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PayPal’s crypto integration means Bitcoin could triple its user base

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Bitcoin (BTC) price has again punched through the $13,000 mark after yesterday’s PayPal’s announcement sparked a powerful rally which drove the price to a new 2020 high. 

Currently sitting near $13,100, Bitcoin price has rallied nearly 10% since the announcement and BTC is now close to overtaking PayPal as the 21st biggest asset by market capitalization.

PayPal’s crypto announcement comes two weeks after Square, another payments giant, announced its own foray into Bitcoin by investing roughly 1% of its assets into Bitcoin.

According to Lanre Jonathan Ige, a researcher at Amun AG, the continuing trend of large sized investments will be material in bringing institutional interest to Bitcoin. Ige said:

“Corporations are often trend-following and we can expect a number of other corporations to follow the lead of Square and Microstrategy, as the returns of the assets continue to impress.”

However, the recent news from PayPal is more likely to bring the masses to Bitcoin, rather than Bitcoin to institutions. This is because PayPal may bring a more mainstream audience up to speed with the cryptocurrency as an investment vehicle for now and as a payment method in the future, which has been one of the main focus of the Bitcoin community when it comes to mass adoption.

PayPal should boost Bitcoin’s user base

According to data from glassnode, Bitcoin currently has over 187 million users or “hodlers”. While impressive, crypto analyst Willy Woo noted that this pales in comparison to PayPal’s 487 million users.

Total Bitcoin HODLers. Source: Twitter

By adding Bitcoin, PayPal is bringing the name to a mainstream audience. While it is only possible to buy, sell and hold Bitcoin through PayPal for the time being, the company announced that it would be adding cryptocurrency payment and transfers in 2021. Once this occurs, it could cement Bitcoin’s reputation as a payment and remittance mechanism.

Transacting through PayPal and other centralized platforms could even become one of the ways in which Bitcoin is able to scale to a mainstream user base. Centralized transactions (along with other methods like sidechains and lightning network) could be used to alleviate congestion in Bitcoin’s blockchain, allowing it to be used only for bigger transactions that require more safety, transparency or immutable proof of ownership.

Bitcoin is on the path to outperforming banks

While it seems that payment processing companies and cryptocurrencies are finding more synergy as time passes, the same can not be said for banks and this struggle is reflected in their stock price.

Jon Erlichman, tech correspondent at BNN Bloomberg, noted that assets like Bitcoin, Ether and stocks for payment companies like PayPal and Square were doing quite well this year but since the COVID-19 pandemic, financial stocks have underperformed.

Bitcoin and Ether YTD performance. Source: Digital Assets Data

To date, the prices of Bitcoin and Ether have appreciated by 80.5% and 217%. Meanwhile, PayPal rallied 99% and Square 186%. Banks like JPMorgan and Bank of America, on the other hand, have lost 28% and 32% respectively. Citigroup has seen its stock value drop by 46% and Wells Fargo has decreased by 58%.

As for Bitcoin, it continues to be one of the best performing assets in existence, beating gold and the S&P 500 by a wide margin in 2020.

Macro Assets Current Year Returns. Source: Skew.com

As a growing number of people interact with Bitcoin as an investment vehicle, it is possible that consumers will turn their backs to banks and invest in cryptocurrency.

According to experts, Bitcoin may even benefit from what some call the ‘Robinhood effect’, a phenomenon where retail investors with disposable income purchase an asset via fee-free, gamified investing platforms in order to avoid the rigamarole frequently associated with banks.

If this happens to BTC, the digital asset could see the same type of hyperbolic investing frenzy that occurred as Robinhood investors poured funds into Tesla earlier this year.

PayPal’s crypto integration means Bitcoin could triple its user base

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Accenture to Invest $3 Billion in Fintech Initiatives that Will Help Companies become Cloud First Businesses

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David Jimenez Maireles, Customer Experience Officer at TNEX, a Vietnam based digital bank, claims that despite the skeptics, banks have been “no laggard when it comes to cloud adoption.”

Banks have been migrating incrementally, and today “the average bank has 58% of its workloads in the cloud—mostly in private cloud centers,” according to a recent report from Accenture.

The report notes:

“Many banking CEOs today believe if they had been more in the public cloud, the last few months (during the Coronavirus pandemic) would have been a lot easier. The Cloud will be both transformational and disruptive post-COVID-19, offering banks improved scalability, efficiency, agility and security. Cloud maturity is becoming a hallmark of the world’s best-performing banks.”

Cloud-powered technologies are increasingly being adopted by financial service providers across the globe. As covered, Australian SME banking challenger Judo Bank will be using the Cloud based bank operating system developed by nCino.

The Qatar Financial Center Regulatory Authority (QFCRA) recently revealed that it will be migrating its online services to the Microsoft Cloud in order to move forward with its digital transformation strategy.

There are many other related technologies such as low-code platforms that are being developed around Cloud solutions so that businesses are able to streamline their operations.

In a recent interview with Crowdfund Insider, Michael Rennie, Product Manager at Mendix, a Siemens business and global leader in enterprise low-code, explained that low-code enables organizations to move quickly to deliver unique and useful cloud-native applications that can scale and take on high volumes of traffic.

As noted in Accenture’s report, the skeptics or industry participants who doubted that Cloud based models could work had pointed out that there were security issues, lack of regulatory clarity, and “potential competitive issues with the largest cloud service providers and the seductive economics of fully depreciated data centers.”

The report also mentioned:

“The [Cloud] debate continues, but the evangelists have gradually gained the upper hand: Cloud investment has grown strongly in recent years and is forecast to continue at 15 percent a year between now and 2022.”

It added:

“More than half of [Accenture’s] top banking clients have adopted a multi-cloud strategy. We believe that, to an increasing degree, this suits the requirements of most banks. Key benefits include: best-of-breed services, autonomy and agility, regulatory compliance, and cost reduction.”

The report from Accenture further noted that Cloud solutions help reduce operational costs up to 20%. They can also reduce time to market by as much as 50% while offering around 50% quicker provisional speed.

Accenture revealed that it’s planning to invest $3 billion, over the next 3 years, in projects that will help its clients with becoming “Cloud first” businesses.

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With job listing, Canada’s central bank takes additional steps towards a CBDC

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The Bank of Canada is looking to hire an economist who has a deep knowledge of financial technology and digital currencies, potentially signaling the latest in a series of steps towards a Canadian Central Bank Digital Currency (CBDC). 

According to the bank’s official page, the economist’s duties will be to monitor and analyze the latest developments related to electronic funds and payments, implement research projects, prepare analytical notes, and work on the “potential development of a CBDC.”

The Bank has defined a set of requirements that the applicant must meet, among which are an in-depth knowledge of Bitcoin, Ethereum, and other major cryptocurrency platforms, as well as familiarity with traditional payments systems like card networks, merchant acquirers, and point of sale technologies. 

The applicant must also have experience in handling and analyzing public blockchain data and analyzing consumer survey data.

Oct. 25th, 2020 is the deadline for receiving applications.

The Deputy Governor of the Central Bank of Canada, Timothy Lane, has recently called on central banks worldwide to issue their own digital currencies, highlighting their importance for the economy in light of the Covid-19 pandemic. At the Central Bank Payments Conference Lane also said that Canada’s CBDC development was progressing at “a good pace.”

In laying the foundation for a CBDC, the Bank joins the Bank of England, the U.S. Federal Reserve and the Bank of Japan, among others, who have also begun conducting research into the viability of CBDCs. 

With job listing, Canada’s central bank takes additional steps towards a CBDC

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