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By: Luuk Soons
This week there was some important news from the world of Bitcoin. PayPal has definitively changed its mind by facilitating payments in virtual currencies. Within weeks, US PayPal users will be able to buy Bitcoin, Litecoin, Ethereum, and Bcash and use them as a means of payment on the PayPal network. It is a breakthrough for the further adoption of Bitcoin, because PayPal has more than 365 million users. The news is noteworthy, as PayPal has neglected Bitcoin for years and has pursued outright anti-crypto policies.
This policy was not strange at first, as cryptocurrencies can potentially make PayPal obsolete. Decentralized cryptocurrencies are a potential threat to PayPal's relatively expensive centralized payment network and can therefore threaten the business model. Good cryptocurrencies have decentralized payment networks that are almost free to use.
However, the adoption of cryptocurrencies is difficult to achieve without clear regulation. However, it has become clear that US and also European governments will not ban cryptocurrencies, but regulate them. In the Netherlands, the Dutch Central Bank (DNB) is the supervisory authority. Every crypto company that is active on the Dutch market will have to apply for a DNB registration. AMDAX is the first Dutch crypto company with an official registration from the DNB.
Moreover, it is recognized that Bitcoin is not just a means of payment, but rather a new form of digitally programmable scarce hard money, which is becoming increasingly harsh due to a growing Network effect. It is embraced by the younger generations in particular as a store of value and as a new asset class. For fintech companies and even banks, it is no longer problematic to add Bitcoin as a new digital currency. Bitcoin does not compete directly with a bank, but rather with a central bank. In addition, most customers need a customer-friendly service to keep Bitcoin safe and trade.
New regulations, particularly in the United States and Germany, allow banks to offer Bitcoin to their customers. It's only a matter of time before the first major German or American bank will start offering Bitcoin accounts. It just takes some time to be able to integrate Bitcoin responsibly within current business processes and regulations. There are already several small banks (including Bitwala, Revolut, Bank Frick) that are already successfully offering Bitcoin to their customers.
Another breakthrough is that Kraken, a major U.S. crypto exchange, has launched a banking license has acquired a banking license of the U.S. state of Wyoming. Wealthy Crypto Exchanges will obtain payment and banking licenses and compete not only with banks, but also with fintech players. In addition, several listed companies (including Square, MicroStrategy, Stone Ridge) specifically moved to hold Bitcoin as a strategic reserve currency.
Furthermore, central banks are working hard to develop central bank digital money as a response to private developments in the field of stablecoins and projects such as Libra. It is only a matter of time before so-called Central Bank Digital Currencies (CBDC) should be put into circulation. China is way ahead of the curve here with the Blockchain Services Network and the digital yuan.
The future of the monetary system and the payment system is digital. PayPal couldn't afford to be left behind. Now, its payment network of 365 million users will still have access to Bitcoin to some extent. PayPal can be used as a Exchange platform charging conversion fees and making a lot of money as a result. Money that PayPal would otherwise miss out on if more and more of its users switched to an exchange and a decentralized (P2P) cryptocurrency network. For more information: Why should I or shouldn't I buy Bitcoin with PayPal?
All the information in this article is based on the articles of the Best Bank. A knowledge base about the emergence of a new financial order.
Disclaimer: Holland Gold does not provide investment advice and this article should not be read as such. Investing involves risk, and past performance is no guarantee of future results. This article gives the insights of the guest author, they do not have to match those of Holland Gold.
