As the price of Bitcoin continues to hit new all-time highs, large companies with existing crypto offerings in place are starting to discuss big plans for the future.
Most recently, Dan Schulman, CEO of PayPal, hinted at future developments in PayPal’s crypto offering during TUSEN’ 2021 Blockchain 50 Symposium: Crypto Goes Corporate, an online event that took place on April 13.
During a fireside chat with Michael del Castillo, associate editor at TUSEN, Schulman mentioned that the financial system will undergo more changes over the next five years compared to the progress made over the past 30 years. . Schulman further noted that digital currencies like Bitcoin (BTC) will lead the way, noting that there will be far fewer cash and credit card transactions over the next five to 10 years. Schulman said:
“We are entering the era of digital currencies, and these digital currencies hold tremendous promise, whether they are cryptocurrencies or central bank digital currencies. I believe digital currencies can increase the utility of payments and make the financial system more inclusive and less expensive. ”
Digital currencies will create financial inclusion
According to Schulman, one of the biggest challenges facing society today is the fact that millions of people all over the world are excluded from the current financial system. This has become particularly evident in the United States, as Americans with bank accounts began receiving their latest round of economic stimulus checks through direct deposit. Sadly, millions of unbanked and underbanked Americans have to wait much longer to receive paper checks in the mail.
Schulman noted that the current financial system is relatively inefficient, noting that it takes too long to receive money, which is even more difficult for people with low incomes. “It’s not at all inclusive,” he said.
In order to address these lingering issues, Schulman explained that PayPal’s crypto offering, which went live in the United States in November 2021, will eventually allow users to do more than just buy, sell, and hold Bitcoin, Ether (ETH), Litecoin (LTC)) and Bitcoin Cash (BCH). While PayPal revealed at the end of March that the platform would soon allow its merchants to accept cryptocurrency as a medium of exchange, Schulman hinted that this was just the beginning of many possibilities. :
“PayPal really wants to use cryptocurrency as a source of funding for day-to-day transactions. The end of the game, however, is a nobler take on this inclusive economy, and things will be done much differently than they are today.
In addition to encrypted payments, Schulman said PayPal will eventually take advantage of smart contracts and other underlying technologies to ensure that a payment is more than just a transaction. “That’s the promise of all digital currencies – they can create additional value from just one basic transaction.”
Digital currency innovation could take longer than expected
While PayPal’s crypto plans are remarkable, it’s important to note that innovation may take longer than expected. For example, when del Castillo asked Schulman how long he expected PayPal’s encryption service to reach $ 200 million in volume, Schulman boldly replied that it would only take a few months, if not less.
While this is encouraging for crypto adoption, del Castillo noted that it took Coinbase Commerce, a platform supporting cryptocurrency payments for online retailers, 13 months to generate a volume of $ 200 million.
However, TUSEN previously reported that Coinbase Commerce’s success was in part due to the 8,000 retailers currently using Coinbase for payment services. Schulman mentioned during the fireside chat that PayPal has over 375 million digital wallet consumers and around 30 million merchants on the platform. In turn, PayPal could very well cross new boundaries when it comes to digital payments for commerce.
There are no plans to add Bitcoin to PayPal’s balance sheet
Although Schulman appears to have a very optimistic attitude towards cryptocurrency adoption, the executive said there are still no plans to add Bitcoin to PayPal’s balance sheet in 2021. “I thinks the likelihood of that happening is low, ”he said.
When asked why, Schulman explained that PayPal’s balance sheet consists of safe assets with less volatility because the funds must be used in a way that returns money to shareholders. “We really need to be sure what is on this balance sheet to ensure a consistent allocation of capital,” said Schulman.
While it may be, Michael Saylor, President and CEO of MicroStrategy, has a different take on Bitcoin’s volatility. This shouldn’t come as a surprise, however, as the business intelligence firm recently announced that its board will receive bonuses in Bitcoin instead of fiat.
Saylor also shared his thoughts on the future of Bitcoin at the TUSEN ‘2021 Blockchain 50 Symposium: Crypto Goes Corporate’ event. In a fireside chat with Steve Ehrlich, director of digital asset research at TUSEN, Saylor said there has been “a huge shift in sentiment in the corporate world” towards Bitcoin . However, he noted that thousands of companies are still hesitant to add Bitcoin to their balance sheets for two reasons: volatility and soft accounting.
According to Saylor, volatility is a misnomer, noting that Bitcoin has been the most successful asset of the decade as its price has doubled every six months for 10 consecutive years. Saylor commented:
“The winning team of everything on earth is always the most volatile. Anyone who thinks volatility is bad should bet on the losers. “
Saylor further explained that the only logical reason most companies still haven’t added Bitcoin to their balance sheets is due to intangible accounting methods, noting that this is more of a problem than volatility. While this may be the case for many companies, Saylor noted that MicroStrategy’s balance sheet will be 99% invested in Bitcoin. He said:
“Our strategy is to develop, acquire and hold Bitcoin. Crypto and Bitcoin are increasingly accepted and adopted. If you look at March 2020 in relation to where we are today, you can see that this is an extraordinary developing asset class. I also think Coinbase’s direct listing will be a big exit feast for the crypto economy. “