It is now a well-known fact that payments giant PayPal is knee-deep in the Bitcoin market. In today’s interview with CNBC, CEO Dan Schulman explained his rationale behind the world’s top cryptocurrency value. He also elucidated on why his company is placing giant buying bets on BTC.
The Utility Surrounding Bitcoin And Cryptocurrencies Is What Imparts Them Value
Upon being asked to explain the inherent value of bitcoin, PayPal CEO Dan Schulman immediately said that BTC and the aggregated class of crypto assets derive value from their utilities.
Mr. Schulman pointed out a scenario where dependability on cash has dropped 40 – 70 percent due to the ongoing coronavirus pandemic. Central banks, he said, will eventually go digital, converting paper fiat into their electronic counterparts.
“As paper money slowly dissipates and disappears from how people are using transactions, central banks especially on the retail side will need to replace paper money with forms of digital fiat currency,” says @PayPal CEO Dan Schulman. pic.twitter.com/pLuvc2RxPY
— Squawk Box (@SquawkCNBC) November 23, 2020
The above will, in turn, bolster the utility aspect of cryptocurrencies in a significant way, in the words of the PayPal boss. Also, the company will allow the usage of crypto as a funding source for 28 million merchants on its platform.
“Early next year we’re going to allow cryptocurrencies to be a Funding Source for any transaction happening on all 28 million of our merchants and that will significantly bolster the utility of cryptocurrencies”
Lastly, Schulman pointed out the recipe for the success of cryptocurrencies. He said that the key is in working as a team with regulators.
Square, PayPal, Grayscale Rapidly Lapping Up All Available BTC
As reported by CryptoPotato, Pantera Capital attributed the latest face-melting bitcoin rally to PayPal and Square’s aggressive buying spree.
When PayPal went live, volume started exploding. The increase in itBit volume implies that within four weeks of going live, PayPal is already buying almost 70% of the new supply of bitcoins. PayPal and Cash App are already buying more than 100% of all newly-issued bitcoins.
Such is the buying pressure from these financial services heavyweights that it’s causing an acute BTC shortage in the market. Due to the pre-programmed supply mathematics. Which in turn is pushing bitcoin (BTC) prices up.
As per Pantera Capital in a previous report, the firm estimated that Cash App was picking up 40 percent of all the newly produced bitcoins that miners. Add to this the additional 70 percent BTC supply that PayPal is buying. This results in a 110 percent shopping activity. This, in turn, is creating a net 10 percent shortage.
Also, top institutional investment focused bitcoin and crypto investment fund Grayscale recently logged its best quarter with its stash size growing to 500,000 BTC. This accumulated buying activity explains why prices of the flagship cryptocurrency found their north star and are on their way to reclaiming the previous all-time highs.
Featured image courtesy of LAPM Journal