PayPal announced on Wednesday that it will allow customers to hold cryptocurrencies in their online wallets. This means that account holders will then be able to shop using Bitcoin and other virtual coins at the 26 million merchants on the network.
This move makes PayPal one of the largest U.S. companies to provide consumer access to cryptocurrencies, and one which they hope will encourage wider adoption of virtual coins as viable payment methods and prepare its network for new digital currencies that banks and companies may develop.
What is cryptocurrency?
A cryptocurrency is a digital or virtual currency which is used as a medium of exchange. It is similar to real-world currency but for the fact it does not have any physical embodiment and uses cryptography, which makes it nearly impossible to counterfeit or double-spend.
The first blockchain-based cryptocurrency was Bitcoin, which remains the most popular and most valuable. Today, there are thousands of alternate cryptocurrencies with various functions and specifications.
In a recent blog post, we explored cryptocurrencies and how they’re being used in money laundering. This move brings crypto into the spotlight and will surely mean tighter regulations incoming.
What does this mean?
Cryptocurrencies have remained a niche payment method up until now, partly down to the rapid change in prices they can experience compared with traditional state-backed currencies.
But PayPal President and Chief Executive, Dan Schulman said in an interview, the company hopes this will “encourage global use of virtual coins,” and ready its network in anticipation of digital currencies being developed and issued by banks. “We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role.”
Following the announcement, Bitcoin prices rose above the $12,000 (£9,170) mark, suggesting that investors agree this is a significant milestone on the path to mainstream adoption of cryptocurrencies.
Bitcoin, along with Ethereum, Litecoin, and Bitcoin Cash (a spin-off from Bitcoin) will be the first cryptocurrencies added to the platform. All could be stored “directly within the PayPal digital wallet”, the company has said, and then used to spend at the 26 million merchants on the network.
“This is a significant step in the evolution of cryptocurrency and how it is perceived by the global market and another step in the direction of creating a more inclusive financial world,” said Pamela McLoughlin, Head of Digital Money & New Ventures at Hello Soda. “Given the increased awareness of crypto and opportunity for fraud, it is important to make sure the necessary regulatory checks are in place and part of an automated onboarding journey.”
How we can help
With wider adoption of cryptocurrencies, you need to make sure your onboarding process is robust, compliant and efficient.
Here at Hello Soda, we provide a range of solutions and specialise in cryptocurrency KYC checks. We offer global verification that takes seconds and all of our solutions are available via our single API, Sodium.
Utilise a single element or multiple processes – it’s entirely up to you. Learn more about how we can help to automate and simplify your verification processes to help you to learn more about your customers.
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