PayPal now enables users not only to buy cryptocurrencies, but also to send them freely. This makes PayPal a real crypto wallet. So far, this has only been possible for US users – but it is still a victory for an open ecosystem.
It’s amazing how important it can be when a company does what is actually a matter of course. PayPal announces that it now “supports the native transfer of cryptocurrencies between PayPal and other wallets and exchanges.” This has been the top user request since PayPal began offering its customers the purchase of Bitcoin, Ether, Bitcoin Cash and Bitcoin in the fall of 2020 to offer Litecoin.
We Europeans are still waiting for PayPal to allow us, as promised, to buy and store bitcoins. But you can still celebrate the announcement. By “allowing customers” to flexibly move crypto assets into, out of, or within the PayPal platform, PayPal demonstrates “the ongoing evolution of our best-in-class platform and enables customers to connect with the broader crypto ecosystem.” to interact.”
It’s banal, yes: a wallet is a wallet and allows money to be moved. But you still have to realize how little banal the announcement actually is. PayPal has always been a “closed garden”. When you deposit money, you can move the money back and forth between PayPal accounts, but to get it out you have to transfer it back to the bank account.
As long as PayPal only dealt with fiat money, this closed model seemed sufficient, maybe even useful. Credit cards do the same thing, so probably nobody asks questions. When PayPal began to sell cryptocurrencies , the company initially also, as a matter of course, relied on the closed-garden approach: You could buy Bitcoin, save it in your PayPal account, send it to other PayPal users and pay where you can PayPal can pay. But you can neither receive nor send bitcoins. Buying is the only way in, selling is the only way out. PayPal was a broker’s Bitcoin sidechain, much like the northern Italian giro banks from the 15th century with gold and silver.
Apparently, the natural openness of cryptocurrencies is now breaking PayPal’s closed shell. One could say that PayPal threw off the mindset of medieval banking only through Bitcoin, but that is perhaps a bit too much. In any case, having received a full-fledged BitLicense in New York, the company is committed to “responsible innovation” in crypto as part of full compliance with regulation. “The option to send and receive cryptocurrencies is the next step in our journey to building a more inclusive and effective financial system.”
PayPal has accepted its position: Bitcoin does not need the payment service provider, but it does need Bitcoin to continue its mission. Not PayPal can change Bitcoin – by locking coins in a PayPal sidechain – but Bitcoin changes PayPal. That’s why the news outside the USA has hardly any practical, but all the more idealistic added value.