Hot on the heels of Nigel Farage’s declaration of war against the financial system and inducement to freedom-lovers everywhere to stock up on gold and silver, we now have another call to arms. But this time, it’s different. This time, it’s crypto.
So who’s waging this war that decentralised bros around the world are so excited about? Some kind of super-decentralised entity that is super not into fiat, we imagine?
That’s right, PayPal — one of the biggest payments companies in the world, with a market cap of $240bn — will soon be allowing its US users to buy, HODL, and sell bitcoin, bitcoin cash, ether (the crypto that powers Ethereum) and litecoin.
It’s not available for UK users yet but here are some screenshots from the PayPal app in the US, from Mike Dudas, founder of crypto site The Block:
Sounds pretty shilliant to us. Only thing is, PayPal will not actually be allowing anyone to transfer their crypto out of their PayPal wallet into another wallet, even if it’s another PayPal wallet, or to deposit crypto from another wallet. Users won’t have access to their private keys — the long string of numbers that allows users to spend their crypto on what they want. Still, censor-resistant money for the win!
Instead, everything has to go through PayPal. And although PayPal says it will allow its users to pay with crypto at the 26 million merchants on its platform, those merchants won’t actually receive the payment in crypto — it will be converted back into fiat, for a hefty fee (2.3 per cent on transactions of less than $100). So why you would choose to pay with bitcoin at all, we’re not so sure.
But does any of this matter when number go up? Bitcoin, as you can imagine, mooned on the back of such news, popping above $13,000 at one point to trade at its highest price since July 2019. Here’s the price move in the past month (screenshot from Coindesk):
As you might also imagine, our inboxes have been overflowing with unbiased commentary, like this from Alex Mashinsky, the CEO of Celsius Network, the margin-trader-lending firm that Jonathan Rowland’s Mode “bank” piggybacks off for its bitcoin piggy bank (emphasis here and throughout is ours):
This is definitely a bullish sign for Bitcoin and other cryptocurrencies. Crypto is all about trust, and PayPal has a very high level of trust with its users: it has helped many people do their first web and mobile-based transactions in the past 20 years. If the UI/UX of the service is done right, we will see millions of new users join each month. We are convinced that many of these new users will want to try additional services like lending and interest income after buying their first few coins — this will be a rising tide for all crypto players.
(So yeah, bitcoin is all about disintermediating trust, but it still needs a trusted intermediary. Makes sense.)
And this, from Nigel Green, chief executive of the deVere Group and “high-profile crypto advocate”:
Unbelievably there are still some financial ‘experts’ and financial watchdogs who believe that cryptocurrencies are not the future of money. The decision by one of the biggest payment companies in the world to allow customers to buy, sell and hold Bitcoin is yet another example that exposes Bitcoin deniers and cryptocurrency cynics as being on the wrong side of history.
The direction of travel has already been on this path, but there is a growing sense that more investors will now be preparing to move off the sidelines . . . Surely, the time is up for those relics who still believe cryptocurrencies are not the way forward?
Don’t let anyone ever tell you crypto is a religion.
We even got commentary that tied the news to the US election. As you can imagine, either outcome will be good for crypto. Here’s crypto trading platform EXANTE co-founder Anatoliy Knyazev, who also says “$14,000 will be the psychologically important milestone”:
A Trump win will probably be welcomed by the stock market players and Bitcoin will keep on growing along with other assets. However, A Biden win, which may lead to a stock market fall, could also work in Bitcoin’s favour based on the expectation of the depreciation of the dollar.
We can see that this must feel like an important step on the road to mAsS aDOpTiOn. And sure, PayPal is a massive company, and this kind of does feel like some kind of endorsement, particularly on the back of Jack Dorsey’s Square buying $50m worth of bitcoin. But endorsement of what exactly, given that bitcoin’s raison d’être — its censorship-resistance — has been taken away? It all feels a bit funny to us. But unlike Nigel Green, maybe we’re just old relics.