Less than a week ago, PayPal made waves in the cryptosphere as it announced that customers would be able to buy, sell and hold bitcoin and other virtual coins using their online wallets.
The company also announced that starting in early 2021, customers would also be able to use their crypto to shop at the 26 million merchants on its network.
This is big news for Bitcoin, so we decided to look back at PayPal’s history with crypto to fully understand the significance of these headlines.
In the Beginning
The PayPal story begins in April 2013, when CEO John Donahoe mentioned in an interview that the company was considering ways to implement bitcoin into their digital transaction network. He said that he had personally been watching bitcoin very closely and expected virtual currency to stay for good.
At the end of 2013, PayPal had 143 million active registered accounts and $6.6 billion in revenue and the news brought potential to the bitcoin economy. For the company, the interest was certainly there – but it was considered exploratory at best – with nothing yet set in stone.
This interest was cemented in September 2014, when Braintree, a PayPal-subsidiary announced that it intended to release a software development kit that would allow merchants to add bitcoin to their existing payment methods.
Later that month, PayPal itself announced that it was partnering with BitPay, Coinbase and GoCoin to allow its merchants to accept cryptocurrency for digital goods like online games and downloadable songs. It stopped just short of integrating bitcoin into its digital wallet or payment processing services directly.
In Feb 2019, the company’s CFO, John Rainey explained their stance saying:
“Given the volatility of bitcoin right now, it’s not a reliable currency for transactions because if you’re a merchant and you have a 10% profit margin, and you accept bitcoin, and the very next day bitcoin drops 15%, you are now underwater on that transaction.”
PayPal followed the interview by submitting a patent application for an “Expedited Virtual Currency Transaction System”.
The patent aimed to reduce the time it took for payments to be processed avoiding the need to wait for a transaction to be included in the next block on the chain.
“In many transaction situations, a 10 minute wait time will be too long for payers and/or payees, and those payers and/or payees will instead choose to perform the transaction using traditional payment methods rather than virtual currency. Issues like this have slowed the adoption of virtual currencies despite their advantages. Thus, there is a need for an expedited virtual currency transaction system.”
Want to learn more about the PayPal story? Click here to read about what PayPal means for crypto in the future.