Jose Fernandez, the Head of Cryptocurrency Announced that Paypal Will Soon Allow Withdrawal of Bitcoin out of Paypal

Paypal, one of the biggest payment solution companies in the world, took a giant step in embracing the adoption of crypto assets by allowing withdrawal from its platform.

By
Chung Yee
on
May 28, 2021
Category:
Blockchain News

A Major Milestone in Crypto Adoption

 This announcement came seven months after Paypal first announced that they will be allowing its users to buy, sell and hold cryptocurrencies through their hosted wallets. 

Paypal, a mainstream fintech company, processed $936 billion in payment in 2020 and boasts 361 million active accounts on its platform. It has a network of 26 million merchants worldwide adopting Paypal’s payment gateway solutions. We are starting to see a paradigm shift from the likes of Paypal, Visa and Mastercard. These institutions are starting to recognise that their users want cryptocurrencies to be incorporated as a payment solution. 

In October, 2020 Paypal announced that they will be allowing their users in the United States to purchase bitcoin and other cryptocurrencies. However, the announcement was lukewarm as it does not allow users to make transfers out of the hosted wallets. 


On the 10th of February, 2021 Mastercard in announcing their policy on cryptocurrency said,  ‘Our philosophy on cryptocurrencies is straightforward: It’s about choice. Mastercard isn’t here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants and businesses to move digital value – traditional or crypto – however they want. It should be your choice, it’s your money.’

This was followed by an announcement by Visa on the 29th March, 2021. Visa announced that they are allowing payments in cryptocurrency. Although the accepted currency is only for USDC, a regulated stablecoin backed by the US Dollar on the Ethereum network, this step was monumental. 

Institutions in Crypto

One of the major stumbling blocks for mainstream adoption is the volatility of the asset class. This has in the past prevented adoption. Companies such as Paypal, Visa and Mastercard cannot turn a deaf ear to the wishes of its users. Although cryptocurrencies have not been broadly accepted for settlement of payments, the steps are suggestive of a wider adoption in the future. One thing is for sure, Paypal cannot afford to be slow in recognising changes in consumer trends. 

Crypto Assets Explained Using the Lindy Effect

Source

The Lindy Effect, a theory commonly applied to non-perishable assets, is one of the better models to be used for technology based assets. It explains that the longer the asset survives the longer its life expectancy. The above shows the stages of an asset class and this theory can be applied to Bitcoin, being the most dominant cryptocurrency by market capitalization. As the asset gains more acceptance and adoption, volatility reduces and it will gradually be categorised as a store of value, medium of exchange, unit of account and finally as a full global money. 


A New Asset Class

"Bitcoin is now considered an investable asset. It has its own idiosyncratic risk, partly because it’s still relatively new and going through an adoption phase," 

The quote above is by Matthew McDermott, the Global Head of Digital Assets of Goldman Sachs. The findings from the research commissioned by Goldman Sachs cannot be more bullish for Bitcoin and the wider crypto market. The crypto market has seen institutional giants taking major steps in recognising the role that crypto assets will play in the future. Whilst some are still arguing over the legitimacy of crypto assets, forward looking institutions are already planning integration of crypto assets and the blockchain technology into their ecosystem. The real focus should be centered on making this new asset class safer and more compliant for wider adoption. 

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance.

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