When Bitcoin began to surge in 2017, it didn’t take long for massive interest to emerge. At the same time, however, most payment solution heavyweights, including Visa, MasterCard and PayPal, weren’t impressed. They fought to play down the importance of cryptocurrency and went so far as to prohibit their cards and users from being linked to anything related to digital currency. Now, just a few short years later, they are taking a different approach and are embracing cryptocurrency. Jason Simon, a FinTech and cryptocurrency expert, discusses why the recent announcements made by these payment giants are significant for cryptocurrency’s growth.
Visa, in 2018, was adamant about its position that its cards and payment solutions could not be used for purchasing or selling digital currencies. It shut off several low-level banks and financial entities that tried to offer cryptocurrency solutions and refused to negotiate a return. However, that changed last year, only two years after it prohibited digital currency. Last July, the company published a blog post and explained, “The concept of digital currency—or a digital version of cash controlled by a private key—was created more than a decade ago, with the launch of [Bitcoin]… We believe that digital currencies have the potential to extend the value of digital payments to a greater number of people and places. As such, we want to help shape and support the role they play in the future of money.”
At the end of last year, PayPal, which had also taken a hands-off approach to cryptocurrency, completely changed its stance and began to allow its users to buy and sell Bitcoin and others through their PayPal accounts. The giant payment processor is also working to establish the possibility that its users can make purchases using cryptocurrency directly from their PayPal accounts. Explains Simon, “This is a massive indication of how far cryptocurrency has come. PayPal has over 325 million active user accounts worldwide and is accepted as a form of payment by thousands of retailers around the world. Its embrace of digital currency is going to have a tremendous impact on cryptocurrency’s status as a fiat alternative.”
One of the long-standing issues with accepting cryptocurrency as a form of payment has been its greatly fluctuating prices. However, in spite of a recent rally, the price of Bitcoin has not seen significant increases or decreases. There are also now solutions that allow for cryptocurrency payments made to a retailer to be immediately converted into fiat, which ensures that the payment price is locked in at the time of purchase.
Cryptocurrency was originally created to be a peer-to-peer form of payment, capable of giving individuals the ability to completely control their own money without the need of an intermediary, such as a bank. Digital currency is also meant to give the world’s unbanked access to banking solutions for that same reason. “The possible solutions cryptocurrency can provide to everyone are limitless,” explains Simon. “Near-immediate transfers of funds between people at a fraction of the cost and the ability of those with no possibility of interacting with traditional banking solutions make it substantially more powerful than traditional fiat alternatives.”
Comparatively speaking, Bitcoin has advanced more rapidly than the US dollar has in terms of global acceptance. From the time the dollar was first created, it took over 100 years for it to be recognized as an established, legitimate currency. Bitcoin, on the other hand, has been around for only around 11 years, and has already become widely accepted. With Visa, MasterCard and PayPal now showing their support, cryptocurrency is going to be advance at a much faster pace.