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- PayPal first voiced its potential participation in bitcoins in 2013, but the idea saw no fruit of fulfilment
- By the end of 2014, PayPal collaborated with Coinbase, BitPay and GoCoin to avail bitcoin payments for online vendors
- PayPal made the public announcement of its bitcoin association on 21st October 2020
The launch of the global e-commerce payments platform PayPal into the crypto industry was one of the most awaited projects to date. The theory did take more than seven years to turn into reality. But how did this happen?
Where it all Began
In 1998, Peter Thiel, Luke Nosek and Max Levchin founded the U.S.-based software service “Confinity Inc.”, which later in the year 2000 merged with Elon Musk’s online banking company “X.com” and a year later got rebranded to “PayPal.” Gradually, following its 2002 acquisition worth $1.5 billion by eBay, PayPal became the default payment method for its 185 million users. After thirteen successful years, Paypal detached from its parent company and, using its PYPL ticker, proceeded to function as a separate publicly-traded company.
Today, the world’s 54th largest company, today with a market cap of $282.58 billion, celebrates a worldwide user base of over 377 million. And in the fourth quarter of last year, the American company processed 3.47 billion transactions worth $277 billion.
PayPal’s Potential Participation in Bitcoin
With its then-President David Marcus, PayPal first acknowledged its potential participation in bitcoins in 2013. However, the idea bore no fruit of fulfilment. Months later, Marcus left PayPal to join Facebook, wherein in 2018 he was selected to lead the cryptocurrency project “libra”, now named “Diem”.
On 8th September 2014, PayPal issued an advertisement stating, “Phone is our wallet, we can spend bitcoin with a tap.” The 60-sec video set-off the whole crypto community. It then counts over 161.5 million users debating whether or not the platform introduced bitcoins support. Had the integration been successful, bitcoin was an excellent opportunity to gain global mainstream pull. The footage, however, was then taken down and replaced by another, excluding the bitcoin part.
PayPal Initiated Association with Bitcoins:
By the end of 2014, PayPal, for the first time, collaborated with crypto-focused companies Coinbase, BitPay and GoCoin to avail bitcoin payments for online vendors. The announcement provided bitcoin with a daily gain of 10.61%, from $404 to $447. The senior director of corporate strategy, Scott Ellison, reasoned the payment platform was still weighing the pros and cons of bitcoins, for now engaging in some ways and holding off on others.
In 2016, PayPal presented a seat to the bitcoin wallet Xapo CEO & founder Wences Casares on its Compensation Committee. And in 2018, it filed a patent with the United States Patent and Trademark Office (USPTO) for a system to reduce transaction time by introducing secondary wallets that use private keys linked to a predefined amount of a cryptocurrency; named “Expedited Virtual Currency Transaction System.” On 14th December 2018, Coinbase availed the free feature to withdraw fiat currency directly into PayPal accounts to its U.S. users, which two months later expanded to 32 European countries.
First-ever Crypto-space Investment & Public Announcement
PayPal made its first-ever crypto-space investment to Cambridge Blockchain’s Series A funding round in April 2019, yet the amount remains undisclosed. Then in 2019 June, along with Uber, Mastercard, eBay, Stripe and several others, it joined the Libra Association. But four months later, following the backlash from several government and global regulators, PayPal was the first to withdraw its support from the stable coin project.
Seven years after the prospect of bitcoin’s potential intro in PayPal was teased, in June 2020, the payment platform was rumoured to allow users to trade particular cryptocurrencies. Initially, PayPal neither confirmed nor denied the speculations, but a few weeks later, it published a letter to the European Commission informing it took “unilateral and tangible steps” in the crypto industry. Paxos’ selection followed this to provide the back-end infrastructure for PayPal’s crypto services.
Officially, PayPal made its entrance into the crypto-verse public on 21st October 2020.
Properties of New Services
Current status of the new services on the platform:
- Only U.S. users have access to them, but the reach will supposedly extend to U.K. users between March and April 2021.
- The platform trades in just bitcoin (BTC), bitcoin cash (BCH), ethereum (ETH) and litecoin (LTC).
- Crypto-assets can’t be withdrawn or transferred to other wallet addresses.
- Users get absolute ownership over the cryptocurrencies in their account, but PayPal refuses to give users the private keys required to access crypto wallet and funds within, like the practices of centralized crypto exchanges.
- Platform’s cryptoassets cannot be spent to buy goods or merchant services.
PayPal’s new crypto service surged its demand and has already increased its daily purchase limits by 200%, i.e. from $10,000 to $20,000. PayPal even removed the whitelist feature that, based on location, restricts the use of specific services, now making it accessible to all U.S. citizens.
PayPal’s Present & Plans for Future
In the last quarter of 2020, PayPal shared that crypto-purchasing users have been logging-in twice as much as before. Mizuho Securities December report revealed that more than 20% of PayPal’s users already traded bitcoins on the platform.
This year, PayPal is now planning to allow the platform’s cryptocurrency to fund over 29 million merchants on board and buy goods. The holdings inc. also plans to acquire an institutional-grade digital asset custody solution, Curv and avail its services on its mobile payment app subsidiary, Venmo, by the first half of 2021.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
