The announcement of PayPal on bitcoins, Christmas before its time for the cryptocommunity?

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L’ad at the end of October that PayPal was about to enter the crypto ecosystem, sparked a chorus of backlash and applause from the cryptocommunity. In the wake of its first announcement, PayPal announced plans to acquire crypto companies to expand its services, but also to open its services to CBDCs – future digital currencies issued by central banks. The announcements of this kind have followed one another making the bitcoin price jump… PayPal: future crypto giant?

If indeed at first glance this announcement is excellent news that moves the debate around cryptos forward in the right direction, it is nevertheless advisable to take a step back on these announcements.

US account holders will be able to buy, sell and hold crypto in their PayPal wallet. Other regions of which Europe is expected to follow in the first half of 2021. The main function of the service is to allow customers to invest in cryptos, use them as a store of value, and then convert them to fiat in the PayPal system. and only then use them as a means of payment. Customers should be aware that PayPal thus imposes a real monopoly on the conditions of acquisition and use of bitcoins.

Read also: Buy your jewelry with Bitcoin thanks to Courbet and Lunu.

For starters, PayPal will not allow the use of cryptos already owned by the customer – it is not possible to transfer assets to their account or withdraw cryptos from the account to transfer them to other crypto wallets. It is also not possible to interact with third-party wallets. Summum of this centralization, the customer does not have the freedom to directly access his crypto account (no private keys)!

The system works in a vacuum, so to speak. Logical continuation of these first characteristics: to make purchases in crypto, the customer must first acquire cryptos through PayPal, at its price conditions. This can lead to exchange rate losses. Also, when paying in crypto, immediately before payment, the cryptos will be converted to fiat at a fixed rate from PayPal. This can again lead to exchange rate losses. In addition, the commission that PayPal charges merchants for the use of its crypto services is 1.9%, which is not cheap … For comparison, at Lunu, for the same service we charge 1%.

We are therefore far from a democratization of payments in cryptos or cryptos more broadly, but more on a monopolization of this technology, by a private operator who centralizes for commercial purposes – everything that is more distant from the philosophy

This article is signed Vadim Grigoryan, partner and marketing director of Lunu, and does not necessarily reflect the opinion of the editorial staff. Lunu specializes in cryptocurrency payments for merchants and individuals on-site and online.


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