PayPal’s decision to integrate cryptocurrencies to its platform may bode well for the price of Bitcoin, as its user base could triple.
The price of Bitcoin (BTC) surpassed the $ 13,000 mark again after PayPal’s announcement yesterday triggered a powerful rally that took the price to a new yearly high. Currently, near $ 13,100, the price of Bitcoin is up almost 10% since the announcement, and BTC is now close to surpassing PayPal as the 21st largest asset by market capitalization. (Update: Bitcoin is now more than PayPal by market capitalization)
The announcement that PayPal will integrate cryptocurrencies to its platform exactly two weeks after Square, another payment giant, announced its foray into the crypto space by investing approximately 1% of its assets in Bitcoin.
According to Lanre Jonathan Ige, a researcher at Amun AG, the continued trend of high-profile investments will be a primary key to attracting institutional interest in Bitcoin. Ige said: “Corporations tend to follow trends and we can expect other corporations to follow Square and Microstrategy’s lead as asset returns continue to impress”.
This recent news from PayPal is more likely to draw the masses to Bitcoin rather than institutions. This is because PayPal is capable of bringing a more general audience up to speed with cryptocurrency as an investment vehicle for now and as a payment method in the future, which is one of the main focuses of the Bitcoin community when it comes to mass adoption.
PayPal should boost Bitcoin’s user base
According to data from Glassnode, Bitcoin currently has more than 187 million users or “hodlers”. While it’s an impressive number, cryptocurrency analyst Willy Woo noted that this pales in comparison to PayPal’s 487 million users.
With the addition of Bitcoin, PayPal brings the cryptocurrency name to a mainstream audience. While it is only possible to buy, sell, and hold Bitcoin through PayPal at the moment, the company announced that it will add payments and transfers in cryptocurrencies in 2021. Once this happens, it could consolidate the reputation of Bitcoin as a payment mechanism and remittances.
Transacting through PayPal and other centralized platforms could even become one of the ways Bitcoin can climb up to a more mainstream user base. Centralized transactions (along with other methods like sidechains and the Lightning Network) could help to alleviate congestion on the Bitcoin blockchain, allowing its use only for larger transactions that require more security, transparency, or immutable proof.
According to experts, Bitcoin may even benefit from what some call the “Robinhood effect,” a phenomenon in which retail investors with disposable income buy an asset through fee-free and gamified investment platforms to avoid headaches frequently associated with banks.
By: Jenson Nuñez.