This is not a BitPay competitor until PayPal allows users to deposit cryptocurrency. Until then it is a closed loop system, users and merchants cannot yet deposit or withdraw crypto itself, similar to Robinhood.
Highly disappointed that Square (Cash) has not launched a BitPay competitor and still only supports Bitcoin. They’ve allowed BTC deposits and withdrawals for years (with great UX!) yet are lagging far behind in release cadence.
The biggest barrier to spending crypto is still finding merchants that accept it, even through third parties. PayPal’s huge merchant userbase will allow dominance if/when they flip the switch to an open loop, “deposit your crypto” approach.
Only PayPal and Stripe can flip that switch at scale with a hosted checkout experience. Merchants don’t care how a user paid, they want fiat.
If paypal allows people to deposit their crypto and pay merchants in fiat, you can be sure that they’ll quickly become the biggest seller of bitcoin out there. With the illiquidity of the btc => usd conversion, they’ll have to pay the merchant before selling the btc, which means they’ll have to take a huge margin to cover potential slippage.
No one wants to be the guy who sells bitcoin on a massive scale.
> With the illiquidity of the btc => usd conversion, they’ll have to pay the merchant before selling the btc, which means they’ll have to take a huge margin to cover potential slippage.
Bitcoin sell liquidity is currently $162MM USD on Bitfinex at 0.5% slippage. Buy liquidity is $543MM USD (at 0.5% slippage). For comparison, the sell liquidity on Coinbase Pro at the same slippage is only $4.5MM USD.
My site https://cryptomarketdepth.com/ tracks the liquidity of various cryptocurrencies over time (for the exchanges: Binance, Bitfinex, Bitstamp, Bittrex, Coinbase Pro).
The problem isn't volume, it is latency. It can take 30m for a btc transaction to settle. That's a nontrivial amount of volatility to exposure yourself to.
I am probably way out of my depth here. But if Paypal or Square have a large enough market/volume of transactions couldn't they act as their own market maker, settle immediately internally? Kind of like the whole storm over Citadel GME. And then also not have to pay the BTC fees?
That'd require them to hold your Bitcoin for you, so they could just move some from one person to another. Isn't that counter to the Bitcoin philosophy?
I believe that’s what they do currently. I made the mistake of buying some LTC recently on PayPal. Turns out you can’t actually send it to any other LTC address ... your options are only “buy” and “sell”.
Ideally everything would be self hosted p2p btcpayserver like technology. But mass adoption requires some compromises. Not everyone wants to self host and self custody, and if you’re willing to compromise a little on that you can have massive UX gains, especially if you’re looking to swap to fiat on either end anyways. As long as you retain the ability to self custody your currency should you desire, it’s not even that big of a compromise IMO.
Can't they sell before confirmation? Probably on the order of 99% of transactions that propagate to the whole network with a sufficient fee end up being confirmed, and that only takes a few seconds to happen.
I would go further to say that for a large portion of merchant transactions, confirmations are a non-issue. It is not trivial to pull off a double spend and no one is going to do it for a cup of coffee. The miniscule number of times that it might happen could be written off as the cost of doing business, the same way the big credit card companies quietly eat all the credit card fraud that happens.
Also, and I could be mistaken, my understanding is the double spend can only happen when the person trying to double spend controls the private/public key to the coins. Normally when you deposit crypto in an exchange (or this hypothetical Paypal wallet) you lose that access and your balance is just a row in a database while "your" coins are swept into a large hot/cold wallet run by the service you are depositing into.
This is correct. Customer double spend risk is not what’s ring discussed here. The risk is PayPal losing money on the spread. A user buys a pair of shoes with bitcoin, PayPal pays the shop owner fiat and takes ownership of the bitcoin. Now PayPal is on the hook for selling that bitcoin if they want to keep their cash flow in fiat. The price of bitcoin can move wildly in the time it takes for a Bitcoin transaction to settle. In reality PayPal is a huge company and can sell to many brokers who will take on the risk for PayPal.
Then use the lightning network, it's really what should be used for smaller payments like this anyways. You don't pay for coffee with a wire transfer, for the same reason you shouldn't be using layer 1 for small everyday purchases like this.
But you need dollars on the other side. For this to work without PayPal hosting the BTC you need the following:
1. You send BTC to PayPal
2. PayPal sends equivalent dollars to the merchant.
But what is "equivalent"? What is the price of BTC at any given moment? It fluctuates a lot and you can't "lock-in" a price without waiting minutes (as opposed to milliseconds in other financial systems). So between the time that you sent dollars to the merchant and when you sold the coins you are exposed to risk of holding BTC.
That's a fair point. In order to use lightning, PayPal would either need to hold some BTC in reserves on layer 2, or work with an exchange that accepts lightning transactions.
That's not true at all. You can perform lots of transactions over lightning, and settle with a single on chain transaction. The money clears instantly, and is not at risk, even if you keep the funds on layer 2.
No, the previous comment was correct, in that an open lightning channel balance is inherently at risk, if you're wallet software isn't monitoring that the lightning nodes you're dealing with follow the protocol. If a node broadcasts an older HTLC transaction to bitcoin's main chain and your software isn't watching, you may loose some/all of your channel balance.
> It's like using a personal check - until the bank clears it you're at risk.
Which is 100% not true, it's not like a personal check. You are only at risk if:
* your counterparty decides to try and cheat you (despite knowing they will lose even more money if they attempt to screw you and you notice, so some game theory is involved)
* you are not watching onchain for a period longer than the monitor period (typically several days)
* you have not elected to have someone else monitor on your behalf (in exchange for a small cut of the "profits" if your counterparty tries to cheat you)
My point being - it's nowhere near the same as a personal check.
> Bad actors exist and will do this with checks or lightning, game theory applies to both
It does, but with lightning, as long as you are watching the chain periodically, you are guaranteed to not lose money. The same cannot be said for checks.
> It doesn't matter if you're watching the chain, you've already transacted with the buyer
It does matter if you watch the chain - this is how you determine if your counterparty is trying to close out the channel with an out of date state (at which point you can submit an onchain transaction that corrects the problem + collects a penalty from your counterparty).
> 3P Escrow is not unique to Lightning and is sometimes used with checks too
Watchtowers are not anything like escrow. It's simply allowing a third party to submit penalty transaction iff your counterparty attempts to submit an out of date state. They do not take custody of your funds.
People watch for bad checks as well. Plenty of cash registers used to have example bad checks laminated on them, back when the modern financial system was still using IOUs like that.
You can make a lightning transaction, drain your bitcoin wallet before it verifies, and no amount of watching the chain will get the seller back whatever they traded you for that transaction. Just because you identify the fraudulent transaction before it finally verifies doesn't mean that the fraud wasn't committed. Same with bad checks.
I thought you were talking about 3P escrow, because watchtowers are even worse than escrow in fighting fraud, for reasons outlined above.
> You can make a lightning transaction, drain your bitcoin wallet before it verifies, and no amount of watching the chain will get the seller back whatever they traded you for that transaction. Just because you identify the fraudulent transaction before it finally verifies doesn't mean that the fraud wasn't committed. Same with bad checks.
No you cannot, again, that's not how it works. You commit funds to a channel on chain before you can spend funds in a channel. I don't think you understand how lightning works.
If I’m interpreting this right, it means the bitcoin market on bitfinex is a bit over 3x more sensitive to sells than to buys? And the possible sell volume on coinbase before slippage is tiny.
A Regular bank wire withdrawal is sent out from Bitfinex within 5-10 business days and credited to your account following processing by the receiving party.
2. An Express bank wire withdrawal is sent out from Bitfinex within 1 business day and incurs a 1% processing fee.
PayPal also does not need to hold the underlying assets. They can buy Bitcoin derivates instead of spot Bitcoin to maintain the reserves. Not sure if they are doing this, though, but it could be more capital efficient.
There are always debit cards that let you 'spend' crypto, paypal is obviously less useful than that. The volume would also be nowhere near big exchangers since trading is by far the biggest activity in crypto
Why would they not? This is effectively buying Bitcoin, slowly, at a discount (they'll surely slap hefty fees/unfavorable exchange rates on it, because there are many people who will happily pay extra for the privilege of paying with crypto, just like people will pay a lot more for anything slapped with an "organic" label).
Tesla, a publicly traded company, got away with buying $1.5 billion in Bitcoin just fine.
PayPal can also sell that Bitcoin to customers who want to buy Bitcoin.
Tesla is not a payment processor. Nor is it in the business of profiting off of crypto as a fundamental change in it's business model.
I'm replying to a comment saying they should use their cash reserve to buy bitcoin instead of dividends/buybacks.
And yes, they can sell it and have some level of "float" to support crypto buy/sell exchange. But the comment was a hodl comment to "make them more money."
They could also accept pebbles and sand as payment, hold them forever, and pay the merchant with their massive cash reserve or 0% interest debt. Profit.
The USD is suffering from a savings glut. The domestic financial markets are already fully developed. Any additional savings from foreign nations is not helping the USA and merely forces an exorbitant downside. Investments have to match savings. All the potentially productive investments have already been made for the current level of inflation. There is nowhere for the money to go so you have two options: Unproductive investments, reduce the savings rate.
Unproductive investments are basically the constant increase in stock and housing prices over the last decade. You're not buying those to make more money, there simply is no other place for the money to go. The only way the savings rate can be reduced domestically is through unemployment or underemployment. Unemployed people don't earn money but they still have to spend, which reduces savings.
It's a truly hopeless situation for the humans living the USA. But hey, at least the dollar is still "good".
Oh right, presidents are taking on debt to cancel the savings glut that was forced upon them. That's a bad thing.
> The biggest barrier to spending crypto is still finding merchants that accept it
I am a huge fan of BTC and have held some for many years. But it seems to me the reason this hasn't really happened yet is just that it's not really a big problem that needs solving. Why do people need to spend crypto on online purchases, as opposed to converting to fiat and spending that?
I'm sure it'll happen eventually, it's not a bad thing to give people more options of how to pay. It just doesn't seem like a huge need for anybody in countries like the US, Canada, UK, Europe, Australia, Japan (which are the vast majority of the market for companies like Paypal, Stripe, and Square).
Being able to spend crypto at any merchant massively increases the liquidity of crypto - it provides more places where one can convert their crypto assets into goods and services. Reducing dependence on a small number of centralized crypto exchanges for liquidity provision is good for the decentralization and robustness of the crypto market as well.
Also fiat networks can be censored by financial institutions and government, as we saw with the financial blockade on WikiLeaks a few years ago, and have seen happen against pro-democracy protestors in Hong Kong recently. Direct merchant acceptance of crypto provides an alternative when such financial controls are put in place.
Merchant adoption of crypto is an unmitigated good for crypto, from any perspective you look at it from. It's puzzling to me when some crypto enthusiasts see no point in
it, when it is really the entire point of cryptocurrency.
I would certainly disagree that being able to online shop using Paypal is the whole point of cryptocurrency. Having the ability to easily and securely exchange with others is the whole point, but doing it conveniently on a daily basis over existing payment rails is not the whole point or even that important.
If a government decides to censor fiat networks to prevent certain transactions, the fact that paypal accepts bitcoin for those transactions is irrelevant. The company you're buying from as well as Paypall will still need to follow KYC laws and will be obligated not to transact with you.
In that scenario you're already fully living outside the law, you'll have to transact as anonymously as possible, exchanging crypto in secret in person or over the dark web or what have you. It doesn't matter whether major above board institutions like Paypal or Stripe accept bitcoin or not.
If paypal only allowed users to pay for things in USD it would also greatly defeat the purpose of Paypal.
Instead, they offer automatic conversion (at a rate favourable to them no doubt) from other currencies. They certainly wouldn't say "If you hold EUR you can take it to a currency exchange and change it for USD, then send it to us". They would have no global hold if they did that.
Likewise, barring access to users of a certain national currency damages the global utility of that country's currency; it's silly of them to do that if there are no regulatory obstacles, and I'd argue they're strongly incentivized to find ways around those obstacles.
Whether it's paypal or not, it's greatly useful to have some way to pay for things with cryptocurrency, and payment companies have an economic incentive to add support for crypto payments as well
This is not a BitPay competitor until PayPal allows users to deposit cryptocurrency.
Yes, I don't see much point to this service without the ability to send crypto to your Paypal account. I don't buy crypto through Paypal, and I suspect nobody else that knows what they are doing does either. They've tiptoed around the idea of allowing crypto deposits by allowing instant, free, fiat withdrawals to Paypal from Coinbase (where it can then be spent). But they absolutely refuse to allow it directly.
No, they didn't. They launched a service where you can buy certain cryptocurrencies from PayPal and then sell it back to them at a later time, which may happen to be at the same time as you are paying a merchant fiat money. You can't even transfer your cryptocurrency to or from PayPal.
It's been possible to buy and sell cryptocurrencies in one's PayPal account for months (including right before buying something with the resulting balance in fiat currency); what seems to be new here is that one can have PayPal handle the conversion at checkout without first having to click "sell" or paying added transaction fees (simply selling would incur a hefty 1 or 2% based on the amount sold).
It is true that one cannot transfer cryptocurrency holdings into or out of PayPal.
Transfers in and out would cause huge source-of-funds type compliance issues and fraud problems, as well as support tickets from users setting the wrong fees and getting scammed. They would've bought something like Bitpay long ago if people cared to transact in crypto. The reality is 99% are happy just to store it on paypal,coinbase, etc and be charged exorbitant fees and hope the price goes up.
The source-of-funds problem is solvable, otherwise companies like coinbase wouldnt be allowed to exist. Paypal just needs to buy some chain analysis service, and implement SARs and other related AML stuff.
So in addition to fleecing me on USD -> AUD with a rip-off exchange rate, they're adding an extra step for users of their fake BTC as well. But really multiple steps because you have to actually buy the fake BTC through PP first. The funny part is that no transaction take place on the blockchain, the BTC is just held at a third-party custodian. This is what VISA is planning too i think.
This is the only way to actually scale crypto to the transaction volumes that PP and Visa actually deal with. You hold stash of crypto and manage your own transactions in-house and then do one actual on-chain transaction to settle up with your peers. Anything else is wasting money on transaction fees for no real benefit to you or your customer.
Also I'm surprised that groups that are so freedom/privacy oriented want literally every exchange of crypto to be on-chain, public, and traceable without using a money laundering service. Sure yes wallets are pseudoanonymous but if every purchase you ever made was on-chain it would be super super easy to de-anonymize you.
Obviously. Intermediators love volatility and big spreads! Users will probably lose a few percentage points on every transaction, so for PayPal this is basically a license to print money.
Like any other business service, PP works for some businesses and maybe not for others. I'm in the category of a small home business making a hardware product that only ships within the US. PayPal has got me covered. They have the customer protections that people seem to like when dealing with a nearly unknown business. They let me run my business from a passive web page and an e-mail address. They offer USPS first class mail as a shipping option, which saves me a lot of money on shipping. The USPS website forces you to use priority mail.
Would I pay less for the same service? Sure. Am I aware of the horror stories? You bet. Do I explore other services? Yes.
On the other hand, a purely digital business that already has a website, and is moving stuff internationally? Maybe there are better options.
It's more like 6%. Standard 2.9+% for transactions and then forced 2.9+% for currency conversion unless you're lucky and you accept transactions in your local currency.
PayPal has some weird priorities, their existing checkout doesn't support CSP and the bug issue remains open for over a year without proper official updates on whether it will ever be fixed.
Same here. Not sure why I should avoid paypal, it seems that it's a middleman but their cut is unnoticeable. I also use paypal to pay for things on ebay as well as venmo for other expenses.
PayPal did a complete 180 from their stance on crypto just 2 years ago.
I worked at Coinbase on the Payments team ~2018. Working to integrate PayPal was a nightmare - so much opposition to the integration from PayPal execs and compliance team. Even when we did manage to finally integrate, PayPal was only enabled for crypto sells.
Change in direction at PayPal must have come straight from the top.
Nobody is going to be left in the dust. There's zero chance the global market moves to bitcoin, and there's zero chance that you'll ever live in a country where it's the primary form of currency.
Everyone who thinks that bitcoin is the future needs to really wrap their head around why a $20 bill buys a nice meal instead of buying you whatever a small scrap of cotton paper with fancy ink on it is worth.
It's good until it's not. A successful quantum attack on a bitcoin address would end it permanently - sure we might be "decades" away from that, but we also knew it took years to make a vaccine until Moderna/Pfizer made one in ~2 days.
Right now bitcoin is like a castle with massive walls - everyone knows where the castle is and what's inside, but nobody can get over the walls. It makes sense to feel safe from attack. Quantum computers are the equivalent to the enemy arriving to your castle walls with a helicopter.
Tbh yeah that makes sense. But only state actors are going to have first control of a quantum computer... Aka one of the US or China. Neither have a ton of incentive to mess up the chain. Plenty of Chinese have btc and plenty of americans have btc. Idk what do you think?
I think that's correct, but I think the broader point is that unlike gold or real estate or other long-term stores of value, bitcoin has a few improbable but catastrophic ways to rapidly lose value.
Also don't put it past the CCP to rapidly change their mind on bitcoin if they detect that it facilitates capital flight.
Imagine if PayPal was handling your cash transaction when your are at a store instead of you paying the store directly.
We don't need PayPal or Visa to pay with crypto. These are desperate attempts for these middleman to keep the control they have. In fact this way they can make the crypto experience worse than regular payments with hight fees etc. Pushing people away and thinking crypto doesn't work.
Yes. Full agreement here. That said, for better or worse, Paypal's move effectively makes crypto into currency. Up until now, it was not exactly a mainstream option.
I feel in this case they feel that they'd soon become irrelevant if they don't handle crypto. But as a customer I'd rather use fiat for day to day bills and replenish that fiat account whenever I want from crypto - with low fees, security and ease of access.
Exactly my reservation with using something like this! the US still classifies virtual currency as Property NOT currency! This is a HUGE problem when trying to use crypto to buy things where there will be a paper trail that the US govt can get ahold of it.
In US I can imagine that the exported transactions can be imported to a software that understands Bitcoin taxation. But outside US? It's a crazy world....I rather stay with big buys/sells/borrows until taxation is resolved.
Actually they are pretty relevant, because they can provide merchant protection, currency exchange, scalability and privacy to cryptocurrencies. You don't need to use them, but they're useful to many.
I have to correct myself. Bitcoin doesn't need merchant protection, because transactions are irreversible. Paypal can provide buyer protection, i.e. chargebacks.
This is true. There really isn't a built-in way to do chargebacks and in practice this can suck if you live somewhere where that is your only recourse if you get scammed.
There are wallet like Wasabi and joinmarket-clientserver with a single UI for managing coins and anonymize coins that are then difficult for an outsider to connect to each other.
Even without these privacy-focused wallets, you can use an HD wallet, where "child addresses" derived from a never-directly-used root key cannot be connected by a third party, unless you do something to connect them, by e.g. transacting with coins from both wallets from the same IP or in the same transaction.
Bitcoin avoids the double-spending problem by using a public ledger. This means all bitcoin transactions are known to any observer. There is no way round it. The best you can hope for is some "anonymity through obscurity" but this only gives a false sense of anonymity.
On Ethereum you can break the chain by using Tornado Cash which uses zero knowledge proofs with a secret, anonymity sets and time to make it impossible to trace a link.
Monero and Grin/Beam are also public ledgers. But they are harder to deanonymize. You brought a non-sequitur.
The CoinJoin paper details the level of anonymity that it can offer. I could cite it to you here, but I am not convinced that you would read it if I did.
The level of anonymity it can offer is zero. All you can do is obscure the recipient of an outgoing payment or the sender of an incoming payment. We still know all the cash flows in and out of every single address in the network.
That's not how Bitcoin works. You're conflating receiving addresses with wallets.
And in the PayPal use case, you wouldn't even see a single receiving address, as it's entirely opaque to that and it'd all be handled in some internal PayPal ledger. The receiver of the payment would only see a transfer to them denominated in local fiat currency. They might not even know the source of the funds was crypto at all.
If you mean at the worst possible price often forcing you before you can cash it out or presenting you with misleading choices so you are likely to stumble into their expensive option then yeah - that offer that.
True. And the whole initial point of Bitcoin BTC is gone. Bitcoin BTC is now first and foremost a pretty poor digital ponzi scheme(with fees it is actually a negative sum game). Bitcoin SV tries to fix this, but it is still a PoW system and thus not what we want when fighting to save our earth from negative climate change.
However judging by PayPal track record and scary stories of arbitrarily freezing accounts I’d advice all my friends to keep their cryptos away from PayPal hands or any of their services.
or just, you know...pay the vendor directly. capitalism cannot abide a market that exists unexploited it seels.
traditional rent-seeking high fee payment processing services are going to inject themselves into cryptocurrency at all cost. At this point the efforts is getting a little comical.
Those companies only want to offer BTC as a payment option but don't want to hold crypto themselves. So they didn't really choose BTC to start with. Which makes sense since most companies need to pay their costs in fiat money.
It's the same thing as a US company wanting to sell to Europe but not wanting Euros, because they pay their costs in USD.
I think the point here is probably that Paypal is noticing that an increasing amount of consumers have crypto and would like to pay with them, so they offer this possibility.
Bitcoin is just another currency, and indeed most businesses don't want to hold them because they need to hold their local fiat. That doesn't mean consumers don't want to use Bitcoin tho.
I wonder what the dispute resolution mechanism will look like. "Item not received" and "Unauthorised Transaction" complaints by users are the ones mentioned by Paypal Seller Protection [1].
There is literally nothing positive that can happen in crypto without the HN hate train arguing it’s meaningless / “just use mysql” / “am I the only one that thinks this?!?”
Ive been using bitcoin since 2011ish i think, one of the first few people on bitcoin-otc first trade was $40 for 10 bitcoins (paid with paypal transfer funily enough) i must have bought and sold hundreds over years, still have few dozen
In some cases yeh bitcoin has not lived up to initial promises, literally first line of satoshis paper is no longer valid, but it could yet be like early internet and take off (or something similar)
i wouldnt write it off but yeh you are also right its not what we thought it be, the whole store of value thing these days instead of currency
"watchtowers" is a big word now? as for "inbound liquidity", I guess you can argue it's big because it's a compound word, but it's relatively easy to understand ("liquidity" is a standard term in finance, for instance) and I can't think of how you can shorten it further without reducing comprehension.
> Ps. I owned crypto until 2017 and then sold it because i didn't see a valid use-case.
Do you think maybe you have some biases against it now, because it would have made you a lot of money if you held on to it?
Nobody is paying 22$ for a 1$ product, I'm not sure how you can even remotely come to that while ignoring all the layer 2 developments.
There's a ton of really useful projects happening on DeFi, you can see the blockchain data for yourself and see that a lot of people are using it, maybe you don't see the use case, but that doesn't mean there isn't any.
I actually made a lot of money with it. So I don't think I'm biased because of that. It dropped to 4k afterwards ( I could have purchased again, but if something falls from my watchlist, i don't care about it anymore).
What is probably biasing me, is that I had a digital magazine and the #1 hit was for "how to recover Bitcoin password".
Which also leads me to my conclusion: "There's currently no replacement for a official and trusted centralized authority in Crypto".
I was actually paid in crypto for few days of some programming work once. I wish I held to it all rather than spending most of it.
Personally I think the biggest issue with crypto now is, one that it promotes huge value inflation and Ponzi-like schemes (we are seeing it with BTC and ETH), two horrible energy use inefficiency. From a bitcoin transaction that requires orders of magnitude more energy to process than any other transfer of value known to humanity to Ethereum "virtual machine" for smart contracts that is most inefficient way to execute arbitrary code ever invented...
I used to be a big proponent of crypto overall. I still have some holdings in it, but I can't unsee the idiocy in PoW crypto once I saw and understood it clearly.
I wondered for a while what is so specific to crypto that it became today's tulips? (Rather than gold futures, stocks, real estate etc) and then I understood all those asset classes are already used like this. Every kind of asset that can will eventually be used in some kind of pyramid scheme. Just look at the price of gold compared to few years ago, real estate in many large cities, stocks etc. It was absolutely inevitable that crypto as it became a trusted store of value would become a vehicle for speculative bubbles/pyramid schemes.
So then the question is, can crypto fulfill the role of a currency (requiring some level of value stability) and be a vehicle for speculative pyramids at the same time? I don't think so.
Proof of Work is one problem with crypto that perhaps Proof of Stake will resolve.
The other problem is much more fundamental. How do we create crypto that maintains stability without having to resort to typical "stable coin" strategies like holding other currencies and selling/buying them to artificially adjust the value. Is it possible to create crypto that would maintain its value in the long term in distributed - no central authority manner while discouraging pyramid investment schemes.
And finally, once someone invents such crypto would anyone actually hear about it as most promotion of crypto seems to be done by people who got in early and hope for their holdings to increase in value.
Agreed. It's the difference between deflationary assets and inflationary currency. Bitcoin's core, fundamental problem is that it's deflationary. Therefore it will never be useful for economic transactions, because any society which fully commits to bitcoin as their currency will have their economy grind to a halt. Why would I buy a new car today when it's going to be cheaper tomorrow?
There's a reason why the Fed targets a ~2% inflation rate for the USD.
That and the energy cost, both direct as well environmental.
It always surprises me how little cryptocurrency advocates seem to understand basic macroeconomics and unintended consequences, especially on sites like this.
Think again. You have been brainwashed. You buy a car so that you can go to work. You know that the car produces more value than 2% deflation. You don't buy the car if you don't have a job.
What happens to economy if people buy only things that last a very long time or things that increase their productivity? What happens to economy when companies are forced to produce those things?
Inflationary economy is a total disaster. We produce things that don't last to consume things that don't last. Insane amount of human work output is wasted.
If you measure economic growth by amount of pointlessly running in circles, then yeah inflation is good for economy.
> The other problem is much more fundamental. How do we create crypto that maintains stability without having to resort to typical "stable coin" strategies like holding other currencies and selling/buying them to artificially adjust the value. Is it possible to create crypto that would maintain its value in the long term in distributed - no central authority manner while discouraging pyramid investment schemes.
The value of a cryptocurrency is mostly tied to its adoption. Future adoption is uncertain, so there is naturally a lot of volatility right now. If adoption stabilizes, the volatility will likely decrease markedly. In fact, since many cryptocurrencies have a fixed supply (or the supply follows a predetermined set of rules), one could argue that they could end up less prone to speculative pricing than fiat.
I am as much a crypto skeptic as you can find but even I know people who could only pay in crypto and I lost business by not being able to accept it.
The financial regulations around the world are often very strict. A lot of people need to go around them. Sure, a lot of them are drug dealers, gambling operators etc. but there are also people in China struggling with capital control regulations as one example.
A few people that I work with order THC gummies from some sketchy source, delivered via mail, that they pay for with crypto. Pornhub still exists, despite having their credit card processing de-platformed, so I guess somebody is paying them some crypto.
But no. I've never met anyone in real life who uses crypto for mundane transactions, where fiat currency is an option.
>A few people that I work with order THC gummies from some sketchy source
I have heard from a friend that typically those 'sketchy sources' are just buying gummies from stores in legal states (cough California) and shipping them out.
My friend would get the gummies in the bags ready for retail sale. Same with other items like vape pods.
What PayPal is offering is not even close to what BitPay is doing. On PayPal you will only be able to use cryptocurrency that you bought from PayPal, you cannot transfer cryptocurrency in or out of your account. All you can do is buy cryptocurrency from PayPal and then sell it back to them at a later time.
I never used bitpay but I don't think it's their fault to have to request passport verification. As a money transmitter they are required to answer to KYC rules, which includes passport or other docs verification to ensure you are who you are.
If you are wondering why Paypal never asked for your passport, it's probably because you eventually linked Paypal to another KYC-compatible entity, such as your bank (by linking your bank, sending money with your credit card, etc).
I assume in the case of bitpay you would only link your btc wallet which in itself doesn't offer KYC verifications.
Lots of other services continue to function with no such requirements. Bitpay only did it recently after many years of business and there was no regulatory change
I also don't understand how it is logically any different from the merchant accepting btc themselves and choosing to do the conversion themselves
There are many cases where businesses go beyond the legal requirements for whatever reason. Coinbase for example has explained that they make shady backdoor deals with regulators.
Ray Dalio says US likely to ban crypto soon. OTOH, PayPal adding support to crypto, Visa adding support to crypto. Are these being accelerated by Wall St / hedge fund types who stand to lose many Billions of US bans crypto
Perhaps Paypal should focus on hiring more customer service agents instead of going a full year without a direct line in the US? Paypal is one of the most egregious fintech companies in existence.
Can I actually send bitcoin to an address to pay? Or is this only paying with my PayPal crypto balance - which has no blockchain deposit or withdrawal capability?
Can I transfer Cryptocurrency into and out of PayPal?
Currently, you can only hold the Cryptocurrency that you buy on PayPal in your account. Additionally, the Cryptocurrency in your account cannot be transferred to other accounts on or off PayPal.
With this news and the Visa news yesterday Bitcoin still is not at the ath.
It seems mostly a very small group of people are driving this bull cycle, Namely Musk(I am assuming he has some influance over PayPal ), Saylor, Dorsey, but somehow that equals "institutional investment". Everyone else involved seems to be more selling "shovels and picks".
I've seen them integrated into POS systems and I've also paid in-store via their app once or twice (after a promotional offer). However, they also own Venmo, and Pay with Venmo to a business is something they're actively pushing.
With "big" companies coming in on the Crypto bandwagon is Crypto really worth anything? I don't understand (and maybe someone can explain it to me) how Crypto is for "the little guy" when those who started out at the beginning have "all" the crypto already. There is no way I am going to be able to "mine" more crypto than those who started years before me or those who have more "traditional" money than me currently to buy crypto. It's still money. It's still a bond, a promissory note; it's not real and is only worth what the big guys (whether traditional or crytpo big guys) say it is worth. But I am no economist or financial expert. So why should I use crypto? I'm still at the bottom in that game.
So the difference is that there is no central authority that can just print more crypto. It's decentralised which means you don't need a bank, bank card or ATMs, you can store your crypto on a piece of paper. So the big guys can own a lot of crypto or a lot of dollars, with crypto there are no banks for them to control and no government to print out new notes.
Is there anything preventing large players like exchanges or payment processors from adopting fractional reserves? That's effectively printing more crypto by centralized authorities.
But looking at this paypal payment, you cannot use your own crypto from your own stick, but have to first sell that crypto to USD, transfer that USD to paypal, then purchase crypto back in paypal, in order to spend it.
It allows you to be your own bank - you aren't depending on any central authority to allow you access to your "cash". This might be one of those things that is Not For You if you can't think of a use for it, and that is Okay.
>There is no way I am going to be able to "mine" more crypto than those who started years before me or those who have more "traditional" money than me currently to buy crypto
I have the same problem with US dollars, that some people have more than I do, but I still use dollars often.
I just thought Crypto would level the playing field. that seems to be a misconception on my part. Sounds like it's more that I can have access to my money all the time because of a centralized system. Although I am finding in research that there are centralized Crypto exchanges. So I need to figure out how that is different.
That's the nature of my understanding of crypto and why I asked the question. I don't know if Big Companies can dilute the effectiveness of crytpo. It's why I asked. Maybe off topic for this HN post. I don't know. Cryto intrigues me with the thought of a decentralized currency, but does it level the playing field? I don't know.
I really don't know which pitch you are latching on to.
Crypto does not address the reality that people who have a lot of resources can simply buy a lot of crypto. It doesn't attempt to. There have been time periods, including now, where people with a lot of resources are ignoring crypto because the world is comfortable enough for them, and you can buy before they or their heirs do. The entire decade has been that way and it has been completely accurate, and it is also accurate that this makes a lot of people uncomfortable about the sustainability of the exchange rates.
Crypto addresses other playing fields. There are many intermediary liquid systems (cryptocurerncies) that you can use to send unlimited amounts to people anywhere in the world, and they can cash out in their own local currency. All the other systems had limits because governments controlled the financial institution running the system. This has nothing to do with you deciding to own a lot more crypto than you need at that point in time, it is also accurate that a lot of people do keep excess holdings because they realize that they never have to go back to the local currency, and realize that others will come to that same conclusion too.
There are many other areas that crypto does okay at, and is working to get better at.
I appreciate the information. This is the kind of thing I am needing to understand it better. I have a lot of misconceptions about crypto, which is why I am asking the questions. I do the same thing in other areas as well (COVID/Vaccines, etc). So again, thanks for the info.
Highly disappointed that Square (Cash) has not launched a BitPay competitor and still only supports Bitcoin. They’ve allowed BTC deposits and withdrawals for years (with great UX!) yet are lagging far behind in release cadence.
The biggest barrier to spending crypto is still finding merchants that accept it, even through third parties. PayPal’s huge merchant userbase will allow dominance if/when they flip the switch to an open loop, “deposit your crypto” approach.
Only PayPal and Stripe can flip that switch at scale with a hosted checkout experience. Merchants don’t care how a user paid, they want fiat.