If you’re reading this on this website, you’re undoubtedly aware that bitcoin has been in a rough patch. The cryptocurrency has struggled for much of 2018, which is particularly disappointing to some proponents and investors following its late-2017 takeoff. Many are still of the belief that bitcoin will climb toward the end of the year, but at this point that doesn’t seem the case. It’s always been a difficult market to predict. Given that we know how a bullish bitcoin market can look however, it’s interesting to think about what might be holding it back from more sustained strength. And as a point of interest, PayPal feels relevant in this conversation.
Incidentally, former PayPal CEO Bill Harris recently had some harsh words for bitcoin and cryptocurrency in general, stating that it’s useless as a payment mechanism and ridiculous as a store of value. There are plenty of crypto critics who will quickly agree with Harris, and he may be proven right in the long-term. His comments clash with the actual value of bitcoin, even now, however, and invite comparisons with PayPal. In this case, we’re wondering – would bitcoin be more useful as a payment mechanism or less “ridiculous” as a store of value specifically if PayPal weren’t in its way?
The clear benefit would be in retail. We think of bitcoin in fairly complex terms at this point, and the more we consider cryptocurrency in general the more complicated the picture gets. In a very fundamental way though, these currencies were created to provide an easy and reliable means of digital payment. Unfortunately, that’s what PayPal has already done for a long time. Naturally there are plenty of other differences between the two methods, but this is where serious bitcoin proponents sometimes have a hard time putting themselves in the shoes of beginners. For a lot of people, they’re essentially two competing means of making digital payments – and PayPal has almost all of the retail utility on its side. Were it not an option, bitcoin could conceivably expand further into more useful retail areas, with more people tempted to adopt it to make online finances more convenient.
On a similar note, there’s something to be said for the online gaming and casino business. Serving tens of millions of customers across international borders, this is a huge industry, and one in which lots of gaming platforms now accept PayPal transactions for deposits. As it happens, a few platforms – typically smaller ones – have also started accepting bitcoin and other cryptocurrencies. And as with retail this only makes one wonder what would happen if PayPal hadn’t gotten there first. Without PayPal’s availability at online gaming sites, there could be more demand for bitcoin, and thus more adoption.
Another space that’s emerging as something of a battlefield between payment processing and alternative currency is alternative banking. PayPal is leading the way in a race of processors determined to offer traditional banking services, encouraging people to take their finances into their own hands. Things like direct deposit, debit cards, and more help PayPal to more or less replace personal banks in a lot of cases – which isn’t in direct conflict with bitcoin, but which does theoretically negate some of its utility. Because it’s billed as an alternative to fiat currency, cryptocurrency itself can function as something of an answer to those who would prefer not to be at the mercy of their banks. With PayPal and some of its counterparts already providing outlets for this though, bitcoin isn’t exactly in first place as a choice for people who want to detach from banks.
This is not to say that bitcoin would automatically thrive without popular payment processors. It does seem however that PayPal is at least partially blocking its growth in a few areas.