In October of 2020, PayPal made a stunning announcement that customers will be able to buy and sell Bitcoin and other virtual currencies using their PayPal accounts. Cryptocurrencies could now be used on PayPal to buy things from the 26 million sellers who accept PayPal. The full rollout of the availability of cryptocurrencies would be slowly rollout during 2021, according to PayPal. The news from PayPal was the first of several companies that announced that they would begin to accept cryptocurrencies as part of their commerce.
The PayPal Annoucement
This announcement was a milestone event. The PayPal announcement altered the view of those who were skeptical about the future of cryptocurrencies. Bitcoin had long since been seen as an investment vehicle, even though that goal was to become an alternative payment mechanism. The announcement also overcame a stigma given to cryptocurrencies by reputable investors. Warren Buffet criticizes bitcoin and other cryptocurrencies as “risky” and “worthless.”
The PayPal report also said that other cryptocurrencies to be added, including Ethereum, Litecoin, and Bitcoin Cash, a spinoff of Bitcoin. PayPal that all of these cryptocurrencies could be stored directly within the PayPal digital wallet. This availability would mean individuals that use PayPal could invest in cryptocurrencies and have a way to use cryptocurrencies as a mechanism of commerce. PayPal does not offer charts and graphs on a trading platform the way CFD brokers. The real benefit of using PayPal to store and exchange cryptocurrencies is to pay for everyday items that vendors offer on PayPal.
PayPal received permission from the New York State Department of Financial Services in the form of a conditional “Bitlicence,” which was the first such license granted. The service will work with an existing cryptocurrency provider in the US, the Paxos Trust Company.
2021 Brought More Company Acceptance of Cryptocurrencies
PayPal opened the gate to other companies that have subsequently announced the acceptance of bitcoin. Square, Inc. announced in October that it purchased $50 million worth of bitcoin. The company said that it believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system. Previously, the company launched bitcoin trading in 2018 with Cash App, enabling bitcoin buying and selling.
In February 2021, Elon Musk announced that Tesla would accept bitcoin as a payment for all its cars in the US. Also, Twitter’s CEO and founder, Jack Dorsey, teamed up with Jay-Z for a bitcoin endowment. The pair will invest 500 bitcoins in developing the currency in India and Africa.
Although Tesla and its eccentric CEO stole the headlines, hundreds of companies had already announced that they accept cryptocurrency as a valid form of payment across various industries.
While a car is a large purchase and requires a small window for purchase to avoid bitcoin’s volatile movements, food is less costly and has seen new entries. Restaurant Brands International is one of the world’s largest fast-food holding companies that allows purchases with cryptocurrency. It is the parent company of Burger King, Tim Hortons, and Popeyes. Yum Brands, which operates KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill, also accept bitcoin. On the retail technology front, Xbox is accepting bitcoin payments for Xbox store credits. While you cannot use cryptocurrency to purchase goods on Amazon, you can buy Amazon vouchers and gift cards through Bitrefill. This store is a crypto-only company that authorizes users to top up subscription-based services and then spend them on Amazon.
The soft drink and coffee space are ripe for cryptocurrency use. Coca-Cola Amatil announced in a press release their partnership with an online assets platform, Centrapay. This platform enabled it to accept bitcoin as an official payment method. There are about 2,000 vending machines in Australia and New Zealand that now accept cryptocurrency. Starbucks began testing bitcoin payments in 2020 through the app, Bakkt.
The Bottom Line
While several companies had already made announcements that they were accepting bitcoin before the PayPal announcement in October 2020, this was a landmark. Since the PayPal announcement, bitcoin rallied more than 400% in online trading, reflecting the market’s view of what PayPal is offering. The ability to spend bitcoin and store it changed the landscape for cryptocurrencies. In the wake of the PayPal announcement, Tesla and Yum Brands announced that their respective companies would accept bitcoin. Tesla even purchased $1.5 billion worth of bitcoin to provide liquidity for those looking to purchase vehicles using cryptocurrencies. PayPal has created demand as the market moves to an environment where vendors worldwide begin to accept cryptocurrency.