Bitcoin prices surge after Paypal jumps into the cryptocurrency business
New York(CNN Business) PayPal is launching its own cryptocurrency service, allowing people to buy, hold and sell digital currency on its site and applications.
The online payments company declared adding crypto was a significant milestone on the path to mainstream adoption of cryptocurrencies such as bitcoin. Bitcoin investors agreed: Prices rose 5% on the news Wednesday.
The efficiency, speed and resilience of cryptocurrencies give people financial inclusion and access advantages, said PayPal President and CEO Dan Schulman, who described the eventual shift from physical to digital currencies as "inevitable."
Cryptocurrency is digital money exchanged without fees between two parties online with no involvement from traditional banks and no regulatory oversight by national governments.
"Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange," Schulman said in a statement. "
How it works
PayPal says its new service will give customers the ability to hold and exchange Bitcoin, Ethereum, Bitcoin Cash and Litecoin cryptocurrencies using the company's digital wallet, which lets people shop online, request and send money.
The company's US customers will receive crypto service access in the coming weeks, but they won't be able to pay for products and services using cryptocurrency until early 2021. PayPal's Venmo customers and select international consumers won't have crypto services until some time in the first half of 2021.
Investors responded positively to the news Wednesday, as PayPal's (PYPL) stock price surged following opening bell before retreating close to where it opened for the day. The company's stock has more than doubled since the beginning of the Covid-19 pandemic in the United States in mid-March.
The pandemic has fueled a boom in the online payments industry and companies like PayPal, Square (SQ) and Venmo -- which is owned by PayPal -- because many coronavirus-wary consumers are avoiding the use of physical cash.
PayPal isn't the only major company betting on cryptcurrencies. Square spent $50 million to buy more than 4,700 bitcoins earlier this month. Square Chief Financial Officer Amrita Ahuja told reporters at the time that the company believes bitcoin could be more a "more ubiquitous currency in the future."
