PayPal and Venmo to begin offering cryptocurrency services

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As of last week, we have seen yet another big step in the direction of cryptocurrency adoption.

On October 21, fintech giant PayPal announced it will begin offering crypto-related services via its online platform later this year. There has been anticipation surrounding this event for months – with some even dubbing it “the flippening” – but it is now official. Support for U.S. users is expected to begin in the next few weeks.

Here are the finer details of the service offering and what it could mean for the future of crypto and virtual payments.

About the service

There has long been speculation as to if and when cryptocurrency will be viable as an everyday method of payment.

Once PayPal’s new service is completely rolled out, all 346 million of its account holders will be able to buy, sell, hold, and use various forms of crypto through the platform. The move essentially enables PayPal to function as both a digital wallet and a crypto exchange. At launch, the platform will offer support for bitcoin, Bitcoin Cash, Ethereum, and Litecoin.

Thus far, PayPal has had some usability as an alternate method for withdrawing funds from crypto exchanges, but this is an entirely new and colossal step toward true mainstream crypto adoption.

It is worth noting that to begin, PayPal users will not be able to transfer coins from another digital wallet into PayPal or vice versa. In order to hold, spend, and sell crypto on PayPal, you will have to purchase it through the platform itself.

Using crypto to complete transactions

The primary takeaway from this is the potential it provides consumers to use cryptocurrency in everyday retail transactions. This is something we have never seen before, and it is especially big news, as 26 million merchants around the globe rely on PayPal to facilitate their transactions. Beginning in early 2021, users will be able to spend their crypto freely at these merchants in exchange for products and services.

The transactions themselves will be settled using fiat currency, so merchants will not have to convert the digital coins into traditional dollars after the fact. This will help reduce the risk posed to merchants as a result of crypto’s notorious volatility, allowing PayPal and its users to worry about the ups and downs of the market while merchants can still get paid in traditional money.

Other crypto apps

PayPal is not the first fintech name to take a step into the crypto realm. In 2018, Square launched bitcoin support through its Cash app, while Robinhood and Revolut have also previously ventured into the space. But what makes this event much more noteworthy is the reach and potential impact of a massive player like PayPal.

Support is expected to extend to Venmo – PayPal’s mobile peer-to-peer subsidiary – and to international markets beginning early next year.

Further mainstream crypto adoption

There is hope that this move will spur increased adoption of several of the industry’s most noteworthy forms of crypto among mainstream consumers and real-world retailers.

There is also hope that this will prepare the PayPal network to welcome new digital currencies that may be rolled out by banks and corporations in the near future. To that end, a recent survey found central banks representing one-fifth of the world’s population are likely to issue a virtual currency within the next three years.

In the short term, the announcement is having a bullish impact on crypto markets, as well. After the official announcement from PayPal last week, bitcoin’s price jumped almost 5% in a single day. Ethereum, Bitcoin Cash, and Litecoin all experienced price jumps of their own following the news, as well.

chart of bitcoin price over time

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