RE: The ugly truth behind PayPal accepting Crypto

over 3 years ago (Edited)

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My guess is that they will hold a large pool of crypto like an exchange but won't be doing on chain transactions. Users won't control their crypto nor will they be able to withdrawl it to another wallet. Users will only have a fiat amount that represents their crypto. Sort of like buying gold from a bank. You don't actually get to take home a gold bar, but instead you get a certificate that says you own a gold bar thats sitting in a vault somewhere. Users will actually be buying and selling fiat and Paypal will only do on chain transactions when they want to increase their own holdings or need to cash out to gain more liquidity. Paypals crypto prices will fluctuate based on the markets.
This is just a guess but I saw this same thing 2 years ago when Mogo finance offered users a crypto wallet. You could "buy bitcoin" but not withdrawl btc. You could only withdrawal fiat. Its a system geared towards the average person who doesn't care or understand the technology, or the concept of "not your keys, not your crypto." They will think they are buying the actually cryptocurrency but they will actually only be buying a stake or a share in paypals holdings. Again, just a theory.

To add to that. This is probably why they aren't allowing users to withdrawal their money until next year. They will likely use the money they get now to buy crypto, to begin building their pool.

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2 comments

@themarkymark 81

over 3 years ago

I think the hold until next year is a ramp up effort. This is a new and huge change for PayPal and can potentially cost them a fortune if they mess up. Slow and steady I think is the reason behind it. That's why there is a wait list blocking most people for a while.

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@leaky20 77

over 3 years ago

Yeah it makes sense to throttle the new users for sure.

But this statement

Keep in mind though you are unable to withdraw until it is unlocked later next year.

Leads me to believe that they are using the new funds to buy crypto to "fill their vault" essentially. Like you said, the system can't handle paypal doing on chain transactions so they need a large enough pool to minimize their need to do them.

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