Bitcoin, the first cryptocurrency, has seen its value hit its highest level in over two years of just over US$13,400 after a recent move from payments giant PayPal Holdings Inc (NASDAQ:PYPL) that it will allow its customers to buy, sell and hold cryptocurrency using their accounts with the company.
The company said last week that these cryptocurrencies can be used to buy goods from vendors that accept PayPal, with buying options to be rolled out in the US over the next few weeks ahead of a full rollout next year.
Aside from Bitcoin, other digital currencies that will be available on the PayPal platform include Ethereum, Litecoin and Bitcoin Cash, a spin-off cryptocurrency from the original Bitcoin.
The effect on the crypto markets has been stark, since PayPal’s announcement, the Bitcoin price has risen around 10%, while Ethereum has risen around 4%, Bitcoin Cash by 9% and Litecoin by 15%.
The surge in value is due to the potential for PayPal’s to cause a huge expansion in the use of cryptocurrency by its users, increasing adoption rates which ultimately drives the value of all digital coins.
Global rise in crypto usage
The move by PayPal to accept crypto deposits into its customer wallets may also provide the firm with an opportunity to expand its market into countries that have heavily adopted cryptocurrency usage to either circumvent unstable or unreliable domestic banking systems or as a reliable and unobstructed method of sending money across borders.
According to a report on global crypto adoption published in September by Chainalysis, a blockchain analysis firm, Ukraine came out as the country with the highest rate of crypto adoption, followed in second place by Russia. Both countries were reported to use crypto as a method of avoiding cumbersome banking regulations when sending money.
The report also indicated that developing countries had high levels of so-called “grassroots cryptocurrency activity”, with users in nations such as Venezuela using crypto increasingly as a method of saving to avoid the consequences of inflation with domestic currency.
Chainalysis also highlighted that peer-to-peer (P2P) payment platforms are “essential to adoption in developing countries”, an area that PayPal already has a foothold in after launching its own P2P platform, PayPal.Me, in 2017.