PayPals recent announcement, launching a cryptocurrency digital wallet for buying, selling and storing Bitcoin, Ethereum, Bitcoin Cash and Litecoin, may be a milestone but it will impact millions of daily users who have, until now, never considered getting into cryptocurrency. Satoshi Labs, the inventors of Trezor – the original cryptocurrency hardware wallet, explains why consumers should not use PayPal for Bitcoin.
The Reason Why You Should Not Use PayPal For Bitcoin
In short, when a household brand like PayPal starts selling Bitcoin, it’s probably not because they want to spur healthy adoption. Until very recently, PayPal was anti-crypto. Writing in 2018, ex-CEO Bill Harris called Bitcoin “the greatest scam ever”, so what’s changed? Below are a few points about PayPals launch into cryptocurrency:
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- PayPals announcement of their new cryptocurrency service sends out mixed messages.
- On one hand, the service will be entirely custodial, meaning users will not have the key to their own coins, while on the other they intend to “provide account holders with educational content to help them understand the cryptocurrency ecosystem”.
- The idea that anyone informed about bitcoin would agree to not holding their private keys might indicate that this educational content will overlook the fundamental rule of “Not your keys; not your coins”.
- If millions of newcomers are onboarded to Bitcoin by PayPal, there could be a very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency.
- This statement from their FAQ is, in practical terms, false: “You own the Cryptocurrency you buy on PayPal but will not be provided with a private key.” No-one should consider money held entirely by a third party as owned by them. Time after time, exchanges have lost user funds, often leaving them with no recourse.
In the end, Satoshi Labs is providing its expert advice...“Do not use PayPal for Bitcoin; there are many other places to buy crypto which will let you keep ownership of your coins. PayPal is conceding to Bitcoin, and the many other aspirational, educational projects within the community should be highlighted to prevent newcomers from falling into a trap of trusting one of Bitcoin’s greatest long-term adversaries”