PayPal Considers Accepting Bitcoin [REPORT]

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Is Bitcoin becoming, more firmly established in the mainstream tech world?  With the announcement by eBay Inc (NASDAQ:EBAY) CEO John Donahoe that it is considering integrating the digital currency platform into its PayPal unit, acceptance of the digital currency appears to be growing.

After saying Bitcoin not ready for PayPal, does a reversal signal a major shift?

The  eBay Inc (NASDAQ:EBAY) announcement, which came at the annual shareholder’s meeting, is particularly interesting as in regulatory filings PayPal had said Bitcoin was considered competition in the currency transfer business, Business Insider had noted.  The statement from Donahoe is a marked shift in eBay/PayPal policy.  In fact, in 2013 PayPal CEO David Marcus, who owns some Bitcoin, said Bitcoin was not suitable for integration into PayPal, the report noted.  The move would likely encourage other online payment processors to accept Bitcoin, the report noted.

The fact that PayPal is considering a move that would in fact promote a competing method of not money transfer could be construed as a tip of the hat to the inevitable – Bitcoin could be here to stay, in other words.

“We think bitcoin will play a very important role in the future,” Donahoe was quoted as saying. “Exactly how that plays out, and how we can best take advantage of it and enable it with PayPal, that’s something we’re actively considering. It’s on our radar screen.”

Currency or payment processing method?

Bitcoin’s status as a tradable “currency” or a payment processing system is in the process of being defined.  Although it has no backing from a government, as do currencies, nor is it linked to a traditional store of value, such as gold, it was initially considered a currency.  Its price has fluctuated widely as a market making system similar to that in stocks, commodities and other currencies has failed to materialize.  The more functional definition, however, is that of an inexpensive payment processing system – providing a direct challenge to firms such as PayPal. Thus, for PayPal to be offering Bitcoin integration is yet another milepost in Bitcoin’s rise to acceptance.

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About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com

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