OKEx Research: Payment Giant PayPal's Conspiracy and Conspiracy to Open Digital Currency Trading

Original source: OKEx Research

The entry of the payment giant PayPal brings huge benefits to the crypto market.

On the evening of October 21, Reuters issued an article stating that PayPal will allow customers to use the company's online wallet to buy, sell and hold BTC, ETH, BCH, LTC, etc. cryptocurrency. Starting in early 2021, PayPal users will also be able to use cryptocurrencies to shop at 26 million merchants on its network.

Source: OKEx

Affected by this news, the encryption market has rapidly heated up, the price of Bitcoin has hit a new high this year, and other mainstream currencies have also risen. It is generally believed in the industry that PayPal has more than 300 million active users around the world, can bring considerable incremental users and funds to the encryption market, and is expected to become a booster for a new round of bull market.

In fact, PayPal's encryption plan has been reported before, and now the dust has settled, on the one hand, it will inject more confidence into the current encryption market, on the other hand, it will also Bring the payments giant's conspiracies and overtones to the surface.

Bitcoin payment was supported 6 years ago

From getting involved in encrypted payment track to open It took PayPal 6 years to buy and sell digital currency.

Back in September 2014, PayPal announced that it was partnering with three top bitcoin payment service providers to provide limited support for the digital currency. North American merchants selling virtual goods such as music, games, ringtones, etc. can accept bitcoin payments through the PayPal Payments Hub. PayPal said it will provide a simple one-stop service for sellers of digital goods to test this emerging payment method.

However, PayPal was more cautious at that time. The company said in a statement that the move does not mean that Paypal has accepted bitcoin as a currency in its digital wallet, nor does it mean that the secure payment platform will process bitcoin payments. "PayPal has always embraced innovation, but must ensure that it provides users with more secure and reliable payment services. Our attitude towards Bitcoin is no different."

6 Today, PayPal's attitude towards cryptocurrencies is more positive, not only allowing customers to use the company's online wallet to buy, sell and hold BTC, ETH, BCH, LTC and other cryptocurrencies, but also supporting users to use cryptocurrencies on its network Shop with 26 million merchants.

The company's president and CEO Dan Schulman (Dan Schulman) bluntly stated in an interview that PayPal hopes that the service will encourage the global adoption of virtual digital currencies. wide-ranging use and prepare the network for new digital currencies developed by central banks and corporations.

PayPal has made sufficient preparations for this. For example, in 2018, the company's patent application for a method to improve the speed of digital currency payment flowed out. According to the patent description, the purpose of this concept is to reduce the time required for digital currency transactions between consumers and merchants, avoiding the many processes of sending transactions.

In 2019, PayPal participated in launching the Facebook Libra project. However, the project was temporarily stalled by regulatory pressure, and PayPal chose to withdraw. In hindsight, this short-lived experience just accumulated experience for PayPal's comeback a year later: actively embracing regulation.

On the evening of October 21, after PayPal announced the opening of digital currency trading, Paxos announced support for PayPal's new service, allowing US users to purchase directly from PayPal e-wallets , hold and sell encrypted assets.

As we all know, Paxos is known for its compliance operations and is the first regulated digital asset trust company. Choosing to cooperate with Paxos, PayPal obviously has compliance considerations, and through Paxos, PayPal has obtained the first limited virtual asset license from the New York State Department of Financial Services.

It is foreseeable in the future that with the development of new encryption business, PayPal is expected to join hands with more compliance agencies to remove the regulatory resistance that Libra previously faced.

The ambition of the payment giant

From cautiously testing the water to actively expanding, PayPal is paying close attention Every move in the crypto industry.

In March of this year, PayPal stated in a letter to the European Commission (European Commission) that it was "monitoring the evolution of the encrypted asset space" and had "to take unilateral and practical steps to further develop its capabilities in this area".

If you count from the first time you set foot in the encryption payment track, PayPal has witnessed the changes in the encryption market for 6 years. During this period, the total market value of the encryption market grew from less than US$1 billion to US$400 billion, and the annual transaction volume of Bitcoin even surpassed PayPal.

In the face of the exponential growth of the encryption market, traditional financial giants including JP Morgan Chase can no longer turn a blind eye, either planning to issue their own cryptocurrency, or join hands Encryption companies, while improving the original business, further expand the new territory.

In the payment track, PayPal's competitors are also non-stop. Taking Visa and MasterCard as examples, the two traditional payment giants successively announced their entry into the digital payment field, and successively launched plans to use cryptocurrencies in the financial services industry.

Public information shows that Visa has cooperated with the encrypted exchange Coinbase and invested in Anchorage, a digital custody company. MasterCard is working with a number of technology companies to research blockchain technology and cryptocurrencies, and is preparing a new plan to expand the partner group for encrypted payment cards.

According to Livemint, both Visa and MasterCard have registered patents for blockchain technology. As of July this year, Visa had 24 patents, while MasterCard had 80.

In this context, PayPal must take the initiative no matter for the consolidation of the original market share or the expansion of new business territory.

For now, the market is full of expectations for PayPal. After PayPal announced the opening of cryptocurrency trading, the encryption market as a whole rose, and PayPal's stock price also rose sharply.

At this point, PayPal's long-awaited encryption plan is officially released: 1. Allow customers to use online wallets to buy, sell and hold Bitcoin and other virtual digital currencies; 2. Support users to use cryptocurrency to shop at 26 million merchants on its network.

Not only that, PayPal also expressed greater ambitions. PayPal hopes the service will encourage the global use of virtual digital currencies and prepare the network for new digital currencies developed by central banks and corporations, the company's president and chief executive said in an interview.

He further revealed that PayPal is working with central banks to consider various forms of digital currency and how PayPal can play a role.

PayPal's move is of great significance today as the world pays close attention to and researches on central bank digital currency (CBDC). First of all, the company cooperates with the central banks of various countries to ensure the legitimacy of related businesses from the policy level; secondly, PayPal has a large number of merchant resources and is expected to become an important channel for the implementation of CBDC in various countries. Therefore, the opening of cryptocurrency trading is likely to support CBDC. Prepare.

It has to be said that PayPal seems to be entering the cryptocurrency trading market on the surface, but its real purpose may be to further occupy the market by supporting CBDC.

Market Outlook

PayPal opens up digital currency trading, how will it affect the cryptocurrency market ?

For now, the market is generally optimistic.

William, principal researcher of OKEx Research, said that PayPal is currently one of the most widely used online payment tools in the world. If Alipay is Chinese and mainly supports RMB settlement, then PayPal is global, supporting 25 international mainstream currencies such as the US dollar, the euro and the Japanese yen, and occupies a large share in the global cross-border e-commerce third-party settlement and payment platforms. market share. "This will not only bring bitcoin an application scenario for shopping payment at PayPal's 26 million merchants, but more importantly, it means that the encrypted digital currency represented by bitcoin is being recognized by the mainstream business community, so for bitcoin This is an absolute positive, so yesterday Bitcoin hit a record high."

Jayden Wei, executive director of Collin Capital, is also optimistic about PayPal's impact on the encryption market. In his view, after PayPal officially entered the market, we already have the flow and capital entrance of this halving super bull market.

However, some views expressed concerns. Alex Mashinsky, CEO of crypto lending platform Celsius, predicted that PayPal could lead to "millions of new users" entering the crypto space, yet they could face a "tax nightmare" due to the volatility of crypto assets and tax filing requirements. “According to the IRS, digital assets such as Bitcoin are considered property, not currency. This means that whenever you sell, exchange, or deal with cryptocurrency in order to buy something else, it becomes a taxable event.  ”

In addition, PayPal also faces 3 major challenges:

1. Cryptocurrencies are highly volatile and more attractive to speculators, but much less attractive to merchants and shoppers; 2. Compared with other mainstream payment systems, the ordinary transaction speed is slower and the cost is high (of course, for cross-border payment, it has great advantages, such as fast speed and low cost);

3. The laws of different countries are different, how to deal with supervision is a long-term problem that PayPal needs to face.

In any case, PayPal's entry conveys more confidence when the market is turbulent. As for the future development of new businesses, we may wish to wait and see.

This article is from a contribution and does not represent the views of BlockBeats

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