Payments giant PayPal continues to be one of the most notable skeptics of the blockchain and cryptocurrency world.
CEO Dan Schulman remarked at the World Economic Forum (WEF) in Davos on Wednesday that "I have always thought that crypto was more of a reward mechanism for implementing blockchain, as opposed to really a currency." Schulman continued by stating, "We're not seeing many retailers at all accept any of the cryptocurrencies."
Payments is today and has always been a chicken-and-egg business. If merchants won't accept a method of payment, then purchasers have no reason to use it. If purchasers don't have a preference to use a certain method of payment, then merchants have no reason to accept it. In the case of cryptocurrencies, the promise has always been that bitcoin or another cryptocurrency would allow for lower merchant fees than those charged by credit card networks (Visa, MasterCard and American Express) and issuers (Chase, Bank of America, Citi and Capital One.)
However, the entrenched network effects of credit cards and cash have made it difficult for cryptocurrency to break through. According to a recent report from Chainalysis, Bitcoin payments dropped 80% in the first 3 quarters of 2018, as compared with the previous year. The key concern expressed by many is that cryptocurrency payments simply aren't convenient or easy for consumers or merchants to implement.
Ultimately, Schulman conceded that Bitcoin and other cryptocurrencies' blockchains are interesting: "I think the underlying technology is interesting.” However, the question remains: what is the underlying blockchain without Bitcoin. It is, after all, money. And PayPal has the opportunity to help spur adoption and break the slowly moving chicken-and-egg cycle of cryptocurrency merchant payments.