PayPal has demonstrated impressive track records. The company posted excellent financial results for the fourth quarter of 2020 last month. This is largely due to the rapid growth in the Venmo app and division, as well as the success of its new «buy now, pay later» service.
The company expects the pandemic to further boost profits in 2021 as the quarantine forces more consumers to switch to e-commerce and ditch cash entirely.
PayPal came to the fore in the cryptocurrency community in October 2020. It was then that platform representatives announced the addition of Bitcoin, Ethereum, Litecoin and BCash to their service. Thanks to this, users of the site were able to buy coins and earn on their growth.
The innovation was not without criticism, since, in fact, owning a cryptocurrency using PayPal is not complete. This means that buyers are not provided with a private key – that is, a combination for managing a cryptocurrency address, and they cannot transfer crypto to third-party addresses outside the service.
Regardless, the news was good for the cryptocurrency industry. In particular, on the day of PayPal’s announcement, Bitcoin reacted with an increase of up to $ 13,000. Later, BTC began its massive growth above its all-time high.
Increase in the price of Bitcoin per day after the announcement of PayPal
Will PayPal Buy Bitcoin?
In an exclusive interview with the news outlet Decrypt, PayPal CEO Dan Shulman shared the company’s plans for the future, as well as the issue of direct investment in the cryptocurrency market.
Recall that earlier a massive trend for investments in crypto from large investor companies was launched by MicroStrategy and Tesla. They have invested huge amounts of money in Bitcoin. For example, the first giant now has 90,859 BTC at its disposal, which they acquired on average for $ 24,063. At today’s exchange rate of $ 47,323, the company’s savings are equivalent to $ 4.29 billion. Moreover, the profit in this case is $ 2.11 billion.
However, it is important to note here that MicroStrategy is not going to «fix» earnings. As the head of the company, Michael Sailor, said earlier, in this case we are not talking about earnings, but about the transition to a new system of finance. That is why the representatives of the giant intend to keep bitcoins «even for a hundred years.» At least this is what they say.
According to Shulman, one of the key tasks of PayPal should remain the development of its own payment infrastructure. Here is his replica, in which he shares what is happening in the coin market.
We have a ton of opportunities to help build the next generation of payments infrastructure. This is what our new business department is doing.
That is, here he makes it clear that cryptocurrencies – which are the «next generation infrastructure» will continue to be in the focus of the company.
Here is a transcript of a conversation with a PayPal executive. We recommend that you watch if you understand English by ear and want to gain a deeper understanding of what is happening within the cryptocurrency industry.
As Dan clarified, this is a new division of the company, which is managed by an advisory board of experts in technology, cryptocurrency and regulation. PayPal has also worked closely in the past with Venses Casares, a former board member and founder of crypto firm Xapo, who is a legend among blockchain enthusiasts. According to Shulman, Casares prompted the company’s management to carefully study new trends in finance.
PayPal logo
The PayPal executive has clearly done a good «homework» in exploring the main intricacies of the cryptoindustry. In an interview, he shared the details of testing different platforms based on Ethereum, as well as the experience of using smart contracts. That is, PayPal attaches importance not only to speculation on the prices of cryptocurrencies, but also to the fundamental potential of different blockchains.
However, despite this, PayPal will not buy Bitcoin directly yet. This was stated by Dan Shulma.
Bitcoin is not yet in our field of attention. We don’t like the potential risks associated with investing in highly volatile assets.
This means that the position of the company’s management remains conservative: in their eyes, Bitcoin is an asset with too sharp price fluctuations. We find this point of view strange – especially considering that PayPal allows its customers to invest in coins.
From this we can conclude that PayPal is not yet going to follow the example of Tesla and MicroStrategy, which previously invested large amounts of money in BTC. Instead, the company plans to «hold» free cash reserves for possible purchases of startups – including those from the crypto sphere. So for now, the question of the arrival of PayPal on the crypto market has been postponed indefinitely.
We hope the situation will improve in the future. Based on the behavior of Bitcoin and other cryptocurrencies since the beginning of the pandemic, these assets are very strong. This means that the decision not to diversify at least part of your portfolio into coins now seems more risky than to do it.
