PayPal has launched its first crypto offering, ‘Checkout with Crypto’, in a move it announced several months ago. While its first roll-out is in the US, the company has said it will soon roll the service out to its 200 strong merchant network, bringing the crypto option to its global base of 377 million active users.
Industry observers have long speculated about the future of cryptocurrencies, and it has not been a smooth ride. Bitcoin watchers (and investors) have watched the currency sway widely in value, but the trend has been ever upwards.
More and more big players have embraced crypto, most notably Tesla, who publicly declared it was investing in bitcoin and allowing car purchases using the currency. The announcement caused a surge in value.
There have been some notable non-starters. Facebook was the target for much reporting and general criticism for leading a consortium to launch a Facebook-friendly currency called Libra. One by one its partners backed out, and it has all but disappeared.
Despite this (and you can speculate that Libra failed because Governments did not want Facebook to ‘own’ its own currency), there has been discussion between Government-owned banks about the idea of launching a global cryptocurrency, on the basis, we assume, that ‘if you can’t beat them, join them’.
PayPal’s launch is big news and bad news for a couple of competitors who were first to the party, but, as has been the case for decades, that is not necessarily the best place to be. Other companies will watch and learn from your mistakes and then buy you, beat you or squash you.
If a big payments player gets behind crypto, you have to wonder and worry that it will encourage unsophisticated people to invest in cryptocurrencies, which is not necessarily the safest option.
Remember the recent report from the ‘coffer keepers’ advising against jumping into crypto:
“When I did my treasury exams, the thing we were told as number one objective is to guarantee security and liquidity of the balance sheet,” said Graham Robinson, a partner in international tax and treasury at PwC and adviser to the UK’s Association for Corporate Treasurers.
“That is the fundamental problem with bitcoin; if those are the objectives for treasurers, then breaking them could get them in trouble.”
Whilst PayPal’s crypto move is bold and likely to be extremely popular, you have to wonder about the consequences for stability and sanity in the financial world.