Bitcoin rallies to reach highest level in over a year with PayPal support

Breaches $13,000, experts feel this will bolster acceptance of crypto in India

Bitcoin has breached the $13,000-mark for the first time since July 2019 after online payments company PayPal decided to allow the customers to buy, sell and hold this and other virtual coins using its online wallets. 

PayPal customers will also be able to use cryptocurrencies to shop at the 26 million merchants on its network starting in early 2021. The Calfornia-headquartered company plans to support Bitcoin, Ethereum, Bitcoin Cash and Litecoin at first.

The service will be available to PayPal account holders in the US in the coming weeks. The company plans to expand the features to Venmo and select international markets in the first half of 2021. 

The move has been welcomed by cryptocurrency experts and enthusiasts in India as well. "PayPal offering services to its customers to buy or sell cryptocurrencies is a positive sign for the overall ecosystem. Given the strong distribution and reach of PayPal, the huge user base of over 346 million globally, and many merchants around the world, with this service, it has given direct access to cryptocurrencies to numerous users," said Sumit Gupta, CEO and co-founder, CoinDCX, a Bain Capital-backed cryptocurrency exchange. "Although the users can't redeem their Bitcoin outside PayPal, I believe it is a good starting step and it is likely that other major global payment players will follow the lead."

“When trusted, mainstream payment apps like PayPal start offering crypto, it just shows that crypto should be trusted and mainstream. I think we are reaching the tipping point when people go from 'fear of getting in' to 'fear of missing out',” said Vikram Rangala, chief marketing officer of crypto-exchange ZebPay.

"This shows US startups are moving at a rapid pace towards crypto adoption. The doors to such mass adoption (of cryptocurrencies) just opened wider," tweeted Nischal Shetty, founder of WazirX, a cryptocurrency exchange backed by Binance. Binance is the world's largest cryptocurrency exchange in terms of trading volumes.

Mainstream adoption of cryptocurrencies has traditionally been hindered by their limited utility as an instrument of exchange due to volatility, cost and speed to transact. However, the promise of advanced technological platforms offers the possibility of mainstreaming digital currencies. According to a survey by the Bank for International Settlements (BIS), one in 10 central banks – representing approximately one-fifth of the world's population – expect to issue their own digital currencies within the next three years.

Reserve Bank of India (RBI) had in 2018 banned cryptocurrency transactions after multiple fraud activities that emerged after Prime Minister Narendra Modi's demonetisation. However, the Internet and Mobile Association of India (IAMAI) that represented the cryptocurrency exchanges won a favourable ruling in March this year.