PayPal will bring cryptocurrencies into the accounts, first for US customers, then also for Europe. In principle, PayPal forms thereby its Sidechain, which has the potential to scale Bitcoin to hundreds of millions of commercial transactions on the day.
Pretty much all of you will know PayPal, and many of you have already read the message of the day somewhere else. So I will be brief about one of the most important news of the year:
PayPal will integrate cryptocurrencies. In the coming weeks, US customers will be able to buy and sell Bitcoin, Ether, Bitcoin Cash, and Litecoin in their PayPal account. The offer will reach selected international markets during the first half of 2021. Due to the regulatory environment, the chances that Germany will be among them are slim.
Furthermore, PayPal users will also use the cryptocurrencies in their wallets to pay at online stores in the PayPal checkout from spring 2021.
However, one must add that PayPal does not “really” sell cryptocurrencies. The users are neither able to export their private keys nor to pay out the coins. They can only hold, sell and, from 2021, pay on the Internet with it. Not even the transfer to other PayPal users is planned. Thus PayPal does not sell cryptocurrencies, but only an investment product whose value is linked to cryptocurrencies and which can be used as a voucher to pay on the Internet — but only in stores that also use PayPal.
Under these circumstances, it can be assumed that online stores will not accept payments with cryptocurrencies to their addresses, but only for their account. It might not be possible to pay with their wallet, but only with their PayPal account.
PayPal includes thus the Bitcoins and other Kryptowährungen in the own ecosystem. This might relax both the regulatory situation in the USA and come to meet PayPal’s business interests. After all, it is not on the part of the company to open its ecosystem.
PayPal becomes what Blockstream’s Liquid, Lightning, and every other Sidechain has always wanted to become: A “second layer” that uses Bitcoin, but not the blockchain. Presumably, PayPal will hold the appropriate amount of coins, but it can be assumed that when paying in an online store, the transaction will not take place on the blockchain but in PayPal’s database.
Of course, this Sidechain of PayPal is the most intransparent, centralized, and unfree Sidechain you can imagine. In all probability, however, it will become the most successful Sidechain by far and has the potential to scale crypto currencies to hundreds of millions of everyday, commercial, and almost toll-free transactions.
This prospect naturally inspires the market. The prices of both Bitcoin and Ether rose in the course of the past 24 hours by scarcely 5 percent — Bitcoin briefly exceeded the 13,000 dollar mark — while Bitcoin Cash increased by more than 6 percent and Litecoin even clearly more than 10 percent.
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