PayPal announced that it will allow U.S. customers to hold, trade, and shop using digital currencies such as bitcoin and Ethereum. Transactions paid using cryptocurrencies will be settled using the fiat currencies (dollars, pounds, etc...) that merchants prefer. The company will expand its service to its social payment platform Venmo and other countries in H1 2021.
- Paypal has a network of 26 million merchants. The company also has 346 million accounts overall and processed transactions worth $222b in Q2 2020.
- The volume of bitcoin transactions has increased by 70% since January. The price of a bitcoin fluctuated between $4,945 to $12,399 this year. After PayPal's announcement, bitcoin price momentarily surged beyond $13,100 and is currently trading at $12,893 as of 10 a.m. ET.
- Bloomberg reported, however, that customers could only hold cryptocurrencies bought in PayPal.
- Last year, PayPal pulled out of Facebook’s Libra association, formed to develop a digital currency.
- WSJ noted that several central banks are looking to introduce their own digital currency. PayPal Dan Schulman said that PayPal is working with central banks’ initiatives in launching digital currencies.
- Payment platform Square and trading platform Robinhood allow trading of bitcoin. In Q2 2020, Square reported that its Q2 2020 revenue from bitcoin sales increased 7x YoY to $875m with a gross profit of around $17m. On Oct. 8, Square announced that it invested $50m in bitcoin, representing 1% of its assets.
This story first appeared in Inside Business. You can read the full issue here.