On 21st Oct, PayPal officially launched its new service enabling users to buy, hold and sell cryptocurrencies. This announcement has arisen huge waves in the cryptocurrency community. BTC price also hit $13,000 again in recent days.
Will you use PayPal’s cryptocurrency service? Let’s count the pros and cons.
There are many advantages to use PayPal. It’s a payment giant, with 26 million merchants and 325 million active account holders worldwide. This would be a significant move for both Paypal and cryptocurrency traders and might drive the mass adoption of crypto payment.
However, how’s this cryptocurrency service work?
According to Paypal’s official news, they will initially feature Bitcoin, Ethereum, Bitcoin Cash and Litecoin, directly within the PayPal digital wallet. And the service is enabled in the U.S. through a partnership with Paxos Trust Company, a custody provider of cryptocurrency products and services.
So we can regard Paypal’s cryptocurrency service the same as other custodial wallets in the present crypto market. Using a custodial wallet means your private key is stored by a third party. You don’t have full control over your funds. If your wallet gets hacked, your coins may go missing.
A negative example of custody is the recent OKEx incident. A few days ago, OKEx’s founder was taken away by the police. Since he’s the person who controls the private key, now all the OKEx users are not able to withdraw their cryptocurrencies from their accounts.
Taking account of this, some in the crypto community have expressed their rejection of this custodial feature by Paypal on social media, as they think it a highly centralized and inflexible service. And cryptocurrency is based on blockchain technology and all about decentralization. Long term, would this bring value to the crypto market?
As there are already lots of crypto wallets, how to choose a reliable and suitable one for yourself? You can check our new Wallet topic page. We cover all the blockchain wallets for different cryptocurrencies and rank them by different dimensions: Interest (a product’s mentions on the Internet), New, Recommendation, User Rating, and Alexa Ranking (a website’s popularity).
Actually, there are 3 types of crypto wallets - software crypto wallet, hardware crypto wallet, and crypto wallet service that allows users to store their cryptocurrencies by blockchain private keys.
How to know a wallet is custodial or non-custodial?
Search “wallet” on dapp.com (https://www.dapp.com/search_product/?keyword=wallet), then you will see there is a custodial and non-custodial tag put on each wallet.
And those wallets with a “buy crypto” tag means you can trade cryptocurrencies directly inside the wallet. (Playlist - Wallet with Built-in Token Swap).
Wallets with “Dapp Browser” tag means besides storing cryptocurrencies, you can also use dapps inside these wallets.
Among all the wallets, the safest type is the hardware wallet, such as Ledger, one of the top crypto wallets that have passed the security audit. It double protects your crypto assets as you need to obtain both the hardware and passcode to operate.
If you want to use PayPal as your fiat entrance to crypto and then do crypto trading to gain profits, just forget it. PayPal is not the way that can make this come true. Because all cryptocurrencies on the PayPal network must stay there, you can’t withdraw or transfer, but only buy it by fiat and sell it for fiat.
If you want to buy crypto by fiat and transfer to another account as a way of payment, no, you can’t do this either. Buy, stay and sell, that’s all.
Another problem is the users’ complaints about their PayPal accounts being shut down from time to time.
These are some of the comments Paypal users posted on Twitter. As we’ve mentioned before, it’s a centralized platform, which means it has full control of your personal account. Unlike decentralized projects, it doesn’t need to launch a community vote to shut down your account.
All in all, with all these pros and cons, will you use Paypal to buy, hold, or sell cryptocurrencies? Tell us in the comments.
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