Paypal’s Crypto Embrace: Morgan Stanley Says Move Boon For Mass Adoption, Critics Say Payment Giant Violates Crypto Principles

Paypal’s entry into the cryptocurrency industry continues to expose the gap between traditional cryptocurrency players who are less enthusiastic and non-crypto players who support the move. Non-crypto players like Morgan Stanely analysts agree with the idea that the payment giant’s move will lead to greater adoption of cryptocurrencies. However, analysts believe that such a move will not lead to an immediate improvement in the company’s profits.

In a note, analysts explain that the move “should expand the acceptance of online cryptocurrencies, which to date has stopped at 1% of the top 500 Internet retailers.” However, it is speculated that Paypal’s embrace of encryption is motivated more by a desire to keep up with rival Square than by helping bring encryption to the masses.

Violation of the principles of cryptocurrency

Meanwhile, critics of Paypal’s crypto voice like Satoshilabs, a manufacturer of crypto hardware wallets, are less optimistic about the turnaround of bitcoin payment giants. Noting that at one point, a former senior Paypal executive called bitcoin a scam, Satoshilabs claims that “the service will be fully guarded, meaning users won’t have the key to their coins.” It is such conditions of service that seem to go against bitcoin’s ideals, which are the decentralization and elimination of third parties.

According to Satoshilabs, less reliance on third parties is especially important now that “exchanges are losing user funds, often leaving them (customers) with no recourse.” As Satoshilab lashes out at the restrictions Paypal will impose on coin movement, the crypto hardware maker admits the payment giant’s regulated entity status is likely to attract new users.

Not your keys, not your coins

Also echoing the feelings of the Satoshilabs team is Brad Garlinghouse, CEO of Ripple whose XRP token is not part of the list of coins that Paypal customers can buy. Writing on Twitter, Garlinghouse questions Paypal’s move that he does He says is:

2 steps forward, 1 step back … Great to see a payments pioneer leaning on it, BUT disappointingly some fundamental principles / benefits of crypto are rejected. I suspect PayPal is concerned about the regulatory uncertainty (wait for it …), which affects its launch on several levels.

Garlinghouse and others appear to be in dispute with the customer payment giant’s clarification that “you own the cryptocurrency you buy on PayPal but you won’t be given a private key.” According to Satoshilabs, that statement shows that Paypal’s alleged embrace of digital currencies “undermines key principles of cryptocurrency instead.” However, others like Virgin Galactic President Chamath Palihapitiya see the positives of Paypal’s move.

Paypal determination

Meanwhile, in a move that reaffirms its new commitment to cryptocurrencies, Paypal is reportedly on the verge of acquiring Bitgo, a cryptocurrency custodian. Reports cite unnamed sources as saying “PayPal is in talks with BitGo and could close a deal within weeks.” However, if the negotiations fail and the payment giant is reportedly looking for new targets to buy.

Alongside the initial announcement, the latest reports appear to help push Paypal’s share price up. The stock was up 5% on October 21 after the announcement.

Are crypto users better off without access to private keys? Tell us what you think in the comments section below.

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