back to article Bitcoin value jumps as PayPal says it will accept cryptocurrencies... once it has the kinks worked out

The value of Bitcoin spiked on Wednesday after PayPal said it would soon start accepting cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, through its online payment system. The announcement by its CEO Dan Schulman saw PayPal’s share price rise 5.5 per cent, indicating a pent-up demand for more …

  1. msknight

    A kick in the VISA

    I believe I read headlines recently about complaints at the cut that Mastercard/VISA were taking from transactions. If this upsets that particular apple cart sooner than the legislators can do it, then all... er... credit to them?

    I still don't own cryptocurrency and have no intention to at present, but I have noticed that prices for goods and services have risen uncomfortably lately, and I welcome a bit of turbulence and competition in the market place right now.

    1. DrXym

      Re: A kick in the VISA

      The fees from Visa are something like 1-2% of the transaction, depending on what the transaction is - it varies. That includes all the processing, security, fraud prevention / protection and some insurance.

      If you paid with cryptocurrency you'd get no protection or insurance whatsoever. Worse, crypto currency has a transaction fee baked into it to discourage spam transactions. And companies that take it will regularly charge you a "service" fee and a currency conversion / volatility fee on top too. And someone fool enough use one of those crypto currency apps that offers a debit card they'll get screwed twice - once from the app and its exorbitant processing fees and again from the Mastercard / Visa.

      So crypto currency makes a bad situation worse.

    2. Version 1.0 Silver badge

      Re: A kick in the VISA

      Try paying for something internationally with a bank wire transfer, it takes days and costs money.

      1. katrinab Silver badge

        Re: A kick in the VISA

        It takes about 4 hours to transfer € between my UK and Italian bank account, and doesn’t cost a single cent. Transferring £ between UK and Italy takes about 3 seconds and doesn’t cost a single penny.

        There’s currency conversion costs to convert between € and £ of about 0.2%. I can do that at either end before or after making the transfer, but that isn’t part of the transfer process.

        1. Roj Blake Silver badge

          Re: A kick in the VISA

          Will that still be the case after 1st January though?

        2. NATTtrash

          Re: A kick in the VISA

          We should be careful to compare apples and pears though. Most, if not all Europeans have a bank account and debit card, and the system is well established, regulated, and utilised. The fact that many in the US don't even have a bank account, transfer money through "wire services" and confuse debit with credit cards continuously, makes we can't compare situations. And thus these (in the eyes of many here) superfluous services are created all the time...

          But yes, you're right. Our intra-EU, international payments also go for 99% in real time, the rest within a day. Most of the time it's when I send something to acquaintances in the US when the real trouble starts.

  2. Anonymous Coward
    Anonymous Coward

    "cryptocurrencies" offer no advantages over money unless you are a criminal. Add to that the insane amount of electricty that generating them consumes just so that economically illiterate bedroom dwellers can "trade" it. It would be hard to outlaw such a crackpot product but it would be trivial to simply ban visa, mastercard, paypal etc from dealing in it.

    1. This post has been deleted by its author

    2. tony72

      I bought 1000eur worth of BTC a few years ago (at a bad time market-wise, I may add) just for fun, which I have intermittently traded (as in selling or buying maybe once a year if I notice the market is particularly high or low). I withdrew 1000eur in profit a couple of years ago, so anything I make now is gravy. My trading account is currently worth ~13000eur. Compared to the returns on my weekly lottery ticket and the premium bonds I was given decades ago, I'd say bitcoin has been a sound investment so far, wish I was brave enough to invest more than beer money in it.

      1. Graham 32

        So the only thing you have bought with bitcoin is another type of money. You are a currency speculator. Admittedly one who has done well so far. I sense you were meaning to disagree with the OP, but your post supports the argument there isn't much use for bitcoin.

        1. DRue2514

          I think Bitcoin may be better viewed as a store of wealth right now rather than a currency. With most countries around the world printing money like crazy it is hard to view cash as a long term asset. And compared with assets like bonds and shares Bitcoin has been relatively stable this year and stability is likely to improve with wider adoption and usage. Electricity issues and transactions speeds are being addressed and regulatory authorites are taking an interest. especially as central banks (BoE, ECB) are now planning their own digital currencies. A few years ago there was 'bitcoin' mania and yes very risky. However with any new 'thing' people tend to overestimate the effect in the short term but actually underestimate it in the long term. I don't see Bitcoin as a bubble and it definately doesn't fit the description of a ponzi scheme.

          1. Cynic_999

            Due to the effects of the pandemic, most currencies will see a huge devaluation in the coming months. As almost all currencies will be affected, the net result will not be as bad as it would otherwise be, but any exchange medium that is *not* affected so much by the pandemic will see a huge increase in value relative to fiat currencies. So in my opinion now would be a good time to invest in either cryptocurrency or precious metals (gold, silver, platinum).

            1. DS999 Silver badge

              You mean like the huge devaluation all the gold bugs were claiming we'd see after the money printing in 2008/2009 that never happened?

              People who believe what you do simply don't understand economics, particularly the part of about "velocity of money".

          2. Anonymous Coward
            Anonymous Coward

            it's useless as a store of wealth because the price fluctuates more than dona;d trumps mental state

          3. Jaybus

            It can be viewed much like gold or other precious metals. It is susceptible to volatile exchange rates driven by speculation, and this detracts from its use as a currency. This volatility means that it most certainly can result in a bubble, just as gold can.

      2. Lee D Silver badge

        I owned an entire Bitcoin at one point. It went nowhere for years, and even dipped. Hell, at one point there was a "Bitcoin tap", a website giving away fractions of a Bitcoin for free to anyone.

        I spent it in dribs and drabs. Other currencies came and went. I got more out than I'd put back in. I found the wallet file the other day, withdrew the last fraction.

        The problem with Bitcoin is not Bitcoin, nor value. It's converting the damn stuff. My original purchase was basically giving a stranger several hundred pounds and hoping they'd send me a Bitcoin. It worked, there were reputation-based websites but some guy on some mobile phone sent me a Bitcoin and I sent him something via a Barclays PingIt account that I had to set up especially. It was NOT anonymous.

        I gave parts of the Bitcoin to a handful of websites that supported such payment. Donations. Humble Bundles. Things like that. Spent most of it that way. Sure, I got value, but it was never "money".

        Then to convert that last fraction out to real money? It was impossible. Trust someone at random, then get queried by your bank because they have money-laundering requirements nowadays. Try to pull out direct to a card or account, and it's blocked because certain banks will not deal with known cryptocurrency dealers or websites in any way.

        In the end I found a site that would give me an Amazon giftcode for it, to the nearest £10. Again, literally sending Bitcoin to a site with no contact details and hope they send me a number of value, and that that number doesn't get flagged and/or block my Amazon account.

        Basically the only way to use or spend Bitcoin is to sacrifice your anonymity and take a chance - and that chance will be reflected in processing fees just the same as the chance of a credit card company having to refund the transactions on your card because the card was stolen.

        Sure, if you're willing you could have put £1000 into 1st class postage stamps and they'd be worth much more now, and still legally viable. Selling old stamps in those quantities isn't convenient or easy or without question, though.

        And, sorry, but to me and others €1000 or £1000 is nowhere near beer money, and they could not afford to gamble like that (and it is a gamble). And if you were to put that same money in Bitcoin today, likely you would lose money in the same time period.

        It's speculation gambling. Not a currency. It's a pain in the butt to buy, handle, convert, audit, or prove and that means at every turn you're under suspicion and up against obstacles using it. Paypal still have to abide - being an EU bank - by the same money-laundering regulations, so you sending Bitcoin to some random third-party via Paypal isn't going to be as simple as you think. Likely it would only work between authorised Paypal accounts with verified information, which basically means that the whole point of Bitcoin becomes moot, and you may as well have just used cash or card.

        Bitcoin isn't a currency. It's buying some diamonds and hoping DeBeers doesn't crash or get broken up. Sure, profitable if you're right. But it's not a currency in which to put your children's college money, and using it for day-to-day usage makes it just like any other currency.

        I'm a mathematician, computer scientist and programmer... I think it's an incredibly clever idea. I also think that it's also a very stupid thing to have as a currency.

      3. Anonymous Coward
        Anonymous Coward

        so all you have used it to buy is actual money, you are not an investor, you are a gambler. You are supporting my claim that is has no legitimate use case

      4. katrinab Silver badge

        But you are not using it to buy stuff, which is the whole point of a currency.

      5. To Mars in Man Bras!
        Thumb Up

        Glenn HODL

        You're doing better than me. About 4 or 5 years ago I bought a couple of hundred £££s worth every now and then over the space of about a year Mixed bag of cryptos. Total invested around £2000.

        I've never got round to trying the buying and selling and trying to make profit from the rises and falls of the market. I've just HODLed [as they say in crypto land].

        When the crypto boom of a few years ago happened my portfolio was, at one stage, worth just over £17,000. I decided to hold on 'just a wee bit longer' and see if I could get it to a nice round £20,000 and, of course, as is the usual wy with me and Lady Luck, the market crashed and I was back to where I started, within a few days.

        Since then my digital nest egg has fluctuated at much lower levels. It has gone as low as £1800 and as high as £6000 but never scaled those dizzy heights again. At the moment, on the back of the PayPal announcement, I'm hovering around £5200. I know I'll never see the heady days of £17,000 again but I'm hoping it might push up to around £7500. Then I'll be tempted to bail out and look on the bright side that I have at least tripled my initial investment in the space of about 4 or 5 years.

        BTW: I'm not a big lottery player. I'll buy a ticket the odd time, if there's a massive rollover or suchlike. To date my winnings over the entire period of the lottery's existence amount to precisely zero. So, my gamble on cryptos has thus far ben infinitely more successful.

    3. Cynic_999

      Trading bitcoin probably uses less electricity than trading with fiat currencies. *Creating* ("mining") bitcoin takes a fair amount of power, though I don't know how it compares to the amount of power required to make the paper/plastic or mine the metals to print or stamp the equivalent value of notes & coins. Especially considering that notes wear out and need replacing reasonably frequently (as do coins though less frequently).

      Your suggestion that bitcoin is only used by criminals is as wrong as suggesting that cash is only used by drug dealers.

      1. Anonymous Coward
        Anonymous Coward

        read what I said, I didn't say that it is only used by criminals, I said that the only advantages it has over money are ones that only criminals need. Lord knows why a law abiding criminal would use them, they are useless.

      2. katrinab Silver badge

        Bitcoin uses in the order of the entire electricity consumption of Ireland, to provide the equivalent of everyone in Ireland doing two transactions per month.

        If you paid for a Dublin bus fare with Bitcoin, it would use enough electricity to take that bus to Belfast and back.

        The Irish banking system uses a tiny fraction of the country’s electricity for a much higher volume of transactions. So it is not even remotely close.

    4. DS999 Silver badge

      The only advantages are for criminals as you say, and giving speculators another outlet to speculate on. Those who are worried about currencies losing value and want to protect their wealth would be far better off buying gold (or farmland, or other hard assets) than bitcoin.

      If the US government announced tomorrow they would block US financial institutions to from permitting transactions to buy/sell bitcoin, its value would drop through the floor instantly. There's no similar shock that can happen that would cause the price of gold or farmland to drop by 50% overnight.

      Its value is mostly being supported by ransomware victims forced to obtain bitcoin to pay off the ransom. No one buys products using bitcoin anymore - there were some articles years ago about random small shops like a bar or whatever that would take bitcoin, but the ridiculously high transaction costs make that a non starter for small items like a pint of beer. Those transaction costs keep rising, in a few more years it would only make sense to buy things on the price level of new cars with bitcoin.

    5. To Mars in Man Bras!
      Thumb Down

      Daily Fail Reader Alert!

      >"cryptocurrencies" offer no advantages over money unless you are a criminal.

      ..or unless you're one of those people who thinks that the state doesn't have a god-given right to know; where and who every penny you possess came from, where and who every penny you possess goes to and when and what every penny you possess is spent on.

  3. mark l 2 Silver badge

    Where as I welcome Paypal starting to accept cryptocurrency as it makes it easier for business to accept them and for customers to pay using them if a well know and trusted payment provider like Paypal is accepting them.

    I still do worry that the most common of these cryptocurrencies which is bitcoin is not actually being used to pay for goods and services but as an investment opportunity which is just getting hoarded waiting for the price to rise. And that can only eventually result in a the bubble bursting and a collapse in its value if no one is actually spending them.

    1. DrXym

      Well quite. It's basically a crowd sourced ponzi where waves of investors hype it up until they can attract the next wave and exit with a profit. It's not being treated as a currency and doesn't behave like one. It's so volatile that it lurches up and down by amounts that would destroy a regular economy.

      1. Anonymous Coward
        Anonymous Coward

        "It's basically a crowd sourced ponzi where waves of investors hype it up until they can attract the next wave and exit with a profit. "

        I think you're missing the whole "setup a crypto-exchange and disappear with the cryptocurrency" or "knock over an existing exchange" if you don't feel like going to the effort of setting up an exchange and disappearing off the face of the earth.

    2. DS999 Silver badge

      What business would accept bitcoin with its punitive transaction costs, and the possibility the bitcoin they accept for payment in the morning could be worth 10% less after lunch?

      I'm willing to bet Paypal has some deal with a bitcoin exchange so they can get a set exchange rate to provide to the customer buying something in bitcoin and immediately offload the bitcoin for cash. The only reason they are doing this is because there are probably enough bitcoin investors in the US who want to figure out how to unload their stash without paying taxes on it, and figure by using it to buy stuff on eBay or other sites that accept Paypal they can slowly drain down their stash without the sale being reported to the IRS.

      1. katrinab Silver badge

        If you want to hide stuff from the IRS, Paypal is not the way to do it.

  4. Anonymous Coward
    Anonymous Coward


    What could go wrong?

  5. Anonymous Coward
    Thumb Down

    "The Kinks" being ownership

    PayPal will happily sell you Bitcoin, but the problem is that you don't actually own the coins in your PayPal wallet; they are owned by PayPal.

    From PayPal's Cryptocurrency FAQ:

    Will I get a private key for the Cryptocurrency I buy on PayPal?

    You own the Cryptocurrency you buy on PayPal but will not be provided with a private key.

    If you don't have the private key to your Bitcoins, then by definition, you don't own the coins.

    1. Graham 32

      Re: "The Kinks" being ownership

      It's like a bank then. The blockchain might not consider you the owner. Ownership is more a legal concept.

    2. MatthewSt

      Re: "The Kinks" being ownership

      So this is no different from all of the other "exchanges" out there. I suppose as they deal in real money too, PayPal are less likely to get hacked or go bust shortly after losing everyone's coins at least!

    3. To Mars in Man Bras!

      Re: "The Kinks" being ownership

      Yes. My initial "Oh this is good for cryptos!" reaction to the PayPal announcement quickly gave way to wondering what the catch was.

      Given that PayPal won't even let you [for example] withdraw your own Euros to your own bank account held in Euros, if you live in UK, without hitting you with a usurious double currency exchange fee*, I wasn't expecting their crypto dealings to be any less user unfriendly. And, reading the detail of their announcement pretty soon confirmed this.

      From a purely selfish point of view, as a holder of a few cryptos, I'm just hoping that enough people won't bother to read the 'small print' for long enough to keep the momentum of this upturn in the crypto market going for a bit yet.

      *[and don't even get me started with trying to get dollars out of your non-US PayPal account, without being right royally shafted.]

  6. Pascal Monett Silver badge

    Only one good thing to come from this

    "allow its users to buy, sell and hold cryptocurrencies "

    That is one thing that could finally wipe the slate clean of all the criminals and incompetents that are holding this market today.

    I am expecting PayPal to give serious thought to security and transaction control in this wallet implementation, so that hacking them will become extremely difficult, if not impossible. That, plus the fact that PayPal cannot simply leave with the cash, means that other exchanges of dubious honesty (ie all of them, at the moment) will see a market downturn in the number of idiots customers trusting them with their funny money.

    Also, I expect PayPal to not put extortionate costs on transactions, meaning acquiring and spending funny money will become more normal, like with any other debit card.

    So I welcome this move from PayPal. Not that I'm going to embark on a journey into funny money, but because I view this as the taming of the shrew. Things are going to calm down on the funny money shenanigans and that can only be a Good Thing (TM).

    1. find users who cut cat tail

      Re: Only one good thing to come from this

      > I expect PayPal to not put extortionate costs on transactions

      Really. Well, in such case you might be also interested in this very fine bridge…

    2. DS999 Silver badge

      Re: Only one good thing to come from this

      How are they going to avoid extortionate exchange costs when bitcoin has far worse exchange costs than Visa or MC charge (unless you are buying stuff that costs thousands of dollars)

  7. Rol

    My enemy's enemy....

    I think Bitcoin will find itself making several home runs, in light of China recently announcing it's own digital currency.

    Although Washington may not be fully onboard with crypto-currency, it will damn well make sure if the world is going to adopt one, it's not going to be China's version.

    1. DS999 Silver badge

      Re: My enemy's enemy....

      They sure as hell also would make sure it won't be bitcoin. If the US wanted a digital currency, they'd create a digital dollar.

      We'd probably already have it, but the Visa/MC lobby will fight to the death to preserve their transaction income. But the idea they would go with bitcoin over rolling their own is probably the most ridiculous and ill informed idea I've ever read in the comments on this site.

      1. Rol

        Re: My enemy's enemy....

        Why reinvent the wheel when a perfectly satisfactory one already exists and is already agreeable to many?

        1. Claptrap314 Silver badge

          Re: My enemy's enemy....

          Because "many" does not include the incumbents in the rival space?

  8. Anonymous Coward
    Anonymous Coward

    "even as the banking industry worries about potential abuse."

    Translation: The banking industry is scared shitless about losing its grip over humanity that its held for centuries.

  9. Anonymous Coward
    Anonymous Coward

    "It may make things slightly easier and slightly cheaper to pay with a crypto currency but no one sensible is going to put their savings or business accounts into something that remains extremely volatile."

    While I understand full well (and who wouldn't, apart from people who have lived under a rock for the last decade ?) the volatile aspect, I absolutely don't get the point about easiness of use ...

    How is it difficult to buy online with a modern bank account ? Bank web site -> generate fixed money allocation e-card -> perform 2 or even 3 FA -> you got the e-card number -> you pay online, et voilà. Minutes after, money is transferred and e-card is now obsolete (no more money allowance).

    I'm paying telco bills every month like this ! Very easy and unbreakable when it has 3 FA:

    1- account number + passwd

    2- use once number on a private paper card

    3- final go on your smartphone app with finger print auth + another password

  10. GBE

    This isn't going to end well.

    The interesting part is trying to guess just how this is going to go sideways...

  11. YARR

    Fools and their money

    Since when did “cryptocurrencies” officially become currencies rather than assets (subject to capital gains tax) ?

    Conventional currencies can easily be used for online purchases, they can be just as virtual as cryptos.

    What “clear advantages” do cryptos have?

    “financial inclusion and access” - conventional currencies can be used with ease both online and offline. There is no artificial scarcity to skew value in favour of early adopters. = Win for conventional currencies

    “efficiency” - electronic conventional currency uses minimal energy to create or trade. Many crypto’s waste energy on expensive calculations whose results have no obvious utility = Win for conventional currencies

    “speed” - updating a centralised bank account is faster than updating a distributed ledger = Win for Conventional currencies.

    “resilience” - judge for yourself how resilient banking IT systems are compared to crypto exchanges. How often have people lost their money / investment in each system? How many crypto wallets are now irrecoverable?

    Most cryptos have 0 intrinsic value, most conventional currencies were originally backed by precious metals, then later by the assets they are loaned against.

    One reason cryptos are unstable is because if there is a big sell-off, there aren’t enough buyers willing to part with large amounts of conventional currency for them. Most holders of large amounts of cryptos are long standing investors who bought them when they were cheaper. Hence the true “dollar value” is never really tested.

  12. MachDiamond Silver badge

    Your ownership is public

    If you "own" BTC through PayPal, that information is discoverable. It may become required that banks and quasi-banking companies report crypto-currency holdings to the tax authority if they exceed a certain amount just like they do for large deposits and withdrawals. I don't see the advantage of having it if it isn't confidential. If I keep a wodge of bank notes tucked away somewhere, it would have to be physically found in a search rather than something online that could be reported just by the asking. How difficult would it be for a law to be passed that crypto accounts have to be reported just like a foreign bank has to report accounts held by US persons to the IRS? That obviates the need for subpoenas, search warrants, etc.

    The massive amount of power needed for crypto is rather obscene. It also means that power and internet are required for transactions. If either are down, you are cut off from your funds the same as if all of your money is in a bank account that you access with a debit card. I can recall a couple of instances in my town where the internet was down and if you didn't have cash, you weren't going to be buying anything since there is one high speed company. The landline telco is dying and DSL isn't sufficient for business so nobody much uses it. If they were smart, the telco would have been adding fiber along side their copper lines and going from voice services to data, but they'll likely be naught be a memory in another couple of years. I have the feeling they are subsisting on government contracts and grants.

  13. mix

    Let's barter with some shells shall we?

    Digital currency is happening in our lifetime. Our children will be the first true users as they will accept it as the norm, there are already "stablecoins" which are designed to stay at the same price as the currency they replicate. The innovation in the space is revolutionary and extends much further than Bitcoin. Yes, there are pitfalls but who remembers the early internet, it was a mess.

    We are now ten years into a digital currency revolution, major banks and corporations are doing their best to understand it and catch up. The truth is, it's too late to stop it. Reading a lot of comments in here proves that the majority of people still don't fully understand the sea change that is happening. This is like the early internet where people didn't quite "get it" and there were very few users. Jeff Bezos had to explain the internet to his prospective backers.

    Whether you like it or not, this is the future. Simple example, when the human race gets adept at interstellar travel, what will be the store of value? Moving/mining precious metals? Highly speculative and expensive to transport. You'll be able to send digital currencies via most networks.

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