One of the largest online payment systems in the world, PayPal, has enabled cryptocurrency transactions.
If this sounds like a big deal, that’s because it is. After all, we are talking about the platform that serves more than 300 million users and over $700 billion worth of payments annually. If PayPal decides to add cryptocurrency payments to the system, it means that digital coins are becoming very important.
Bitcoin is literally booming these days and going well above $40 thousand, while other cryptocurrencies are expected to follow in its footsteps soon. But what exactly is the story with PayPal and digital currencies? Keep reading to learn all there is to know about it!
When and Why the Integration Took Place?
PayPal officially announced the cryptocurrency integration in December 2020. Here’s what they said: “We are pleased to announce that all eligible PayPal account holders in the U.S. can now buy, hold, and sell cryptocurrency directly with PayPal.”
But it’s not only a matter of trading digital currencies. On the contrary, crypto owners are now free to shop and make purchases at over 26 million PayPal-powered merchants worldwide. They can also use the system to exchange one type of coin for another or to exchange crypto money for fiat currency. In other words, cryptocurrencies are now as useful as traditional currencies within the PayPal ecosystem.
Why did PayPal decide to activate crypto transactions? We can name three main reasons:
- Growing demand for digital payments. Ever since the coronavirus outbreak, clients have shifted to online transactions. In such circumstances, crypto payments represent a natural extension of the system.
- Traditional banks are showing interest in cryptocurrencies. According to PayPal, 10% of central banks globally are preparing to issue their own cryptocurrencies in the next 36 months.
- Improving the overall system. Online coins can speed up the system and make it faster and more resilient.
Technical Aspects of the Integration
It’s easy to say that PayPal is enabling crypto transactions, but what does it mean in practical terms? Who is eligible to use the new functions and are there any hidden fees or regulations you should know about? There are so many questions to ask, but don’t worry about it since PayPal really made it simple and easy for you.
First of all, we must emphasize that every account holder in the US is free to use cryptocurrencies within the PayPal system. This means some 150 million clients will have the opportunity to take part in crypto transactions through PayPal.
Secondly, you should know that PayPal doesn’t support every cryptocurrency out there. The platform focuses on the four major coins: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. You can do whatever you want with these four cryptocurrencies – buy them, sell them, exchange them, or use them to buy fiat currencies.
And thirdly, there are no service fees whatsoever. You can hold, buy, or sell digital coins without spending a dime in the process. PayPal clearly stated that they wanted to increase the utility of cryptocurrencies and so they did not plan to charge clients for crypto transactions.
Possible Issues with the System
The integration of cryptocurrencies functions flawlessly, so we can’t really talk about any major issues here.
What we can mention, however, is that PayPal may have a problem convincing account holders to start using virtual money. A report shows that only 7% of Americans have used or owned cryptocurrency in 2020. In other words, the mass adoption of this payment method is still far away from us.
But the very fact that PayPal enables cryptocurrency transactions suggests that the method is gradually becoming the mainstream. The platform is also preparing a lot of educational content and offering personalized consultations to users who want to learn more about the cryptocurrency ecosystem. That way, interested parties can figure out the risks and possibilities concerning virtual assets.
It may take a while before we see millions of PayPal clients using digital coins to conduct purchases, but one thing is for sure – the project is evolving and it is only going to get bigger and more important in the years to come.
The Bottom Line
As one of the largest online payment platforms in the world, PayPal is constantly looking for new ways to improve its services and enhance user experience. In December 2020, they completed another milestone by activating cryptocurrency payments.
It’s a huge thing for both the cryptocurrency ecosystem and PayPal. Of course, it is also an important novelty for PayPal users who are now able to use four types of digital coins just like any other fiat currency. The goal of this project is to make online transactions faster and more efficient, but it’s still too early to understand how the market is reacting to the evolution of the system.
What are your thoughts on PayPal cryptocurrency integration? Let us know in the comments!
Jessica Chapman is an IT blogger and one of the best essay writers from Chicago. She is interested in new technologies, business, and finance. Besides writing, Jessica loves traveling and long-distance running. You can find her on Facebook.