PayPal's support shows bitcoin can be used for payments
As digital assets gain increasing levels of traction among major institutional players, it is clear that we are entering a new phase of adoption in the asset class.
One of the most often touted criticisms of bitcoin is: “What can you do with it–you can’t spend it, so why should anybody be interested?” The same argument can be used to dismiss gold as a useless rock, despite the fact that it has been a stable store of wealth for thousands of years, and is increasingly hoarded by the world’s central banks as a monetary asset.
Bitcoin has been making major inroads into the store of wealth narrative as “gold 2.0,” or “digital gold,” even with legendary macro investors like Paul Tudor Jones recommending in his most recent investor letter that investing in bitcoin offers a compelling hedge against inflation. The widely reported story last week that Paypal and Venmo may offer bitcoin later this year could finally end the “you can’t spend it” argument. If confirmed, it would mark both a significant reversal in the payment giant’s previous stance towards cryptocurrencies and could be the long-awaited catalyst for mainstream adoption of bitcoin both as a store of wealth and a payment vehicle.
There are other clear takeaways from the PayPal and Venmo news: firstly, crypto has a new on-ramp that will provide access to their 325+ million users. If the rumors are indeed true that the payments giant will only be offering bitcoin then this will likely be a game changer for Bitcoin and will likely, at a minimum, set a floor on bitcoin’s price, and more than likely set the stage for a much higher and sustainable move in bitcoin’s valuation.
The news offers another affirmation that traditional payment players can no longer ignore the potential business opportunity presented by crypto, and are now even willing to risk disrupting their own fiat based platforms. Evidently, PayPal has seen the success Cash App has had with crypto and wants a piece of the pie, and may view Venmo as a potential means of building a similar, sustainable business model.
With Facebook’s Libra expected to launch in 2020, and now PayPal jumping into bitcoin, the payment space is on the cusp of a huge shake-up. In 2017, retail “fear of missing out” was the theme that drove the general public into crypto markets and saw a climactic push in bitcoin’s price towards $20,000. The interesting question now is: are we on the edge of an institutional fear of missing out that will deliver ubiquitous access to crypto?