PayPal's Paradox: Bitcoin is the Future, But Not Just Yet

PayPal's Paradox: Bitcoin is the Future, But Not Just YetWith a single announcement, PayPal could widely legitimize bitcoin and its cryptocurrency ecosystem, skyrocketing its acceptance.
That announcement would entail bitcoin’s entry as a PayPal payment or funding option. But that’s not going to happen — for now.
PayPal President David Marcus actually owns bitcoins and said this week that it has a better shot at revolutionizing commerce than the ballyhooed — but unpopular — NFC (near field communication) technology, which involves tapping or waving your smartphone to make purchases.
But Marcus has placed himself into somewhat of a paradox. He envisions bitcoin’s acceptance, but not now because of the virtual currency’s instability — wide price swings and lack of a mainstream regulatory infrastructure.
Yet, PayPal has the influence to bring stability to bitcoin, and simultaneously force U.S. financial institutions to take a serious look at cryptocurrencies.
Here’s what Marcus said at the LeWeb conference in Paris this week, according to CNET:
“It’s a great place to put assets, especially in places like Argentina with 40 percent inflation, where $1 today is worth 60 cents in a year, and a government’s currency does not hold value. It’s also a good investment vehicle if you have an appetite for risk. But it won’t be a currency until volatility slows down. Whenever the regulatory framework is clearer, and the volatility comes down, then we’ll consider it.”
PayPal, an eBay company, boasts of 100 million active accounts in 190 markets and 25 currencies.
The volatility that bitocin has shown this year — skyrocketing past $1,000 after sitting below $200 just a few weeks ago — seems to have instilled a more cautionary stance in Marcus. (Bitcoin has settled in a range that hovers near $900 this week.)
In April of this year, Marcus seemed to hedge less on PayPal’s likelihood of bringing bitcoin into its fold.
“I’ve been spending a lot of time looking at it,” Marcus told Guy Johnson on Bloomberg Television’s “The Pulse” on April 24. Bitcoin peaked at a high of $260 in April, before settling down and hovering above $100 for months until November’s first-time surge to $1,000.
“For us at PayPal, it’s just a question of whether bitcoin will make it to PayPal as a funding instrument. We’re thinking about it,” Marcus said back then.
See Bloomberg’s April interview. The brief comments on bitcoin are at about 2:55 minutes into the interview.

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