On Oct 21, PayPal made a terrific announcement to accept cryptocurrency transactions on its platforms. The move is an extra boost to the adoption of cryptocurrencies because PayPal has a psychic influence world over. According to a report published by Statistica.com on Aug 13, 2020, the leading payment gateway has over 346 million active users all over the world. This number is good news to the likes of Bitcoin, Ethereum, and other cryptocurrencies set to benefit greatly from the move.
According to the announcement made on newsroom.paypal-corp.com, the shift might have been informed by the need to adjust to the rapid tech changes influenced by the spread of Covid-19. Blockchain developers and enthusiasts have for a while now advocated for the adoption of cryptocurrency as a utility token for years but faced major resistance from traditional banks and most governments.
In 2018, there was a boom in the development of cryptocurrencies with over 1600 cryptocurrencies in supply, as of Aug 19, 2018. Fast forward to January 2020 and there were over 2000 digital coins in the market. While the number of coins went up, all of them, including the most popular coin (bitcoin) faced major adoption hurdles as most users associated them with fraud. The majority labeled them Ponzi schemes. With PayPal deciding to join the crypto bandwagon, perhaps we’ll see these individuals tone down.
One of the weighty reasons individuals and businesses alike shun cryptocurrency is the high risk involved. For most coins, prices rise and fall on a speculation basis. This volatility increases the chances of losing your dealings especially if you are a novice trader. For coins with strategy, their Crypto is pegged on projects and this helps stabilize the price of their coin. Reports have it that the changes in prices of Bitcoin significantly affect the prices of other cryptocurrencies or so it is believed. PayPal intends to facilitate the usage of crypto as a utility token. This will help mitigate risks by stabilizing the prices.
PayPal has close to 26 million traders worldwide. This will help spread out the number of holders of the coin which will also play a major role in stabilizing the stability of prices.
Other than utility, PayPal will allow holders of coins to HOLD their coins. HODLing is a tech slang for holding the digital coin. HODLing is simply keeping the coin and selling it when the prices go up. To start with, PayPal will allow the likes of Bitcoin and Ethereum and a few other popular coins. The progress will be analyzed and more coins may be lined up for future inclusion.
Implementation in Phases
The roll-out of this program will take place in phases according to the announcement made on PayPal’s official blog. The first to benefit will be US residents. The coins they can HODL or trade include Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. This provision will be made possible through a partnership with a crypto provider called Paxos Trust Company. The regulated dealer is a custodian of most digital coins and a mobilizer for the adoption of these coins. After the successful roll-out of the initial phase, the rest of the world may benefit from this deal starting 2021.
PayPal will also benefit tremendously from this move. It may be a deal that may push PayPal to unimaginable levels of success as far as financial technology is concerned. With time, we will see how far both cryptocurrencies will go with this partnership as well as PayPal.
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