The arrival of PayPal in the world of Bitcoin has caused a stir. Everyone saw this as a sign of incredible progress for Bitcoin. This entry of PayPal into the world of Bitcoin (BTC) has clearly reinforced the bullish rally that we have been experiencing since early October 2020. Unfortunately, you must understand that buying Bitcoin via PayPal is missing you the monetary revolution embodied by Bitcoin. In this article, I will explain that to you in detail.
Started at the very beginning of October 2020, the bullish rally in Bitcoin that we have known since then gathered pace as PayPal has announced its official entry into the world of Bitcoin.
At the start of 2021, all 346 million users PayPal worldwide will have the ability to purchase Bitcoin directly from its platform and that of its Venmo online mobile payment solution.
Many immediately welcomed this entry from PayPal.
PayPal then made its service accessible from the beginning of November to its American users.. There has been a strong demand for Bitcoin since the release of PayPal’s new service. During the month of November 2020, PayPal thus purchased something like the equivalent of 70% the supply of new Bitcoins issued.
This obviously strongly boosted the price of Bitcoin which ended up reaching a new All-Time High (ATH) on December 1, 2020, very close to $ 20K. If the $ 20K still refuse Bitcoin, it will not last very long.
This barrier of $ 20K will be largely crossed in the months to come.
While the entry of PayPal boosts the price of Bitcoin, it is not without risks for users
If the arrival of PayPal in the world of Bitcoin brings credibility to the king of cryptocurrencies in the eyes of the general public, I quickly wanted to calm the ardor of some. In my opinion, the Bitcoin revolution cannot be complete if actors like PayPal or American banks are engaged.
The real problem is that when you buy your Bitcoins through PayPal, and in the future through US banks, you are not in control of your BTC’s private keys.
However, without the private keys of your Bitcoins, you end up facing the same risks as with the current banking system. The third party who holds the keys to your Bitcoins may decide to block some of your transactions. Worse yet, it can confiscate all of your BTC.
This is the misfortune that a user of PayPal’s Bitcoin service experienced at the end of November 2020.
This user has made too many transactions for PayPal. This prompted the company to freeze their account and freeze their money for a period of 3 months. PayPal said it was their standard protocol when someone saw their account banned.
This first example will unfortunately not be the last. Many people will experience the same disappointments in the future.
Bitcoin is much more than a monetary inflation hedge
Some people tell me that Bitcoin is the best hedge against monetary inflation today. De facto, investors who buy Bitcoin do not care about other characteristics of Bitcoin. The fact that Bitcoin allows you to resist censorship, and therefore take full control, is just one feature among many for them.
However, this is the point of Bitcoin. Bitcoin is the people’s currency supported by the people.
If you are buying Bitcoin, you must take full advantage of its benefits. Bitcoin aims to address the problems posed by the current system. And in particular the original problem described by Satoshi Nakamoto in 2010 :
“The fundamental problem with conventional money is all the confidence it takes to make it work. You have to trust the central bank not to devalue the currency, but the history of fiat currencies is rich in breaches of this trust. You have to trust the banks to hold our money and transfer it electronically, but they lend it in waves of credit bubbles with barely a fraction of the reserve. ”
In this quote from Satoshi Nakamoto, there are several problems with the current system.
The first is linked to central banks which keep increasing the money supply of fiat money. The second relates to private banks whose behavior creates waves of credit bubbles with barely a fraction in reserve, and whose people always end up giving in to the corruption inherent in human beings.
The third problem is that we cannot trust them to manage our money properly. The banks charge you too high fees. They have too much power over the money you own.
The goal of Bitcoin is to allow you to cut out middlemen like PayPal
The problem Satoshi Nakamoto talks about can be extrapolated to all intermediaries. That’s what Bitcoin was created for. Bitcoin aims to provide access to a decentralized payment system to as many people as possible.
A system where each individual can regain full control over their hard-earned money. No one can confiscate your Bitcoins, or even prevent you from making the transactions of your choice.
This is true provided that you have the private keys associated with your BTCs. If you let PayPal, a US bank, or any other middleman hold your private keys, you don’t own Bitcoins.
You trust a third party to hold Bitcoins that they claim to reserve for you.
This poses a risk to your wealth. At any time, this intermediary can decide to confiscate your Bitcoins as PayPal did with this user at the end of November 2020. The user had simply decided to carry out about ten transactions in a few days.
Since it was his money, he had every right to it. Not in a centralized system like PayPal’s. I’m talking about PayPal, but this will apply if you are buying Bitcoin through your bank. Indeed, it will probably hold the private keys of your BTC.
Not all Bitcoin you are going to buy is created equal. Only Bitcoins whose private keys you own are really yours. De facto, PayPal’s Bitcoin is not real Bitcoin. Sorry to have to shower the hopes of some who tell me that a new paradigm is being born.
If the arrival of PayPal, and soon American banks, in the world of Bitcoin are good things, it is only for the exposure to the general public that it induces.
The real fight must continue. The Bitcoin revolution is here to solve the problem that intermediaries like PayPal have created. These are at the root of the problems of the current system, they cannot be part of the solution embodied by the Bitcoin revolution.
All of this should only be the first step. People will then have to take charge of their own money destiny. For this, it will be necessary to buy Bitcoin directly to hold the private keys.
The current bullish rally, which has been reinforced by the entry of PayPal, must not distract from the real goals of the Bitcoin revolution. Bitcoin is there to restore power to the people when it comes to money. Don’t let third parties lock you into a centralized system again. Make sure you take advantage of Bitcoin to be the real master on board.
A developer by training, I discovered Bitcoin in 2014 but did not immediately grasp the importance it could have for the world of tomorrow. I took a more in-depth look at it from the start of 2017 and I haven’t let go of it since.
Passionate about Bitcoin and the new system it is trying to build for the future, I decided to participate in its evangelization at my modest level by writing about Bitcoin, Blockchain and cryptocurrencies in different media.
It is with pleasure that I publish some of my texts in French on The Coin Tribune.
I also write quite a bit about personal development and self-improvement.
Please feel free to connect with me via social media or in comments on my articles if you have any questions regarding my articles.