
Paypal President: We're thinking about adding Bitcoin (2:50) [video] - tonez
http://www.bloomberg.com/video/paypal-sees-20-billion-in-mobile-transactions-WlokACTBRterdjHAJGNB6w.html
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khet
If Bitcoin does succeed, I don't see a regular person wanting to manage his
own wallet and security let alone understand all the complexity that is
bitcoin.

I see Bitcoin becoming the underlying infrastructure on which companies like
Paypal, Square, Banks and other financial institutions trade.

If Paypal does invest in adding Bitcoin, it would be right step ahead for
Bitcoin and for Paypal.

~~~
Drakim
The real win is that if it becomes the underlying infrastructure, it is still
_possible_ for the common man to have a "manual wallet".

You won't end up in walled garden situations where a single vendor controls
with massive fees and restrictions, but you have no choice but to use them,
because hey, that's all everybody accepts and uses.

If an online wallet service/paypal/visa is gonna keep your business, they have
to make what they offer be worth their fees.

~~~
blake8086
What if you have large vendors like PayPal only offering transfer to other
institutionally-controlled wallets?

for example: "Since your funds are transferred only between other PayPal
users, PayPal can always reverse a fraudulent transaction."

Then you would have a veritable roach motel of bitcoins.

~~~
celticninja
you could easily send BTC out of paypal to any bitcoin address, they could nto
sue it and disable those coins from accessing the blockchain. However they
could say that if you do a BTC transfer from paypal account to paypal account
they could offer protection then by freezing the funds or having a 5 day
period before the user could withdraw them. Once they are withdrawn there is
nothing paypal could do, of course this removes the immediacy of payment
aspect of bitcoin so merchants may not want it.

Really because bitcoinoffers low fees this sort of service would be of benefit
to the buyer only.

Alternatively PayPal could use bitcoin as their backend for transferring money
internationally. If i want to pay someone in USD but only have EUR then they
could exchange EUR for BTC then BTC for USD and pay the USD to whoever I was
paying.

~~~
ewbuoi
They could place any restrictions on it they want if they keep both keys
secret. They could also just keep all the bitcoins in the same wallet, and
keep track of how much each account owns.

------
tonez
The main line: "So I've been spending a lot of time looking at it. It's truly
fascinating, actually, the way the currency's been designed and the way
inflation is built-in to pay for miners and all that, it's truly fascinating.
And I think, for us at PayPapl, it's just a question of whether Bitcoin will
make its way to PayPal's funding instrument or not, and we're kind of thinking
about it right now."

~~~
lingben
inflation? I think he means DEflation

~~~
mckoss
In 8 years (by 2021) 90% of Bitcoins will have been issued. Strictly speaking,
the supply is inflating continuously, though it is unlikely to ever be growing
faster than future demand (we seem to have past that point within the last
year). The only reason economists would call Bitcoin deflationary is the
presumption of constantly growing demand.

~~~
BadCRC
> Strictly speaking, the supply is inflating continuously

what about Bitcoins being lost? perhaps we should also consider coins that are
not used in the past five years also "lost".

~~~
fnordfnordfnord
>what about Bitcoins being lost?

At some point, the rate of loss may overtake the rate of new coin creation.

> perhaps we should also consider coins that are not used in the past five
> years also "lost".

Maybe, but be prepared for some of those to someday be spent, they may merely
have been hoarded. I have dollars that have been in my possession for more
than five years, they aren't lost as far as I am concerned.

------
vlasta2
Oh, dear. If I were the president of PayPal and wanted to make quick buck, I
would buy some bitcoins, released news like this, and sold my bitcoins the
next day with a nice profit. And then, I could just deny the news, sending
bitcoin value back where it was so that it is ready for the next exploiter...
Heh.

But seriously, PayPal and Bitcoin are by nature rivals. If PayPal wanted to
have a crypto-currency, it would develop its own, not validate and boost value
of another one gaining nothing in the process.

~~~
ok_craig
A lot of what keeps regular Joes away from bitcoin is its complexity and the
difficulty of keeping your funds secure. If PayPal were to make the most
secure, easiest-to-use bitcoin wallet, they could profit greatly from it and
also provide something that doesn't really exist anywhere yet.

All PayPal does right now is help you get dollars from point A to point B, and
in the process they take a cut. They could do the same thing with bitcoin. I
don't think it would be competition with bitcoin, it would be promoting it to
mutual benefit.

I would be afraid of them providing this service without allowing you to
export your data, however, which seems like the kind of thing PayPal might
like to do. If your bitcoins were trapped in their system you're always in
danger of having your account frozen as has been a problem up to now. Part of
the purpose of bitcoin is to be able to avoid that, so I'd hate for PayPal to
bring that whole problem to the bitcoin world.

But if they approach it properly, bitcoin could be a great opportunity for
PayPal, instead of a threat.

~~~
vlasta2
I am sorry I cannot agree with you.

You cannot collect profits from a transaction between 2 Bitcoin users like
PayPal does right now with "real" money. If the world adopted Bitcoin, it
would be the end of PayPal's business model. If PayPal were ready to replace
their business model with something way less profitable, but more future-
proof, it would still make no sense for them to adopt bitcoin. It would only
make sense if they owned significant amount (50%) of the existing bitcoins and
had the code base under at least indirect control. What would happen if this
were true and the bitcoiners found out? ...too many ifs.

That said, Bitcoin will never become a commonly used currency in its current
form. The built-in deflation is a _fatal_ flaw, which makes it unusable for
normal buyers or sellers. It is only appealing for "get-rich-quick" investors,
which is a shame, 'cause we really need a good solution (0% fee & safe) for
online payments.

~~~
javert
> The built-in deflation is a fatal flaw

Yeah, I mean, gold didn't work as a currency all those hundreds of years.
/sarcasm

~~~
rsofaer
The amount of gold in circulation has never stopped increasing.

~~~
draugadrotten
Nothing prevents you from creating a "bitcoin-B", "bitcoin-C" and so on. There
will be enough bitcoins for everybody.

Disclaimer: I believe bitcoins are tulip bulbs.

~~~
YokoZar
More relevantly, nothing stops you from creating a tradeable note that says
"redeemable for 1 bitcoin from <trusted authority>" and then using those as
currency.

This happened with gold, and also would happen if we saw a true bitcoin bank
rather than bitcoin wallet -- they'd pay a bit of interest, and in return
would pool their deposits and use some fraction of them to generate revenue
through other channels.

------
axusgrad
Paypal would do very well buying and selling Bitcoins. Buying bitcoins with
Paypal is a very common request, which most sellers won't do because Paypal
makes it very easy to rip off the seller.

~~~
eurleif
>Buying bitcoins with Paypal is a very common request, which most sellers
won't do because Paypal makes it very easy to rip off the seller.

Where are you observing that it's a common request? Could it be a common
request _because_ it's easy to rip off the seller, in the same way that
assistance transferring a dead relative's funds out of Nigeria is a common
request?

~~~
Devilboy
Go on any Bitcoin forum and the newbie section will be filled with people
wanting to buy Bitcoin with credit cards, usually via Paypal. Some of those
will be scammers but not all of them.

~~~
eurleif
Seems hard to gauge the proportion of real newbies vs. scammers, though.

------
amalag
Paypal already encourages you to use your bank account instead of a credit
card. Paypal is not Visa/mastercard. They have to make their money in addition
to whatever the credit card is making. It only makes sense they look at
bitcoin as a method for frictionless digital payment.

------
mcantelon
"You'll never lose a penny while using Paypal."

Unless your account is frozen...

~~~
jonknee
In which case it's still not lost...

~~~
Ziomislaw
...just "stolen"

~~~
snarfy
...without the same legal recourse as you would a real financial institution.

------
Mahn
Bitcoin itself doesn't _need_ PayPal, but the bigger picture here is that
PayPal integrating BTC could boost awareness like few things could for the
currency.

------
chiph
Doubtful. I expect this is a tactical marketing play to associate themselves
with the current hipness of Bitcoin.

~~~
drcode
I disagree: If they had no interest in integrating with bitcoin, the smart
move for paypal would be to just spread FUD about bitcoins at every
opportunity.

~~~
threeseed
I disagree: If they did spread FUD they would be widely considered to be out
of touch by the IT crowd. The same crowd they need to be incorporating the
Paypal APIs into their apps.

~~~
obviouslygreen
PayPal already _is_ considered out of touch by the IT crowd (and many other
crowds that are actually involved in the selling or payment gateway
integration end of things beyond "put this HTML on your page and use the Buy
Now button").

It's still widely used because everyone knows about them and they're well-
established. It's often hard to talk clients out of using PayPal because the
barrier to entry for setting up an account is so low, despite the arbitrary
terms and the relatively high fees and limits.

This could potentially be a bid to _impress_ the IT crowd, which would be a
good move for them if they actually follow through (it certainly won't affect
my view of them, but that hardly means anything).

------
nemonoko
"We're thinking about it" - They better be, because if decentralized payments
hit the mainstream, PayPal's 3.9% fee is going bye-bye.

~~~
amalag
Paypal takes 3.9% ? No, you have to see how much credit card companies take
and how much paypal takes. They likely get less than half that.

~~~
MacsHeadroom
For international sales PayPal takes 3.9% plus a flat rate fee ($1-$5) plus a
poor exchange rate which adds in a hidden 2-3%.

In total they can end up taking $12 on a $100 purchase.

But you're right, most of that probably goes to the credit card company.

------
hogu
that's so garbage, I remember back in the early days, they were closing down
accounts used in bitcoin exchanges. Getting money into bitcoin exchanges was a
huge problem.

Besides, with bitcoin, why use paypal? Is paypal going go try to act as an
exchange between btc and usd?

~~~
betterunix
"Besides, with bitcoin, why use paypal?"

If you have a bunch of Bitcoin money but need to do business with people who
will only accept fiat currencies, you need some kind of exchange service. I
suspect that is what Paypal will do.

~~~
lucb1e
Or they start to act like Bitpay, providing payment (or donation) services. In
addition they could exchange BTC against other currencies at the current
market rate from a market exchange like Btc-e, mt.gox or bitcoin-central.

------
benhebert
I expect this news alone will make Bitcoin go up $30 - $40 today.

~~~
ceejayoz
A stiff breeze makes Bitcoin go up (or down) $30-40.

~~~
viraptor
It's like signal and noise. Responses to news like that are still visible on
their own shortly after the event, even if the exchange rate is not stable in
general.

------
nazgulnarsil
This along with comments from Western Union have surprised me. But it does
make sense. These companies would be foolish not to stay open to pivoting with
market demands. Right now it is "we're aware of it", if it starts to take off
I expect them to integrate it into their business models to capture part of
that growing value.

Remember that in the gold rush you got rich selling pickaxes. WU and Paypal
stand to profit from bitcoin with very little risk if they play it right.

------
oomkiller
Didn't Paypal start out as a Palm Pilot app that transmitted money using
cryptography? I think it's interesting that bitcoin is kind of the 21st
century version of that.

------
iguana
Anything that increases bitcoin liquidity is good for bitcoin. Anything that
increases PayPal's market opportunity is good for PayPal.

A lot of people want to purchase bitcoins with their PayPal accounts, and
since PayPal is already licensed as a MSB, this just requires technology. They
can build or buy (Coinbase), and make a pretty significant revenue on
conversion fees. They could also charge a small fee for bitcoin transactions
over a certain amount, in exchange for convenience, or, for example,
transaction insurance, which can be underwritten, eliminating the risk.

PayPal can do a lot for Bitcoin, and vice versa. If Bitcoin continues to be
successful, PayPal can continue to have a significant portion of the online
transaction pie.

------
unreal37
Why wouldn't Paypal invent its own Bitcoin (i.e. Paycoin) and have complete
control of the system? Why would they want to use Bitcoin at all?

I mean, they're the 800 lb gorilla of online payments. They'd be smarter to
invent their own thing than to use someone else's if they can.

~~~
Mahn
Yeah, and for that matter, why would anyone partner with Facebook, when you
could easily build another social network? I mean look at Google, they clearly
pulled that off without a problem.

Bitcoin is used and has value. The same could most likely not be said about a
hypothetical currency created by Paypal, specially considering one of the most
important assets Bitcoin has is its decentralized and unregulated nature.

------
lucb1e
Can't click this link right now. Abbreviated transcript please?

It's weird to see Paypal and Bitcoin in one sentence on the domain
bloomberg.com... Bloomberg is one of the biggest financial companies and
entirely against Bitcoin. I can't rhyme this; what are they saying about it?

~~~
magoghm
He say's: Bitcoin is truly fascinating. For us at PayPal it's just a question
of whether bitcoin will make its way to PayPal as a funding instrument or not,
and we are kind of thinking about it.

~~~
lucb1e
Thanks a lot!

------
tlrobinson
Yeah, just like Western Union was "thinking about" Bitcoin.

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altoz
It sounds like they see it as a way to get money into paypal. That is, it's no
different than a bank deposit. In other words, an easy way to transfer
BTC->USD ("funding instrument"). What they'll then do is dump the BTC they get
on the market.

Not a bad idea, but it seems they're thinking too small.

------
Havoc
BC does lack an easy way to buy them right now for many countries, so this
would be welcome. e.g. I'd either have to find a local seller (unlikely) or go
through 2x different online "currencies" till I get the BC.

------
Havoc
Its strange though to mention something like that at a "thinking about it"
level. If paypal were to actually implement it, surely taking the world by
surprise would be the better strategy.

------
madmaze
It's interesting they showed paypal.com screenshots from early 2000's

~~~
purephase
It's changed since then?

------
smaili
What would be the benefit for PayPal adding Bitcoin? I feel like this is
analogous to BoA saying you can now login to our site using your Chase
account...Doesn't make sense to me.

------
johnward
Is everyone forgetting that Paypal just sucks in general?

~~~
bithive123
At least it can probably handle more than seven transactions a second, unlike
the Bitcoin network. Future of currency indeed.

~~~
iso8859-1
The network is P2P, there is no limit to the amount of transactions per second
it can handle. MtGox is not the network.

~~~
bithive123
Incorrect. From the wiki:

 _Today the Bitcoin network is restricted to a sustained rate of 7 tps by some
artificial limits. These were put in place to stop people from ballooning the
size of the block chain before the network and community was ready for it.
Once those limits are lifted, the maximum transaction rate will go up
significantly._

Of course, a significant increase from 7tps still might fall well short of
what is required for real commerce. If you look at this graph of the daily
transaction rate, you can see that the actual performance of the network is
somewhat less than 1tps:

<http://blockchain.info/charts/n-transactions>

For comparison, there are probably more than seven transactions per second
going on in any small to medium sized city, let alone worldwide.

------
aioprisan
aren't bitcoin transactions irreversible, making it incompatible with PayPal
general policies?

~~~
bonzoesc
Bitcoin transactions are irreversible, but so are cash transactions. Wrapping
either currency with a transaction model that introduces a delay between
commitment and transfer allows reversing during the delay.

Paypal transactions are reversible because there's a delay between me
confirming the order with a merchant and the funds appearing in their account.

Paypal bitcoin would be similar; I deposit BTC with Paypal, and a week or two
after I approve sending to a merchant, the merchant gets BTC in their Paypal
account.

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felipelalli
Great! :)

------
knodi
Please don't. Bitcoin is a ticking time bomb. When it goes off you don't want
to be the one holding the coins.

~~~
psionski
Dude, don't mention bombs and bitcoins on the Internet. CISPA passed and if
they kick your door down, you'll most probably have to pay for the repairs out
of your own pocket.

