In September, PayPal has signed agreements with GoCoin, BitPay and Coinbase, thus allowing PayPal’s merchants to accept payments in digital currency. Many in the cryptocurrency community wonder how the partnerships will impact the bitcoin industry.
Gem COO and former PayPal executive, Ken Miller, described some benefits of the bitcoin adoption by the online payments provider in his new article and touched upon the consequences of such integration.
There are certainly some benefits of bitcoin integration for both merchants and consumers. The bitcoin consumers, who are constantly looking where to spend their virtual money, will have more choice of payment options. Moreover, PayPal users will be able to make international payments at lower cost. Meantime, the merchants will likely boost the number of customers by offering a new payment option.
PayPal’s initial target, which is similar to those of bitcoin, was to enable people send and receive money all over the globe at relatively low price. The technology was designed to allow big retailer and smaller shops to have the same payment possibilities.
Miller pointed out to the similarities among bitcoin and PayPal:
“[B]itcoin embodies much of the core mission that PayPal originally set out to achieve. Back in 2000, the mission statement of the company was ‘Democratizing Global Payments.’ Seeded in that was a desire (made explicit within the company at the time) that we wanted to allow anyone, anywhere in the world, to send frictionless funds on the cheap (relatively). [I]t didn’t exactly work out that way, as PayPal was merely built on top of existing, decades-old payment infrastructure – and it’s not cheap to use – but there was an appetite for that libertarian-esque approach at the time and it galvanized us all. I was one of the original employees at PayPal, and the bitcoin announcement felt full circle in a way from those roots.”
PayPal co-founder Peter Thiel admits that although both bitcoin and PayPal are based on similar ideas, the two developed in a completely different ways. According to Thiel, bitcoin is often used illegally, for instance, to buy drugs.
Security is among the key factors limiting further bitcoin adoption by consumers, as it is often associated with fraudulent activities and theft.
In order to minimize the chance of such activities, the firms must focus on improving the network security and bitcoin protocol. Moreover, the use of multi-signature key, which is hold by the wallet owner and the customer, helps to enhance security.
Devin Wenig, president of ebay.com, has recently said his company is open to digital currencies. “Both eBay and PayPal are open to [Bitcoin]—PayPal is experimenting with it—and through our relationship we’re likely to do the same. I am very open to it,” he said.
Although he did not disclose any further details, it became obvious he is interested in the digital currency. Furthermore, the statements of EBay CEO John Donahoe that the companies may adopt bitcoin in the future, only increase the chances of bitcoin integration.