- Cryptocurrencies are too volatile, hence not widely accepted by merchants, he said
- It’s the “applications on top of” blockchain technology that is the interesting part
PayPal CEO Dan Schulman in his latest interview with Fortune revealed that he only owns one cryptocurrency and that is Bitcoin.
When it comes to cryptos, Schulman said it is still “very volatile” and as such not seeing much demand by merchants because it offers “very small margins.” Merchants immediately turn their crypto into fiat and that involves a fee so “any advantage in cost is typically eaten up by that conversion fee.”
Schulman says unless digital currencies become less volatile, “it won’t be a currency that is widely accepted by merchants on the web — not the dark web.”
Despite this, he says crypto is an interesting idea which is more like a commodity than cash. He also mentioned that cryptos can also have use cases in different counties where it can be more stable than the alternatives.
When it comes to the blockchain technology, he says it is about the “applications on top of it” like identity. He doesn’t see any benefit of the technology in terms of lowering the cost because “the system today is pretty efficient.”
Why did PayPal Quit Libra Association?
Earlier this year, PayPal's CFO John Rainey revealed that the company had teams working on blockchain and cryptocurrency.
On this Shulman declined to share any details but stated that it is “not necessarily competitive with Libra” but does have a competitive advantage.
PayPal was one of the 28 companies that were part of the Libra Association when Facebook first announced its Libra project in June but later in October became the first company to back out of the consortium.
Now, Schulman revealed his reasons for quitting the Association, saying the project was “appealing” in terms of financial inclusion. But apparently later felt, “if we focus on our own roadmap, we’d be able to advance financial inclusion faster than if we put all these resources against Libra.”
He denied that regulatory scrutiny was what spooked them as regulatory and compliance is “foundational” to the company and they have an “extremely robust relationship with every regulator.”
“Once they (Facebook) start figuring things out, we’ll take another look at where they are,” Schulman said.