Don’t bank on bitcoin for payments yet

14 January 2021: Writing for the Technology and Financial Services Faculties, journalist Billy Bambrough examines the case for bitcoin as a major payment provider.

US payments giant PayPal’s support of bitcoin and a handful of other cryptocurrencies has boosted the bitcoin price, but mainstream bitcoin adoption as a means of payment will remain elusive for now, experts have told ICAEW. 

PayPal kicked off a bitcoin bull run reminiscent of bitcoin’s late 2017 bubble when it announced it would begin facilitating bitcoin buying and spending services in October, sending the bitcoin price back to its all-time highs of around $20,000 per bitcoin after a three-year bear market.

But PayPal’s lacklustre cryptocurrency offering, allowing users to hold the digital asset but not freely trade it outside of PayPal’s platform, was met with a muted reaction from many cryptocurrency watchers. 

“This is not a game-changing moment for bitcoin,” David Birch, a director at payments consultancy Consult Hyperion, told the ICAEW. 

“When things begin being denominated in bitcoin, that's when people maybe should start paying attention,” added cryptocurrency expert and author David Gerard. “Until bitcoin stops being a dollar derivative, it won’t be used for anything other than speculation.”

PayPal declined to comment when asked how the general reception and take-up of its cryptocurrency services has been so far and whether it has made progress on plans to allow the digital tokens bought via its platform to be moved off it.

PayPal has already begun allowing US account holders to buy bitcoin, ethereum, litecoin and bitcoin cash and from “early 2021” they will be able to spend with them at its 26 million merchants. It plans to expand the service to Venmo, its peer-to-peer payment app, by the first half of next year, aping what has become a lucrative business for payments rival Square. 

You can read more about this in greater detail in the Financial Services Faculty’s forthcoming January bulletin.