Crypto News | Bitcoin Volatility Delaying PayPal Support

In an interview for CNBC, John Rainey, the CFO of PayPal, once again talked about Bitcoin. He said that PayPal could absolutely offer support for Bitcoin and other cryptocurrencies in the future, but that Bitcoin volatility is stopping merchants from committing to the idea and showing “a lot of interest.” He said that, if merchants accepted Bitcoin, sudden price shifts could lead to them incurring losses the very next day. PayPal already tried integrating Bitcoin in 2015 with its Braintree platform. In the meantime, the Lightning Network is putting pressure on merchants and payment processors with extremely low fees and near-instant transaction times. Although Lightning is still in its infancy, Rainey indicated that integrating Bitcoin is certainly a possibility, as long as Bitcoin volatility “stabilizes in the future.”

However, Bitcoin volatility is not the only topic we have to discuss. Bitcoinist reports that the total capacity of Bitcoin Lightning is currently under $170,000. However, this might change very soon, with MIT, one of the top universities in the U.S., working on experimental use cases of the Lightning Network. One experiment shows that combining Lightning with smart contracts could lead to the network handling millions of transactions with an unprecedented degree of complexity. The research is based on the idea that transactions could take place automatically in case certain defined external events take place. Smart contracts would receive the relevant data from so-called oracles, trusted external entities. Although the demo is now complete, whether there will be users and companies who will want to use it remains to be seen.

Meanwhile in Argentina, a major bank in the country took it one step further and is no longer experimenting with Bitcoin. Banco Masventas (BMV) has decided to use Bitcoin for cross-border transactions as an alternative to Swift. On May 21, the bank announced its partnership with Bitex, a South American blockchain payment services provider. As a strategic partner, Bitex will provide the bank’s “overseas customers with payment and collection services”, ensuring faster and more secure transactions.

In spite of all of these developments and the constant innovation, there are many who still believe that cryptocurrencies are nothing new. On May 21, Robert Schiller, who won the 2013 Nobel Prize in Economics, published an article called “The Old Allure of New Money,” where he argues that cryptocurrencies are just the newest iteration of old ideas about alternative currencies. He mentioned “labor notes” briefly used between 1827 and 1830, before moving on to Karl Marx and Friedrich Engels and their idea of eliminating private property. He also talked about the Great Depression and a contemporary movement called “Technocracy”, which proposed that the then gold-backed US dollar be replaced with a unit of energy. Schiller argues that people are attracted to cryptocurrencies for several reasons. He said that the lack of understanding on the part of the general public grants cryptocurrencies an air of exclusivity and glamor. He also talks about the underlying “deep yearning for some kind of revolution in society”, which cryptocurrencies play to with their decentralized nature, seeing as people often distrust governments that perpetuate inequality and war. His analysis, although critical, is not entirely pessimistic and dismissive, although he is skeptical, saying that a compelling story may not be enough to guarantee any kind of staying power when it comes to cryptocurrencies. Seeing as Bitcoin has been around for way longer than “labor notes” and similar initiatives, perhaps there’s more to this than just a compelling story? We’ll keep you posted.

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Author: Max Rothstein

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