Editor's Note: This article comes fromBlock beats BlockBeats (ID: BlockBeats), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Block beats BlockBeats (ID: BlockBeats)
Block beats BlockBeats (ID: BlockBeats)
22 years, a market value of 250 billion US dollars, business in more than 200 countries and regions around the world, nearly 250 million daily active users, and 26 million merchants. These labels outline PayPal, a company that almost everyone knows. And the world's leading payment giant detonated the currency circle with an announcement.
On October 21, PayPal officially stated that it will allow users to use PayPal accounts to trade cryptocurrencies such as Bitcoin. The official pinned the announcement on Twitter, announcing the latest service to its 660,000 Twitter followers.
PayPal obtained the first conditional cryptocurrency license from the New York State Department of Financial Services. Through Paxos Trust Company, PayPal users can directly purchase the most mainstream cryptocurrencies such as BTC, ETH, BCH and LTC through their wallets.
From the integration with encryption companies in 2014, allowing users to use BTC as an online shopping payment method, to now direct cryptocurrency transactions through PayPal wallets. After 6 years, PayPal finally opened its own cryptocurrency service.
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PayPal's road to encryption
In December 1998, Peter Thiel and four partners jointly founded this payment giant that later influenced the world. Peter himself was later regarded as one of the top venture capitalists in Silicon Valley. In addition to PayPal, he also won a 10% stake in Facebook in 2004. Top companies and projects in the currency circle such as Bitmain and EOS are also in his in the portfolio.
Compared with the traditional mailing of checks or remittances, PayPal, which allows users to use emails to identify their identities, shines brightly. This new method of transferring funds is rapidly gaining popularity in the market. In the past 22 years, PayPal's mobile payment market share in the United States has soared and is far ahead of its competitors. If Amazon is not counted (Amazon has its own payment method: Amazon Pay), 77% of the top 500 online retail companies in the United States % used PayPal to pay, and the market value has risen from 50 billion US dollars in 2015 to 250 billion US dollars.
Many people may not know that PayPal started contacting the cryptocurrency field 6 years ago, but the process was not smooth.
On September 23, 2014, PayPal cooperated with BitPay, Coinbase, and GoCoin to allow eBay users to use BTC as a payment method through PayPal.
Unfortunately, in less than a year, PayPal cut off its business related to cryptocurrencies and “actively freezes any accounts related to cryptocurrencies” due to the fact that encrypted transactions are often fraudulent and even have transaction chargebacks.
However, PayPal has always had an encryption dream.
At the World Economic Forum in 2019, PayPal co-founder Luke Nosek (Luke Nosek) said: "A lot of people don't know this, PayPal's original mission is to build a global currency, independent of those who let the currency Devalued corrupt banks and government intervention.” This description can’t help but make people sigh, isn’t Luke Nosek talking about Bitcoin? But there is only one bitcoin in the world, and it may be difficult for PayPal to create another bitcoin.
On June 18, 2019, Facebook launched its own encrypted stable currency Libra. Among the 29 association members of the initially confirmed Libra Association, PayPal was included.
However, while the vision is strong, the road to development for the Libra Association and Facebook has not been smooth. Under the pressure of multi-national regulation, members of several associations announced their withdrawal one after another.
On October 5, 2019, PayPal officially withdrew from the Libra Association, becoming the first giant to leave the Libra Association. Regarding this decision, PayPal CTO Sri Shivananda explained that PayPal believes that in the short to medium term, Libra's idea of "serving payment needs who have not yet connected to the system" cannot be realized.
The vision of getting to know cryptocurrencies for the first time didn't materialize, but that doesn't seem to have swayed PayPal's determination to enter the crypto market. In public, Sri Shivananda has repeatedly stated that the digitization of money is inevitable. On September 21 this year, the cryptocurrency trading platform bitFlyer Europe integrated PayPal, becoming the first encrypted trading platform to allow funds to be deposited through a PayPal account.
But just supporting the integration of trading platforms does not meet PayPal's requirements. Now, it has decided to "end up" by itself and directly support users for cryptocurrency transactions.
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Cryptocurrency transactions on PayPal
On October 21, PayPal officially announced that users can buy and sell cryptocurrencies such as Bitcoin and Ethereum through its online wallet. This also means that for the first time, the payment giant with 250 million daily active users provides cryptocurrency purchase services directly to users. In the next few weeks, PayPal customers in the United States will be the first to experience the function of buying and selling cryptocurrencies, and there will be no service fees for buying or selling cryptocurrencies before December 31, 2020.
As soon as the news came out, the encryption market rose in response, and Bitcoin briefly broke through $13,000, reaching a new high for the year.
This news immediately detonated the encryption circle and the traditional financial market. People at home and abroad have forwarded this news, and most users said that it will bring millions of new users to the encryption market. It is undoubtedly a good news.
Ethereum co-founder Vitalik Buterin welcomed the arrival of PayPal.
Mike Novogratz, CEO of Galaxy Digital, a well-known encryption investment institution, also tweeted that the PayPal news is the biggest news in the encryption market this year, and all banks will be scrambling to support cryptocurrencies.
According to PayPal's official instructions, users cannot transfer money after conducting cryptocurrency transactions. It is impossible to transfer money to any user in the PayPal system, which means that if users want to transfer assets, they can only convert encrypted assets into legal currency. In addition, users cannot hold the private key themselves.
Therefore, many encryption people have expressed their concerns about PayPal's entry into the encryption market.
Ripple CEO Brad Garlinghouse said: "2 steps forward, 1 step back... Nice to see payments pioneers coming in, but disappointing with some of the fundamentals/benefits of cryptocurrencies being taken away. I suspect PayPal is worried (wait... …) regulatory uncertainty, thereby affecting its rollout at multiple levels.”
Jesse Powell, CEO of Kraken, another compliance trading platform, believes, "PayPal's support for Bitcoin will bring amazing adoption rates. But don't expect PayPal to change their account freezing policy. They are still centralized, and the government will Continue to expropriate the financial system for extrajudicial sanctions...”
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Reflections on PayPal's Encryption Road
In the field of encrypted payments, Square, the payment company founded by Twitter CEO Jack Dorsey, is more well-known to the public. The company’s revenue in the first quarter of 2020 was worth $306 million in Bitcoin, a year-on-year increase of 367%. It is undoubtedly one of PayPal's number one rivals in the encrypted payment field.
In addition, there are views that PayPal's move to support the purchase of cryptocurrencies may cause tax troubles. According to the US Internal Revenue Service (IRS), encrypted assets such as Bitcoin will not be considered "currency" but will be considered "assets", which means that every time a user sells, exchanges or disposes of a cryptocurrency Any time money is used to buy something else becomes a taxable event.
For such concerns, PayPal explained that capital gains or losses caused by cryptocurrencies need to be filled in the relevant tax information report, but users are responsible for their own tax affairs: "You are responsible for determining the taxation of transactions using Cryptocurrencies Hub." What taxes, if any. You can access your transaction history and account statement through your PayPal account to determine any tax filings or payments required.”
Regarding the above concerns, Harry Zhou, chief compliance officer of Koi OTC, said that PayPal's support for digital currency trading is actually not a kind of lead, but behind in years. The product form implemented by PayPal (strong KYC, retail legal currency transactions under a strong license), Square's Cash App, and Robinhood were widely implemented a few years ago. In this context, if "tax trouble" refers to "computing tax liability trouble", then there is some worry. Currently such products are designed to automate the calculation and recording of U.S. tax returns.
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Will PayPal support DCEP?
So, as PayPal, which has always supported currency digitization, will it accept the Chinese central bank's digital currency DCEP payment in the future?
In 2005, PayPal entered the Chinese payment market, using RMB as the only currency, and DCEP has the same effect as RMB. So normally, PayPal, as a payment processor, has every reason to support DCEP.
So if PayPal accepts DCEP, will it face pressure from the US policy? After all, as a payment company with 250 million active users and a global business, its support will play a huge role in promoting the widespread adoption of the currency.
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