Online payment platform PayPal broke the news on Oct. 21 that it will start allowing customers to buy and hold bitcoin and other cryptocurrencies in its digital wallet. PayPal customers will also be able to make purchases using cryptocurrencies. Bitcoin prices rose by about 5 percent following the announcement.
PayPal decides to accept bitcoin
So far, PayPal is one of the largest U.S. companies to embrace cryptocurrencies like bitcoin. The move will likely benefit bitcoin and other cryptocurrencies by broadening the scope of cryptocurrency use in the marketplace.
Other mainstream companies, including Square Inc. and Robinhood Markets Inc., have already started accepting cryptocurrencies.
In the press release, PayPal president and CEO Dan Schulman said, “The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly.”
PayPal and cryptocurrencies
Paxos Trust Company, a cryptocurrency firm, will partner with PayPal to provide the new service, according to Reuters. The first cryptocurrencies accepted on the PayPal platform will be ethereum, bitcoin cash, and litecoin.
PayPal customers in the U.S. will be able to access crypto services in the coming weeks. However, cryptocurrency payment options won't be available until early in 2021, according to CNN.
Bitcoin will be available on Venmo
PayPal, which owns the popular peer-to-peer payment app Venmo, plans to extend its cryptocurrency services to Venmo early in 2021, according to Reuters. At that time, bitcoin and cryptocurrencies will become available through PayPal in some other countries as well.
Bitcoin prices got a boost
Bitcoin prices increased by 5 percent on Oct. 21 after PayPal's news broke. As of 8:44 a.m. ET on Oct. 21, bitcoin was at $12,871.05, according to CoinDesk.
Reuters also reported that bitcoin being accepted by a company as large as PayPal will be benefit bitcoin prices. Joseph Edwards of Enigma Securities, a London cryptocurrency brokerage exchange, said, “The price impact will be positive overall.”
How is PayPal stock today?
PayPal processed $222 billion in payments during the second quarter of 2020, according to Reuters. PayPal stock closed at $213.07 on Oct. 21, which was an increase of 5.5 percent. In pre-market trading on Oct. 22, the price changed slightly to $213.20.
How to buy bitcoin
In order to buy bitcoin, you need to set up a digital wallet that enables bitcoin access and usage. You will connect the digital wallet to an account like your bank account or credit card.
Being on a decentralized system, you can send or receive bitcoin from anywhere worldwide. On a cryptocurrency exchange or an online marketplace, investors can buy, sell, or hold bitcoins. For example, Robinhood's trading platform allows individuals to invest in bitcoin.
Reuters noted that cryptocurrency can be risky for merchants and shoppers. Cryptocurrency transactions tend to be slower and more expensive than other payment systems. However, it also stated that PayPal “will be managing the risk of price fluctuations.”