Every 4 years, the crypto market experiences a new bullish cycle. And every time, there are different triggers and market movers that can be held accountable for the positive sentiment in the markets.
In 2017, it was the emergence of Ethereum and ICOs that drove the prices sky-high. At the time, the ETH to USD price reached a new record because people were massively buying ETH tokens to participate in crowdfunding events.
Conversely, 2021 has been a year where multiple factors contributed to the cryptocurrency price rise. The growth of the DeFi market and the rise in popularity of NFTs impacted the markets considerably, driving new retail investors to buy crypto. However, the third, and probably, the most important factor was the increased interest from institutional investors.
In 2020, a few consequential investments from Square and PayPal confirmed that the bulls were finally taking over the market. In this article, we will focus on PayPal, and how the inclusion of crypto in its digital wallet can lead to mass adoption, higher market stability, and consistent growth.
PayPal’s journey with cryptocurrencies
PayPal wasn’t always entirely accepting of cryptocurrencies. In the past, the company usually stayed quite silent about Bitcoin or offering any cryptocurrency services, for that matter.
However, while competitors such as Bitpay and Skill were already bringing crypto to their wallets, PayPal was just waiting for the right moment. In October 2020, the company announced that it would be offering its US users the possibility to buy, sell, and hold cryptocurrencies on their PayPal wallets.
This happened as the bull run was slowly confirming the upward momentum and when the price of Bitcoin still hadn’t reached its previous all-time high of $20.000. Of course, this announcement was considered extremely bullish by the community.
That said, some remained skeptical about the addition of Bitcoin and a few other select cryptos to PayPal. This is mainly because PayPal wouldn’t let users withdraw their crypto to another wallet, which contradicts the concept of true ownership of cryptocurrencies.
A popular saying in the crypto sphere goes: “Not your keys – Not your crypto”. This means that as long as you don’t have access to your private keys, you don’t own that cryptocurrency, and PayPal could revoke access to your funds.
Mass adoption through PayPal
However, what remains undeniable is the extreme reach that this addition had on the market. Suddenly, more than 300 million PayPal users were met with the possibility to enter the exciting world of cryptocurrencies and speculate on their value. And all of this is made possible through a proven, user-friendly app that everyone knows how to use.
Moreover, the initial offer was improved considerably over time. In March 2021, PayPal introduced a “checkout” feature for the cryptocurrency wallet. This allowed US residents to spend their crypto within the merchant network of PayPal. Consequently, every crypto holder on PayPal could use their cryptocurrencies to pay for goods and services to any merchant accepting the e-wallet service.
As a bonus, the process is extremely simple. If a user is eligible to pay for goods or services using crypto, the payment option automatically appears in their wallet upon checkout.
More importantly, the merchants don’t need to accept crypto, as PayPal converts the cryptocurrencies into fiat on checkout. This ensures that there’s no friction between the customer and the merchant if the former chooses to pay with Bitcoin and the latter prefers fiat.
Recently, PayPal released an update to its UK-based wallet, enabling UK citizens to access the buy, sell and hold features of the wallet. The company has said that its actively working to bringing these features globally, starting with the EU and Australia.
The main takeaway here is that PayPal adding cryptocurrencies so that users can use them as payment methods works as a tool for mass adoption. As more people are using cryptocurrencies, the assets become more stable. The volatility of their prices diminishes and more merchants are willing to accept them as a means of exchange.
This helps cryptocurrencies become more mainstream, and not some unattainable or risky asset that requires advanced technical knowledge.
As a result, more institutional investors might enter the market, giving it more legitimacy and stability. This was proven to be the case, with Tesla purchasing as much as $1.5 billion worth of Bitcoin and Microstrategy acquiring $5.3 billion worth of bitcoins.
The 2021 crypto bull run was mainly driven by institutional interest. PayPal, with its inclusion of cryptocurrencies in October 2020 confirmed the positive sentiment in the market and allowed Bitcoin to reach new record highs.
That said, there are some additional benefits of this crypto addition from PayPal. Eventually, it will bring cryptocurrencies into the pockets of more than 300 million potential investors. This in turn help brings Bitcoin and peers into the mainstream, allowing for mass adoption of the assets as a method of exchange.