- A major bitcoin update in recent times is that PayPal has announced to receive the approval of Bitlicense by NYDFS. Now, the payments giant has launched a new service that will allow users to buy and sell cryptocurrencies through PayPal’s digital wallet.
- US Government agencies have proposed changes in the fund transfer rules to include cryptocurrencies and to set the threshold for international transactions at $250, from the existing $3,000.
- A report by JP Morgan states that millennials prefer cryptocurrencies to gold, which will enable increased adoption of these digital currencies. After this news broke out, the market capitalization of bitcoin stood at $242.2 billion.
Recently, there have been some major developments in the world of Bitcoin, which may potentially pave the way for its worldwide adoption.
This post will revolve around the latest Bitcoin update on PayPal’s latest foray into the bitcoin market, the US government agencies’ proposal to change the fund transfer rule to make bitcoin inclusive, and millennials’ preference of bitcoin over gold.
PayPal’s Bitcoin Update: A Move Towards Mass Adoption
In the last week of October 2020, PayPal announced that it has received the approval of a conditional Bitlicense by the New York State Department of Financial Services (NYDFS).
The license will allow PayPal to start a new service that will help its customers in the following ways:
- Purchase, possess and sell cryptocurrencies, including Bitcoin, Bitcoin Cash, Ethereum, and Litecoin directly through PayPal’s digital wallet.
- Incorporate the cryptocurrencies as a source of funding for its 26 million merchants.
PayPal has a plan to implement buying options in the US over the coming weeks, and the full implementation will happen earlier in 2021.
After the news broke out, the bitcoin price surged and went beyond the $12,000 mark.
As far as using cryptocurrencies are concerned, PayPal will convert these virtual currencies into the applicable national currency, so the company that gets paid never receives the virtual coins. Instead, it will receive just the exact amount of dollars or pounds. The cryptocurrencies will be stored directly in the PayPal digital wallet.
PayPal confirmed that there would not be any service fees for buying/selling cryptocurrencies through December 31, 2020. Besides, PayPal is not going to charge fees to users for holding cryptocurrencies in their PayPal account.
A recent survey result shows that PayPal’s new move is likely to be a big hit. The survey included 3,000 US consumers, and conducted by Cornerstone Advisors and FICO:
- 60 percent of mobile phone users have the PayPal app installed on their phone.
- 14 percent of PayPal users are already holding some form of cryptocurrency. Out of those users, 53 percent have used Bitcoin to purchase products/services in 2019, and two-thirds have a plan to do the same in the coming years.
- 15 percent of PayPal users are willing to buy or invest in cryptocurrency in the coming year, and 50 percent of them are planning to buy using Bitcoin in the coming years.
- In 2019, Americans bought $31.2 billion worth of retail products and services using cryptocurrencies, where PayPal users accounted for 74 percent ($23.1 billion).
PayPal’s launch of this new service will eliminate two obstacles when it comes to using cryptocurrencies by retail users:
- Making cryptocurrencies usable for retail purchases, and
- Ensuring that merchants accept cryptocurrency as a form of payment.
Due to these changes, retail payments using Bitcoin, Litecoin, and Ethereum by PayPal users could double and hit the $50 billion mark by the end of 2021.
US Government Suggesting Changes in Fund Transfer Rules
The US Federal Reserve Board and Fincen have proposed to lower the threshold for financial institutions for collecting and retaining funds transfer information.
The two US agencies have asked for a new threshold for international transactions set at $250, lowering from the existing $3,000. The agencies also want that cryptocurrencies to be defined as money.
Although the agencies are accepting that cryptocurrencies lack the legal tender status, the change in the existing rule will treat digital currencies as money. According to them, digital currencies are already working as an equivalent to currency or as a substitute for currency.
The agencies state that from nearly 1.29 million underlying fund transfer, almost 99 percent of these either started or ended outside the US. Out of these, only about 17,000 were domestic-only transactions.
Nearly 71 percent of the 1.29 million fund transfers (over 916,000) were at or lower than $500, making it more than $179 million. Making digital currencies a legal form of money can streamline these transactions.
Millennials Prefer Bitcoin Over Gold
In 2020, the surge of Bitcoin continues as the cryptocurrency is now giving tough competition to gold as an alternative currency.
According to JP Morgan, the participation of millennials may prove to be crucial in the coming years, as their preference for bitcoin over gold can set up this cryptocurrency for future success.
The financial giant has made this assessment after observing that institutional investors are increasingly adopting Bitcoin, along with corporations like PayPal.
JP Morgan estimates that the current worth of the physical gold market is $2.6 trillion, which includes assets within gold exchange-traded funds (ETFs). The company further reasons that to catch up with the gold market value, bitcoin has to surge 10 times from current levels.
Until this update, the market capitalization of bitcoin was $242.2 billion, while the value of one BTC was a little over $13,000.
Before We Go
The cryptocurrency industry is growing at a rapid pace, a report by the Digital Currency Group (DCG) suggests. The study included executives of more than 150 DCG portfolio companies to provide qualitative analysis and trends in the crypto industry.
Despite the onslaught of COVID-19, which has posed challenges such as remote work, third-party delays, technical barriers, and fundraising, crypto-based businesses have grown in 2020. Besides, 50 percent of the startups have outperformed their projections made at the beginning of the year.