transactions and runs under regulations similar to the banking system. It is an extension of the banking financial system.
Newcomers need to understand
While cryptocurrencies have been rising recently and mainstream adoption is closer, most of the newcomers are not holding their crypto in wallets. And don't know/care what is the meaning of holding the private keys. It is up to us to explain and make them understand what financial freedom means. We don't need to go into a lot of details, decentralization is the important part we should be focusing on, and after that explain the merits of our favorite coin. It is imperative to explain the complete freedom we have, to move our money anywhere and not have to care of a third party blocking our transaction.
PayPal will block many transactions and accounts and seize funds. And as I am reading it has already started doing this. This is not what crypto is about, but the exact opposite.
What it means that PayPal added crypto payments?
There is no meaning behind PayPal's use of crypto. What is the plan here? Buy cryptocurrencies, and then use the PayPal cryptocurrencies to buy anything from the PayPal merchants. There is absolutely no reason for someone to find value in this. The only justification someone will buy crypto from PayPal is price speculation. Someone that holds money in PayPal may want to buy crypto, but not to use crypto to buy from PayPal merchants. This is not Bitcoin, Bitcoin Cash, and Litecoin the PayPal users will be transacting with.
Image Source: Zephyrnet
A confusing and pointless fake crypto adoption system
So what happens now, is PayPal users buying Bitcoin and Bitcoin Cash and thinking they bought cryptocurrencies. But this is not the same as they only bought a name and a number on a screen. Crypto is nothing like that. It is not a digit on a screen and not a value in a balance sheet. Bitcoin is not just an address and a balance. What PayPal users are buying is not Bitcoin, Bitcoin Cash, Ethereum, or Litecoin, but it is a balance inside PayPal, which unfortunately is locked and they can't move the funds to a non-custodial wallet.
We can't validate anything with PayPal, it is not our Crypto there. It is not even like other custodial wallets. It is a very weird system that you have to trust PayPal that it actually bought the crypto you asked for. It is an absurd mechanism that is not required, something we can call vaporware that doesn't solve any problem.
PayPal is creating an additional middleman without any need or solution for any consumer demand or problem. It is difficult to understand the reason someone will not just use the USD balance he has and buy from merchants using USD, but instead will first buy BTC from PayPal, and then use this BTC for purchases. Makes absolutely no sense, since this is just a platform that plays with digits. Once again, Bitcoin, Bitcoin Cash, Ethereum, and Litecoin are all based on the same principles. Ethereum has a few differences, but more or less it is the same.
Image source: Medium
All of the above explains what exactly a Bitcoin address is and how it is derived in steps. It is the system of validating and executing transactions. All of this is canceled when someone is using PayPal. All the process of having a secure blockchain transaction in the mind of PayPal is just a few digits that will change in our balance. No, this is not correct at all, Satoshi created a secure payments network and not a centralized joke like PayPal. It should be PayPal celebrating for having the honor of accommodating Bitcoin, Bitcoin Cash, Ethereum, and Litecoin as it helped PayPal more than helping crypto.
It offers a product (cryptocurrencies) but in a way that it is distorted and misleading. It doesn't offer any access to ownership of the cryptocurrencies and is lying when it gives these numbers in the PayPal platform that mean nothing.
Sample of Paypal wallet
What mainstream means for PayPal
This is the PayPal wallet, with no information on a public address, no private keys available, no validations, just a centralized database, closed to the public and with trust imposed. Buy, sell and securely hold. You are not buying, selling, or securely holding anything with PayPal.
The immediate gains to the cryptocurrencies offered by PayPal may push prices of these assets higher, but when looking at the long-term, I am not convinced this is the way for Cryptocurrencies to proceed. It has been the worst I've seen. It doesn't just utilize crypto holdings in an exchange, which the user can move to a wallet. It is a system that asks to buy with PayPal, sell with PayPal, and use only inside the PayPal platform and nowhere else.
PayPal envisions a "super app" offering a set of features that once would have required a series of different apps. These include tools for payments, shopping, financial services, and "even new forms of digital identification."
-From Decrypt.co
It is now becoming more clear what the real intentions of PayPal are. Create a social payments network, databases with consumer habits, and biometric data to sell to marketing squads and decrease even more users' privacy.
To conclude, here is the reviews from Trustpilot on PayPal:
Source: Trustpilot
PayPal is the crypto prison and has nothing to do with adoption. For the short term prices can pump, but it will not mean anything for the long term. In fact, it could have helped coins with high fees like Bitcoin and Ethereum, but the system it has is very difficult to bring some kind of adoption that will last. Meanwhile solutions like Litecoin and Bitcoin Cash can be used as method of payments without the need of PayPal and its network. Bitcoin Cash especially is expanding with hundreds of thousands of merchants on board having the lowest fee and fast transactions.
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One final note
I have to thank @MarcDeMesel for the recent donations in two of my posts. It means a lot to me, that I am doing something right, and helps to focus even more on bringing unique and valid information. While I may often be wrong in my predictions, I always describe situations after careful consideration and research and not just blindly following and trusting sources without verifying first. I am always in favor of all authors giving their personal opinion, no matter if I agree with them or not. It is more important to report the least popular views and different perspectives, as quite often the mainstream opinion may have been misled and manipulated.
I read your article. You're right PayPal is not better to other wallets. And kindly tell me about publish0x, how can I withdraw my funds from publishox. Can I use probit for my kucoin funds . Please tell me. And which wallet you are using for publish0x. In Pakistan kucoin wallet is not available.