PayPal, Coinbase Aim To Bridge Crypto ‘Divide’

In the bid to make digital currencies more widely available and embraced by consumers, perhaps … make them easier to buy.  To that end, PayPal users can link their wallets to Coinbase, the newly-publicly traded exchange, so that they can buy cryptocurrencies, including bitcoin (among others).

The announcement seems to speak to a truism of commerce and currencies – you can’t spend what you don’t have. Thus, linking what might be termed a ubiquitous account (that would be PayPal) to an exchange with scale (that would be Coinbase) gives users a bit of an onramp to pulling the trigger on the transactions they might previously have just been mulling. That bridges the divide between watching the crypto tilt-a-whirl and getting fully involved.

The news follows the announcement earlier this month that PayPal’s peer-to-peer (P2P) payment app, Venmo, is now offering its estimated 77 million users their own direct ramp into the cryptocurrency arena. Users can buy, sell or hold digital currency from the app, spanning bitcoin, Ethereum, Litecoin and Bitcoin Cash. Its Checkout with Crypto tool lets users convert their digital currency into fiat to complete transactions with its 29 million global merchants. PayPal has said no fees will be levied at checkout.

Add a Payment Method  

In terms of mechanics, the PayPal/Coinbase partnership eliminates at least some of the steps involved in buying those digital coins, where debit cards or traditional bank accounts had been the conduits to making the purchases (though those options, via ACH or wire transfers, or funds in the Coinbase USD wallet, are still on offer).

In order to fund crypto purchases with PayPal on the exchange, users select the crypto they want, select “add a payment method” to choose PayPal, and then work through prompts to move through multi-factor authentication and add accounts linked to the PayPal account.

In the blog post announcing the particulars of the joint efforts between PayPal and Coinbase, Eddie Lo, product manager at Coinbase, said that there are purchase limits of $25,000 a day with the PayPal account — which would mean that buying bitcoin would take a bit more than two days.

The move follows PayPal’s announcement late last year that users could begin buying bitcoin, Bitcoin Cash and Litecoin. For the PayPal transactions tied to Coinbase, as noted on Coinbase’s site, effective conversion fees equate to 3.99 percent.

Separately, as reported by Bloomberg, in yet more evidence of cryptos’ bid to go mainstream and to be embedded in at least some part of everyday financial activity and interactions, Social Finance has started allowing its customers to redeem rewards earned through the company’s app. Those rewards can be redeemed in bitcoin or Ethereum, using the 2 percent cash back rewards to be deployed into those cryptos.

Wallets, exchanges, rewards… bit by bit, might we be moving toward cryptos’ critical mass?

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