This week PayPal’s mobile transaction company “Venmo” announced that it will allow users to buy, sell and hold cryptocurrencies such as Bitcoin or Ethereum. Venmo’s take on cryptocurrencies comes as a result of PayPal increasing its endorsement of cryptocurrencies since receiving the green light from New York regulators last year.
Venmo is the primary contender to Square’s “Cash App”, popular among young adults in the U.S. Both Square and PayPal have taken significant steps to integrate cryptocurrency usage, investing heavily in cryptocurrency holdings. Square purchased a total of 8.027 Bitcoin in 2020, estimated at over $170 million.
Digital Payment App Integrates With Crypto
Venmo is one of the most popular digital payment apps in the U.S., with over 70 million active users. Payment apps rose to fame as they allow users to make faster payments or split bills with their friends and family, decreasing financial disputes.
App users can access cryptocurrencies such as Bitcoin, Litecoin, Ethereum, or Bitcoin Cash with as low as $1. The social functionality of Venmo will allow users to share their investments with friends through the social feed, creating a more user-friendly way of interacting with cryptocurrencies.
PayPal’s move to accept cryptocurrencies comes as no surprise. With over 377 million active users, and the growing demand for crypto, the company announced in October 2020 it would allow users to buy, hold and sell cryptocurrency. Furthermore, PayPal announced plans to allow users to spend crypto at over 26 million retailers across the globe, increasing the use of crypto in the retail space.
Integration and need for cryptocurrencies are “inevitable,” as highlighted by PayPal’s CEO, Dan Schulman. Furthermore, he acknowledged digital payments of any form as having an “advantage in terms of financial inclusion” as they distributed payments faster through the network.
Senior vice president of Venmo, Darrell Esch, claimed crypto usage on the platform would enable the “community to learn and explore cryptocurrencies” creating a safe environment for the retail market to use cryptocurrencies. Since 2020, retail buying has increased; however, it hasn’t impacted Bitcoin’s ongoing bull run.
To integrate cryptocurrencies on the platform, Venmo partnered with the blockchain infrastructure company Paxos, which PayPal also used to create its digital asset infrastructure.
On the Flipside
- Influence on market sentiment from the likes of Elon Musk has shown it can control the price of a currency with a single tweet.
- Elon Musk was the largest stakeholder in PayPal and could still have shares in the company.
- Bitcoin retail investors increased in Q1 despite warnings from economists about the price fluctuation.
- Sovereign ownership of cryptocurrencies is dismissed on both Venmo and PayPal.
Financial Institutions Investing in Bitcoin
Inevitably, the growth of Bitcoin and cryptocurrencies facilitates bigger investments from larger financial and non-financial entities. While the market is still highly unregulated, a large capital influx into the market can increase the price and create a state of euphoria. However, as we’ve seen in the previous months, the market can be manipulated, and Bitcoin’s volatility is still a cause for concern.
PayPal and Venmo are not the only big names that have warmed up to cryptocurrencies. In March 2021, PayPal announced its purchase of Curve for $200 to provide digital asset security as a cloud service. Additionally, through their acquisition, PayPal increased its footprint on currencies to allow faster implementation and use of crypto on the platform.
Earlier in 2020, Elon Musk announced a purchase of over $1.5 billion worth of Bitcoin as a new way to diversify Tesla’s investment holdings. Furthermore, Tesla accepts Bitcoin as a payment method on their website, developing and expanding Bitcoin’s use. Still, for many investors, Bitcoin is seen as a store of value. The likes of Tesla, Square, or Chinese listed company Meitu invested heavily into the cryptocurrency, some also diversifying into Ethereum as a store of value.