Paypal to the conquest of cryptocurrency: Bitcoin reaches $13,000

Paypal and the Blockchain: Profit for Financial Services Companies

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Bitcoin exceeds $13,000

Paypal to the conquest of cryptocurrency: Bitcoin reaches $13,000

On Wednesday, October 21, PayPal, the US online payment giant joined the cryptocurrency market and is considering acquiring BitGo to enable its customers to buy, sell and retain Bitcoins and other crypto. Is this the reason why Bitcoin has surpassed US$13,000?

Paypal and the Blockchain: Profit for Financial Services Companies

Blockchain and cryptocurrency are now considered the future of finance and it is obvious that some of the world’s most successful online payment platforms have begun experimenting with this technology.

PayPal began investing in Blockchain as early as April 2019 by investing in Cambridge Blockchain, a start-up that strives to give individuals a way to own their own identity online without the need for intermediaries.

Cambridge Blockchain manufactures digital identity business software for financial institutions, providing robust digital identities on a global scale while enabling individuals to control their own identity data. By combining Blockchain technology with an out-of-chain personal data service, the company creates an independent source of validation through the network effects of trusted parties, individuals, legal entities and devices. Identity data is reliably and flexibly managed and secured, enabling seamless transactions, operational efficiency and enhanced privacy protection.

A PayPal spokesperson told Forbes:

‘We invested in Cambridge Blockchain because it applies Blockchain in a way that we believe could benefit financial services companies, including PayPal.

This first investment of Paypal in the blockchain universe was also intended to encourage the use of virtual currencies on a global level and to prepare its own network to the new digital currencies that could be developed by central banks and companies.

In June 2019, PayPal initially signed a non-binding letter of intent to participate in Facebook’s Libra Association with the intention of learning more about the proposed use of blockchain technologies to provide financial services to unbanked populations around the world.

In October 2019, without giving a specific reason, PayPal had declared that it was withdrawing from the Libra Association. Paypal then announced to Theverge:

‘We continue to support Libra’s aspirations and look forward to continuing the dialogue on how we can work together in the future. »Facebook is a longstanding and valued strategic partner of PayPal, and we will continue to collaborate with and support Facebook in a variety of ways.

One year after having decided to leave the Libra association, through a letter entitled PayPal’s response to the European Commission’s public consultation of December 19, 2019 on the development of a European framework for crypto markets, Paypal had revealed that the company will develop crypto management capabilities.

It is explained in this letter that being an innovative FinTech company, PayPal is following the evolution of crypto. As such, PayPal has recommended three fundamental principles to underpin the development of a cryptographic asset management framework:

  1. Establish clear definitions for the various crypto-related activities to encourage licensing and regulatory standards.
  2. Building on the first point, PayPal advocates that similarly stringent AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) measures be introduced at the national and supranational levels.
  3. Given the rapid evolution of the technology sector, the company believes that regulatory frameworks should remain neutral to allow innovation and competition to flourish.

Paypal then stated:

‘PayPal is proud to be a trusted partner not only for consumers, merchants and businesses, but also for policy makers, regulators and law enforcement.»

It is official: You can buy and sell Bitcoins with Paypal

PayPal has one of the largest merchant networks in the world and has just given its 346 users access to a new way to buy tokens.

PayPal said it aims ‘to increase consumer understanding and adoption of cryptocurrency’.

On Wednesday, October 21, 2020, the payment platform entered the crypto market and announced a new feature that will allow its customers to buy, hold and sell Bitcoins and other virtual currencies using their PayPal accounts.

Dan Schulman, CEO of Paypal announced:

‘As part of this offering, PayPal will provide account holders with educational content to help them understand the cryptography ecosystem.

PayPal initially plans to roll out this new service in the United States in the coming weeks and will initially offer Bitcoin, ether, bitcoin cash and litecoin. All cryptos could be stored ‘directly in PayPal’s digital wallet.

Behind the scenes, Paxos is in charge of trading and currency custody.

By early 2021, the company also plans to enable its customers to use cryptography for everyday purchases without having to convert their crypto-currencies on a stock exchange beforehand with its network of 26 million retailers.

For Schulman, the shift to more digital forms of currency is inevitable; he explained:

‘Digital currencies bring clear benefits in terms of financial inclusion and access; efficiency, speed and resilience of the payment system; and the ability for governments to quickly disburse funds to citizens’,

PayPal shares climbed more than 3% at the start of trading in New York. The price of bitcoin rose nearly 5 percent to trade at around $12,440, according to CoinDesk data.

PayPal has received approval from the New York State Department of Financial Services for its business in the form of a conditional ‘Bitcoin License’ — the first such license to be granted. PayPal has partnered with the company Paxos to launch the new service.

However, PayPal will not allow users to transfer their cryptography in or out of PayPal — nor will it allow users to control their private keys. The company said:

‘Currently, you can only hold on your account the crypto you buy on PayPal. In addition, your account’s encryption cannot be transferred to other accounts, whether PayPal or not. ‘

To make your first purchase of cryptocurrency using Paypal, you need to:

  1. Have a Paypal account
  2. Register with a trading platform or brokerage service that sells digital currencies such as Bitcoin, Bitcoin Cash and Ether with Paypal.
  3. Have an e-wallet that supports the digital asset you wish to purchase.

A fee will be charged for transactions:

2.3% for transactions under $100,

2% for transactions between $100 and $200,

1.8% for transactions between $200 and $1,000, and

1.5% for transactions over $1,000. The minimum fee is $0.50 for transactions under $25.

Paypal has also indicated that there will be some difference between the buy and sell prices and that the fees will be waived until 2021.

Following the development of this new service and wanting to extend its scope to cryptos, PayPal is currently studying the possibility of acquiring crypto companies.

According to a report published by Bloomberg on October 23, 2020, the company is currently in discussions with BitGo, a company founded in 2013 by Mike Belshe that helps investors store bitcoin.

According to people familiar with the project, the two companies could reach an agreement in a few weeks. These people, who have decided to remain anonymous, also added that discussions could still break down and PayPal may choose to buy other targets.

BitGo offers digital wallets that require multiple signatures (multi-sig wallets) for transactions, as well as offline safes to store Bitcoins and crypto in general.

BitGo is backed by investors such as Goldman Sachs Group Inc, Craft Ventures, Digital Currency Group, DRW, Galaxy Digital Ventures, Redpoint Ventures, Valor Equity Partners and Founders Fund.

According to PitchBook, BitGo raised $58.5 million in 2018, worth $170 million, and in August filed an application with the regulatory authorities in New York.

Bitcoin exceeds $13,000

PayPal’s entry into the world of crypto-money has allowed Bitcoin to exceed $13,000 for the first time since July 2019.

PayPal’s announcement triggered a market recovery, Bitcoin is once again on the move with an increase of nearly 80% over the year.

For Mati Greenspan, the founder of Quantum Economics, this increase was almost entirely driven by PayPal, he said:

‘There is no doubt in my mind that this news is almost entirely responsible for today’s widespread gains.’

Alex Mashinsky, the CEO of the Celsius platform also supported the Greenspan idea, adding:

‘This is undoubtedly a bullish sign for Bitcoins and other cryptocurrency. Crypto is a matter of trust, PayPal has a very high level of trust with its users […] If the user interface of the service is well done, we will see millions of new users joining us every month’.

As one of the most successful online payment platforms in the world, Paypal is interested and enters the world of cryptography by offering a new service that will allow its customers to buy, hold and sell Bitcoins and other virtual currencies using their PayPal accounts. In order to do so, the company would be investigating the possibility of acquiring crypto companies such as BitGo. As a result, the price of Bitcoin then exceeded 13000 USD. Could this be the beginning of a bull run?

Written by Laetisia Harson, Project Manager at Magna Numeris

Magna Numeris is a startup developing solutions for cryptocurrency users, pushing the boundaries of conventional platforms to help grow the peer-to-peer economy

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Magna Numeris

Magna Numeris

Magna Numeris is a startup developing solutions for cryptocurrency users, pushing the boundaries of conventional platforms to help grow the peer-to-peer economy

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