The SatoshiLabs team doubts that PayPal is entering the crypto market to promote it with good intentions.
Even though the majority of the crypto industry was happy that PayPal’s announcement to integrate crypto currencies into the company’s own payment service catapulted Bitcoin up to $13,200, there are nonetheless critical voices.
For example, a blog entry from October 21, written by Satoshi Labs, the team behind the crypto-wallet Trezor, warns that PayPal „is unlikely to include Bitcoin (BTC) in its service offering to promote the development (of the crypto currency)“. The criticism voiced relates primarily to the well-known argument of die-hard crypto investors who believe that holding crypto-money in a centralised organisation, in this case PayPal, contradicts the basic idea of decentralised crypto-currencies.
„If millions of newcomers come to Bitcoin via PayPal, there will be a very large information gap that will jeopardise both their user experience and the very concept of crypto currencies,“ SatoshiLabs writes accordingly. And further: „No one should perceive money that is entirely owned by a third party as their own property. Crypto exchanges have repeatedly lost users‘ money without being able to compensate them afterwards“.
The blog adds to this:
„In the long run, if PayPal does not consider the community and does not allow users to keep their own keys, there will be no added value for the industry. The biggest risk is that the company’s good reputation in the payment industry will also be interpreted as expertise in the crypto sector. This could undermine the good advice that the community has come up with in the long dialogue by bringing many ill-informed people into the market by PayPal“.
Many crypto experts advise not to keep crypto money on centralised crypto exchanges as they are vulnerable to hacks, security holes, bugs or other errors that can have devastating effects. Even Coinbase, the largest crypto exchange in the USA, has crashed repeatedly when the crypto markets have shown high volatility. Currently, the Malta-based crypto exchange OKEx has temporarily restricted all crypto payouts for security reasons, to give another example.
According to Blockchain.com CEO Peter Smith, PayPal’s offer would also be „highly decentralised and not very flexible“:
„We saw it with Robinhood and we are seeing it again now. Crypto-currencies are about financial freedom. They are the modern money that nobody can control. While we are pleased that a new audience is gaining access to it, this approach restricts true self-custody and therefore freedom of transaction“.