PayPal announced yesterday that it will enable its customers to buy and sell Bitcoin and other cryptocurrencies through their PayPal accounts, which could then be used to buy products from the 26 million sellers that use its service.
The payments platform’s announcement brought a surge in Bitcoin prices, rising as much as 4% to $12,381 on Wednesday – its highest level seen since July 2019. With this latest jump, Bitcoin gains rose above 75% for the year.
Mike Novogratz, founder, CEO and chair of Galaxy Investment Partners, described the announcement as “the biggest news of the year in crypto.”
“All banks will now be on a race to service crypto,” he wrote in a tweet. “We have crossed the rubicon people. Exciting day.”
Though it has existed as a form of payment for more than a decade, Bitcoin and its fellow virtual currencies have struggled to see widespread use. Though cryptocurrencies’ volatility has made them attractive to speculators, it poses risks for shoppers and sellers. Transactions are also generally slower and costlier than more mainstream payment modes.
However, PayPal has expressed confidence that its new system will be able to address these issues, as payments will be settled using more the dollar and other traditional currencies. As a result, it will manage the risk of price fluctuations while merchants receive payments in virtual coins.
“We are going about it in a fundamentally different way to make sure we provide the maximum amount of safety to our merchants,” PayPal CEO Dan Schulman said in an interview, adding that the platform is already in discussion with central banks regarding the use of Bitcoin in transactions.
PayPal will issue new buying options in the US in the coming weeks, with a full rollout to come in early 2021. In addition to Bitcoin, it also plans to add Bitcoin Cash, Ethereum and Litecoin to its roster of supported cryptocurrencies. The company confirmed that customers will be able to store these currencies “directly within the PayPal digital wallet”.