Popular global online payment provider PayPal announced earlier this week that it would allow its customers to buy and sell Bitcoin and other cryptocurrencies. The news was welcomed with an open heart as it promises mass adoption for Bitcoin. Following the news, bitcoin’s price reached its highest level in two years.
PayPal has a userbase of almost 350 million and about 26 million vendors compared to Bitcoin’s less than 190 million users. PayPal’s high number is undoubtedly a bullish move for Bitcoin since it exposes the cryptocurrency to mainstream users.
However, for a start, PayPal users cannot transfer or send Bitcoin to another account, whether to another PayPal user or an external wallet.
This has sparked different opinions from industry experts. While some believe that it’s the first step towards mass adoption, others think the restriction takes away the freedom of money from users.
But Danny Scott, CEO of CoinCorner, shares a different thought. He believes that the restriction might be a good thing because the Bitcoin network is not yet ready for it, at least not any time soon.
“PayPal cannot turn on send/receive functionality for Bitcoin any time soon (years?). Infrastructure is not ready, Bitcoin is not ready for that scale from a transactional perspective,” Scott tweeted.
With less than 200 million users, transactions are slow and expensive on the Bitcoin network, especially during price pumps.
According to CoinCorner CEO, the vast exposure for Bitcoin triggered by PayPal’s latest move would only add to the underlying issues of bitcoin fees/delay if the company had enabled bitcoin on-chain transactions.
In other words, if PayPal’s 350 million users are allowed to transfer or send Bitcoin, it would only make Bitcoin’s transaction slower and more expensive.
While PayPal doesn’t offer the send or receive function for cryptocurrencies currently, Scott believes that if the company activates the feature in the short terms, it would be out of ignorance or a direct attack on the Bitcoin network.
But there are existing solutions for this issue, like the Bitcoin Lightning Network that was designed to scale BTC transactions and reduce fees. Lightning is becoming a requirement, Scott added.
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Author: Abigail Michelle