Recently, Bitcoin and Ethereum started a relatively big market pump. Bitcoin surpassed 13,000 USD at the highest, and Ethereum also rose stable at around 400 USD. This is the highest rise for mainstream cryptocurrencies in recent months.
Many people in the crypto industry attributed this round of market rise to a surprising piece of news - Payment giant PayPal announced on October 21 that it has joined the cryptocurrency market, allowing customers to use online wallets to buy and sell bitcoin and other cryptocurrencies.
At the same time, PayPal also stated in a statement that from the beginning of 2021, PayPal customers will also be able to use cryptocurrency to make purchases at its 26 million online merchants.
For users using cryptocurrency to make payments, the company stated that cryptocurrency payments on PayPal will be settled in fiat currencies (such as U.S. dollars), which means that merchants will not receive payments in cryptocurrency.
Dan Shulman, president and CEO of PayPal, said that PayPal hopes that the service will encourage the use of cryptocurrencies on a global scale and prepare for new digital currencies developed by central banks and companies. He said: "We are working with the central bank to consider various forms of digital currency and how PayPal can work."
The news revealed a lot of details. I think the most important ones are the following:
PayPal will promote the popularization of cryptocurrencies
Speaking of PayPal, we immediately think of WeChat and Alipay. But WeChat and Alipay only have extensive coverage in China, and their status in the world is obviously inferior to PayPal.
With 346 million active accounts worldwide, PayPal is a well-deserved global cross-border payment giant. PayPal processed $222 billion in payments in the second quarter of this year alone.
Taking the 222 billion US dollars processed by PayPal in the second quarter, as long as 10% of the payments are made in digital currency in the future, the digital currency will occupy 22 billion US dollars in the PayPal ecosystem. It is nearly 90 billion US dollars in transaction volume. And this is really used for commercial circulation rather than some meaningless fake transactions.
Once this scenario is realized, it will be a big step for the digital currency to move towards real life, which will enable the digital currency to be supported by specific applications and usage scenarios, and will truly bring cryptocurrency into our lives.
PayPal uses a very smart way to avoid the impact of cryptocurrency fluctuations on merchants and makes merchants happy to accept the digital currency
According to PayPal's explanation, when users use digital currency to pay for shopping, the merchant receives not the digital currency but the fiat currency after the digital currency exchange, which means that merchants who settle in fiat currency will not be affected by the fluctuation of digital currency prices.
There will be an exchange process between PayPal and digital currency exchanges in this process, that is, PayPal will instantly convert the received digital currency to the exchange (such as coinbase) into legal currency, and then send the legal currency to the merchant.
PayPal is preparing for the digital legal currency issued by various central banks around the world and accepting more digital currencies in the future
The CEO of PayPal made it clear that the company is preparing for a new digital currency developed by the central bank and enterprises, and "is working with the central bank to consider various forms of digital currency and how PayPal can function."
In particular, PayPal's possible support for other digital currencies is a big plus for the entire digital currency market. The digital currencies supported by PayPal this time include Bitcoin, Ethereum, BCH and Litecoin. More valuable digital currencies will be supported by PayPal in the future.
Soon after this news was released, the chairman of Virgin Galactic revealed on social media: After the news of PayPal, major banks are meeting to discuss how to support Bitcoin, and it is no longer just an option.
It is too early to say that cryptocurrency will replace all legal currencies now. After all, before large-scale commercial use of cryptocurrency, it still has some limitations, such as the immaturity of the technology and the need to verify its security.
However, Paypal has undoubtedly made a good start. At least the various problems of cryptocurrency can be optimized and solved in more practical applications. As this matter continues to advance, it must continue to be positive for the market outlook.