Crypto and Paypal: “Not your keys, not your coins”
Updated: May 24, 2021
Bitcoin hit a high mark this week, reaching 13k, and for every crypto YouTuber, it is heading for an imminent bull run. Larger corporations are getting involved, which means more exposure to bitcoin.
As prices begin to rise other exciting news for bitcoin this week. Paypal has officially accepted bitcoin, ether, litecoin, and bitcoin cash as payment within the platform.
This is massive exposure for bitcoin, Paypal currently has 346 million users, and it is associated with 26 million companies worldwide. This online financial service allows you to pay for items using a secure internet account. Users have to add their bank account, credit card, debit card details, and now crypto! Whenever you pay using PayPal, you can choose which of your cards or accounts it pays with. You can also set one to be the default payment method, which will be used unless you decide otherwise.
Paypal also allows you to receive money through the service. Any money received in your PayPal account can be used when paying for something, with the balance topped up by your assigned cards or bank account.
Imagine how popular Paypal is and how many of those users have no clue about bitcoin or other cryptocurrencies available. Still, now they have a new option on their trustworthy online financial service. This exposure will definitely bring newbies to the ecosystem or at least no coiners; nonetheless, a respected business known worldwide such as Paypal creates exposure and creates trust and legitimizes crypto against many who fear it is a scam.
Unfourtantly, the hype regarding this new announcement from Paypal was shut down once the company stated:
Currently, you can only keep the cryptocurrency that you buy from PayPal in your account. Also, the cryptocurrency in your account cannot be transferred to other accounts inside or outside of PayPal.”
You are the owner of the cryptocurrency you buy from PayPal, but a private key will not be provided to you. In case you are wondering what it is, a private key is a person's secret code for accessing and managing their cryptocurrency. If they are lost, stolen, or even forgotten, your cryptocurrency can never be recovered again, which is quite risky in its own right. If you can log in to your PayPal account, you will have access to your cryptocurrency balance.”
These last two statements would make anyone in the crypto world know a little about this decentralized currency very nervous and reluctant towards the platform. Because one of the significant things in crypto is its security, you and only you own and are responsible for your coins, which is done by having your private keys. Paypal restricts this, not giving you your keys, using them as a third-party custodial, therefore abiding by their rules and regulation and the regulations they must obey according to government input. This can be dangerous; having a third-party custodial always is. Many known faces in the crypto world immediately went against it and warned people not to use the platform. The only problem is if you have been in crypto for a while, you might understand this and chose to use it at your own risk. Nonetheless, many newbies might not and end up using the platform and, by misunderstanding, may lose complete control of their crypto.
Unfortunately, Paypal did not recognize private keys as a must in the crypto environment because having access to crypto within Paypal is a good thing. Still, it must be done with caution and, if used, know the risks associated with it.
By: Carolina Pérez