Peter Thiel is so confused about the PayPal agenda. He clearly did not understand the PayPal operation and crypto core ideology. PayPal is a digital payment system and crypto is a P2P payment system with no third-party involvement.
PayPal’s recent successful crypto service offering
PayPal suddenly announced to offer crypto as their payment option in November 2020. It marked a milestone for them to officially march into the crypto universe. Although rather than directly owning cryptos, they used third parties to manage actual crypto assets while they are handling financial data transactions.
PayPal’s business model
PayPal is a financial data company that use program to manage financial transactions and bookkeeping while providing any financial disputes services between business to business. They did not custody of any assets from them and they only provide services between banks to businesses.
P2P model without third party
The P2P model without a third party is a core idea from Bitcoin creator Satoshi Nakamoto. The idea is two-party can directly transact their asset without any third party providing any services necessary. During such transactions, both parties do not require to know each other and verification of sufficient assets.
Mixed up with PayPal and P2P
PayPal cannot reach P2P at any point as they do not possess any assets and they do not transact assets between two parties. They are heavily regulated under the same as the banking. Their services are a supplement to banks’ loophole which largely operated under bureaucratic structure and lack of transparency.
E-Gold
E-Gold is another different business model that uses a digital currency that is claimed to back by gold and performs P2P transactions. It is between PayPal and P2P model. There is a centralized party to custody assets and a platform to perform financial transactions.
PayPal was legally incorporated with the current system while E-Gold and Crypto were in the grey area against the current system
PayPal was already legal and they took advantage of banking’s lack of technology adoption to perform supplemental services additional to the existing system. While E-Gold and Crypto created a new method to bypass the existing system which regulators were concerned about back then.
PayPal becomes crypto exchange platform
PayPal may become a crypto exchange platform in the future due to its business nature and they are working toward offering crypto payment options for other businesses. It is viable for them to become hybrid crypto exchange platforms to offer more services.
In conclusion
PayPal will become a medium between the fiat system and the crypto system. However, they will not become a crypto company because their business model has always relied on banking systems and custodian services.
PayPal needs to make some changes and get into the future of Finance Crypto currency is here to stay!