Blockchain And PayPal: Friends Or Foes?
There have been talks, debates, and speculations regarding the impact of blockchain technology on the financial industry for years now. Most people agree that this highly-disruptive technology might be the next step in the industry's evolution. However, that leads to a big question — what will happen to online payment services of the previous generation, like PayPal?
For almost two decades, PayPal has been one of the biggest and most dominant methods of making payments online. Can it remain relevant once the era of blockchain finally takes over, or will it become obsolete? Is it in danger of disappearing, like traditional banks, or can it survive by adapting?
Blockchain has already shown potential in the payment industry, but in many others as well. It offers a new world of decentralization, lower fees, and higher speeds than any other tech that came before it. Meanwhile, PayPal has been a pioneer in online payments. It emerged at exactly the right time to be able to follow the expansion of e-commerce.
It also emerged as an alternative to traditional banks and other wiring services. In a way, it even allowed people to become more comfortable with online payments, thus opening the way for blockchain to offer a more advanced version of it. While disruptive in its own right, PayPal might still be overthrown by blockchain payments — unless it evolves.
The pros and cons of PayPal and blockchain
Neither of these technologies is perfect, and there are positive and negative aspects of both of them. PayPal, for example, allows users to send and receive money in 26 different fiat currencies, and it requires them to have a bank account and an email address in order to deposit and withdraw money. It is also fully regulated, which means more protection for its user, and it is relatively fast, with the most transaction being done within 30 minutes.
It does feature a 2.9% fee, and it charges 30 cents per transaction to the seller. This can be bypassed by using the eCheck option, although this method will increase the waiting period for completing the transaction. In addition, there is a currency conversion tool, but it has its own rates, and it has a $10,000 limit.
Then, there is blockchain, which requires no institutional approval for its transactions, and there is no limit to the amount that is being transferred. There is no need to concern yourself about conversion rates, although there is a huge number of cryptos out there, meaning that the payer needs to calculate the price of goods and services in terms of the coins that providers are using.
Blockchain lacks in terms of regulations, but the decentralization of its system means that it is nearly entirely impossible to destroy or modify the content stored within it. It features fewer checkpoints and faster transaction speeds. However, there are equally as many checkpoints for local payments, which also impacts the speeds.
Further, while blockchain promises pseudonymity, it will be broken as soon as the address is connected to the individual making the transaction, which does not work well with demand for increased privacy. The biggest problem remains the already mentioned lack of regulations around the world, which is something that regulators are working on changing, but it will take time for a significant change to be made.
The future of online payments
So, what does that mean for PayPal and blockchain? Well, for now, PayPal is still a bit more secure, and still faster, meaning that it still has a chance for survival. It is even possible that PayPal might have an interest in blockchain due to its disrupting capabilities.
For now, there are no plans to integrate blockchain technology, but that does not mean that it will never happen. Meanwhile, the two technologies may still work together to disrupt traditional banking. And, if PayPal is smart, it might actually approach blockchain itself. The only question is — will this happen before blockchain and cryptocurrencies knock it out of the game.
More and more companies are turning to cryptocurrencies, and more will likely do the same in the future, as crypto and blockchain start receiving regulations, institutional attention, solutions to their problems, and price stability. Meanwhile, companies such as Ripple are developing products that may combine crypto with traditional banks, and make PayPal the loser.
The future is still not clear, and there are many twists and turns along the way. Many decisions might impact the future, and there is still no telling which path PayPal or blockchain might take. One thing that is certain, however, is that a change will come within several years and that it will likely include blockchain. Whether PayPal will be there in its new form as a partner, or will it continue to fight a losing battle still remains to be seen.