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Uh oh… Does the new relationship between PayPal and bitcoin come with a catch or two?
What Kind of Trick Is PayPal Pulling?
Earlier in the week, PayPal announced that it would allow users to purchase items and services with cryptocurrencies such as bitcoin, bitcoin cash and Litecoin. The crypto world celebrated the news and took it as a sign of bitcoin’s growing mainstream status. They were now being given permission to use bitcoin in one of the world’s biggest financial settings, and nothing was going to get in their way.
Following the announcement, bitcoin incurred a series of heavy price rises that have since taken it beyond the $13,000 mark at the time of writing. However, analysts are advising users to read the fine print when it comes to using bitcoin via PayPal, and they say the situation is not all it’s cracked up to be.
According to the rules of the new relationship, people will not be allowed to transfer their bitcoin or crypto into or out of their PayPal accounts. This raises serious questions about how the digital money should be spent. Does everyone have to pay for items through cryptocurrency exchanges or outside wallets? If so, then the money is not really being utilized through PayPal the way cash or cards are.
In addition, users will not be given control of the private keys permitting crypto transactions. These will remain in the hands of PayPal executives. This creates an even bigger problem in that bitcoin and crypto are designed to give users financial freedom and independence. This method of operation is far more similar with that of a standard financial institution, and it goes against the very notions of what bitcoin and its counterparts were built for. We can use bitcoin, but we’re not in control of it…
Not Entirely Clear or Straightforward
This has created a lot of tension in the crypto community, with Satoshi Labs – the company behind the new Trezor wallet – taking it to heart and telling all of its users to avoid utilizing bitcoin via PayPal through a new blog post. The entry reads:
Do not use PayPal for bitcoin. There are many other places to buy crypto which will let you keep ownership of your coins. PayPal is conceding to bitcoin, and the many other aspirational, educational projects within the community should be highlighted to prevent newcomers from falling into a trap of trusting one of bitcoin’s greatest long-term adversaries.
The blog seems to imply that PayPal simply felt pressure to permit bitcoin purchases considering how big and resilient the currency has gotten in recent years, but that it doesn’t necessarily understand it or appreciate it. In addition, the “adversary” the blog refers to is PayPal CEO Bill Harris, who in 2018, referred to bitcoin as the “biggest scam ever.”