The acceptance of digital currencies as a form of payment expanded greatly last week, foreshadowing the increasingly important role cryptos such as Bitcoin and Ether will play in our lives going forward.
Both Visa and PayPal announced they will begin allowing the use of cryptocurrencies to settle transactions. This came a week after Tesla said it will now accept Bitcoin as a method of payment, and a month after Mastercard signaled it would start supporting cryptos sometime this year.
PayPal’s Checkout with Crypto, made available to select U.S. users last Wednesday, gives consumers the ability to purchase goods and services at as many as 29 million merchants using Bitcoin, Bitcoin Cash, Ether or Litecoin.
What’s more, there’s no additional transaction fee.
Founded in 1998 by Peter Thiel and Elon Musk, among others, PayPal has become a trusted household name. 2020 was a record year for the online payment service as people were stuck at home and companies digitized their operations. Total payment volume was a massive $277 billion, a 39% increase from the previous year, while the platform added 16 million new accounts, for a total of 377 million registered accounts.
Very soon, every one of these users will be able to use popular digital currencies to buy nearly everything, from a cup of coffee to a new car. This represents a huge leap forward for the still-emerging technology.
Meanwhile, Visa announced that it became the first payment processing company to settle a transaction with USD Coin (USDC), an open-source stablecoin backed by the U.S. dollar. According to the coin’s website, USDC “is issued by regulated financial institutions, backed by fully reserved assets” and “redeemable on a 1:1 basis for U.S. dollars.” As of March 28, there were 11.3 billion USDC in circulation.
Not only will Visa users be able to make purchases with USDC, but Visa said it would also one day support new central bank digital currencies (CBDC) as they become available. According to the company, some 80% of central banks are strongly considering or in the process of launching their own national digital currency.
Mastercard is reportedly doing the same, announcing in February that it’s engaging with “several major central banks around the world” as they develop CBDCs. At the moment there’s no word on when Mastercard customers can expect to start paying with cryptos, or even which cryptos will be supported, but it seems likely we’ll hear something soon now that Visa has taken the first step.
Tesla Now Accepting Bitcoin
Currently the sixth largest U.S. company by market cap, having surpassed Visa and Berkshire Hathaway, Tesla has been ramping up its accumulation of Bitcoin.Those of you in the market for a Tesla may have noticed that you can already select Bitcoin at checkout, only a week after Elon Musk tweeted the news.
If you recall, the company disclosed that it bought $1.5 billion worth of the digital currency as part of a corporate policy that allows the electric vehicle (EV) maker to invest in alternative reserve assets, including not just cryptocurrencies but also gold bullion and gold ETFs.
Musk often tweets about cryptos to his nearly 50 million Twitter followers, which can trigger incredible price swings. Dogecoin surged more than 1,000%, from $0.007 to $0.080, in as little as 12 days in January and February after the Tesla “Technoking” tweeted about it.
Someone recently developed a bot, in fact, that automatically buys Bitcoin whenever Musk mentions it in a tweet. This reminds me of the Trump & Dump Bot, which used artificial intelligence (AI) to identify publicly traded companies whenever they appeared in one of the former president’s tweets. The bot then shorted the stock and donated the proceeds to charity. Trump’s Twitter account was permanently suspended on January 8.
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