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When it was announced back in October 2020 that PayPal users in the US would be able to buy, sell and spend Bitcoin and other digital currencies using the platform, technology writer Romain Dillet summed things up rather well. “Many companies have been trying to build the PayPal of crypto,” he wrote in TechCrunch. “It turns out that the PayPal of crypto could just be PayPal.”
PayPal has over 360 million users across the globe, with around 26 million vendors allowing their customers to purchase products and services through the payment platform. So it doesn’t take an e-commerce expert to realise what a pivotal moment this is for both PayPal and cryptocurrencies in general. As Matt Frankel of financial advice site The Motley Fool recently put it, “This is the first and this is the biggest by far legitimization of Bitcoin as a means of payment in its history. By far, not even close.”
The knock-on effect for the online gambling industry is sure to be huge, as PayPal is one of the most popular ways to make deposits and withdrawals at casinos and sports betting sites, according to https://www.compare.bet/betting/banking/paypal. There are a number of reasons for this. It’s widely supported by gambling sites, for one thing. It tends to provide a faster way to withdraw funds from your betting site account, compared to using debit cards and bank transfers. It also provides a safe and easy way for people to make transactions, as using an e-wallet removes the need to input your sensitive bank details, severely limiting any chance of exposure to the prying eyes of hackers and hoaxers.
Current limitations with Crypto
By contrast, Bitcoin and other cryptocurrencies haven’t constituted a particularly convenient banking method for gamblers. Players looking to deposit and withdraw funds using their cryptocurrency wallet directly have been largely limited to crypto casinos which exist in a kind of shadowy, parallel universe to the big mainstream casinos and betting sites. Regulating and licensing crypto casinos has long been a sticking point. As gambling law expert Richard Williams recently told TechRadar, “Because of its historical association with money laundering and dirty money (e.g. the Silk Road) regulators are always going to be more wary of cryptocurrency as a payment method.”
The ambiguous, unregulated, transitory nature of crypto casinos and sportsbooks perhaps accounts for their relative lack of popularity compared to mainstream sites. There’s also been concern about the potential presence of bots which, in the words of a 2020 academic study, may “attempt to win the jackpot from an application once it becomes statistically worthwhile to pursue.”
The change-up at PayPal puts mainstream betting sites back on the menu for crypto users. That’s because users don’t actually make deposits using Bitcoin or other digital currencies directly. Instead, PayPal automatically converts the cryptocurrency stored in your account into the equivalent amount of traditional currency, which the betting site then receives. In other words, this won’t change anything for all the many betting sites doing business on PayPal – there’s no disruption to them, and no need for extra regulatory processes to be slapped on.
Is the hype real?
There has been a mixed response to this landmark moment. Some see it as much-needed acknowledgement that cryptocurrencies are no passing fad. Nigel Green, CEO of the deVere Group financial consultancy, has gushed over PayPal’s decision, saying “The decision by one of the biggest payment companies in the world to allow customers to buy, sell and hold Bitcoin is yet another example that exposes Bitcoin deniers and cryptocurrency cynics as being on the wrong side of history.”
Others have been less enthused, raising their eyebrows at the fact that PayPal doesn’t allow users to transfer cryptocurrencies to other accounts. It’s a closed loop, where you can only buy and sell Bitcoin and other digital currencies within PayPal itself. Blockchain.com CEO Peter Smith had a curt response, saying “PayPal’s decision is highly centralised and inflexible.”
Such criticisms may be unduly harsh. After all, it’s still early days, and it’s very likely PayPal will become more flexible as the use of cryptocurrencies becomes truly widespread among the general populace. In the meantime, it’ll be fascinating to see how the development might change things in the world of online gambling.
On the face of it, it’s logical to assume PayPal’s shift will cause excitement among Bitcoin-savvy gamblers who’ve shied away from crypto casinos, and who may now be rubbing their hands at the prospect of using their virtual money to fund casino and sportsbook accounts. And yet, it may turn out that gamblers will always be reluctant to gamble using cryptocurrencies, due to the inherent volatility of those currencies themselves. As tech journalist Joel Khalili points out, “Day-to-day fluctuations in price mean an investment in crypto is a gamble in itself, no matter what the most effusive Bitcoin evangelists might say.”
As betting sites continue to surge in popularity, commentators, CEOs and gamblers alike are sure to keeping a close eye on how the gradual normalisation of cryptocurrencies will impact one of the most lucrative industries on Earth.
