The crypto market changed after the entry of PayPal.

It can be argued that PayPal’s entry into the crypto market was the main reason why Bitcoin rose to record levels in 2020 and could be a secondary reason that added to the upward momentum of Bitcoin that started since the Bitcoin mining reward split.

Dan Shulman, CEO of PayPal, touched on Bitcoin and cryptocurrency in a recent TV interview with CNBC.

Through it, Shulman explained PayPal’s plans to expand into cryptocurrencies, and doubled down on the idea that bitcoin is more than just an investment asset.

Where stated Shulman said:

With the increasing use of cryptocurrencies in day-to-day commerce, I believe they are starting to transition from being an asset class to a currency.

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And when you start moving cryptocurrency as a potential financing tool, I think that enhances its usefulness, and also proves it.

It becomes less volatile because it can be used daily in purchases.

The TV interview was hosted by CNBC’s “Squawk Box” host Andrew Ross Sorkin, and the questions directed to Dan Schulman related to PayPal’s recent decision to allow its users to pay with cryptocurrencies purchased through its platform.

“When you start moving cryptocurrency as a potential funding tool, I think it enhances and also proves its usefulness — because it can be used every day for your purchases,” Tweet embed CEO Dan Shulman # encrypt #btc. pic.twitter.com/Naa5UBhvdS

– Squawk Fund (SquawkCNBC) November 23, 2020

Schulman explained exactly how Bitcoin works on the PayPal platform, and outlined some of the limitations built into the system, which he mentions and outlines below:

First, users can only pay with cryptocurrencies purchased through PayPal, and they cannot transfer these cryptocurrencies to any other wallet.

Merchants never receive any of these cryptocurrencies, since PayPal converts them into fiat currency the moment a transaction is made (here, PayPal services can be likened to the way most “crypto payment cards” work).

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However, it is a smart way to simplify the payment process for people who want to spend a little bit of cryptocurrency on a service or product.

But it is also crucially not a real crypto transaction between buyer and seller, since PayPal always acts as an intermediary.

Schulman explained that next year, users will be able to buy things with cryptocurrency from anyone who accepts PayPal (for now, this service is only available in the USA).

Shulman stated:

Early next year, we will allow cryptocurrencies to be a source of funding for any transaction that occurs with all 28 million merchants.

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When you start moving cryptocurrency as a potential financing tool, I think it enhances and proves its usefulness as well – because it can be used daily for purchases.

Technically, Bitcoin will turn into a currency like other traditional currencies and can be bought and held in exchange for services and things, but in no way a completely non-intermediate system, and not in the way that Bitcoin is built decentralized from the buyer to the seller.

It is worth noting that until now the picture is not completely clear about how the encrypted digital currencies work in the PayPal system.

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