Fairly or not, bitcoin still has an image problem. For every VC who extols the innovative power of the digital currency, pop culture still sees it as a way for the paranoid cyber-libertarian to shop for black-tar heroin on the Silk Road. All the more reason, then, that bitcoin fans should rejoice that, in a move announced Monday at Techcrunch’s Disrupt conference, PayPal is supporting the crypto-currency on its Braintree payments platform. When the internet’s most mainstream brand for moving money embraces a technology, it’s hard to see that system as a fringe operation.
Not that you’ll be buying Beanie Babies on eBay with bitcoin just yet. For non-financial tech nerds, Braintree is a startup bought by PayPal last year that creates tools for software developers to easily integrate payments into apps and websites. Instead of being shuttled off-site or out-of-app in the manner of the traditional PayPal payment flow, everything happens in-app, in exactly the way individual developers want. In supporting bitcoin—an increasingly popular currency driven by open source software running across a worldwide network of machines—Braintree is allowing developers on its platform to effectively flip a switch and add bitcoin to the payment methods they accept.
‘It’s still very much cutting edge, but it’s past bleeding edge. A lot of the things that needed to be solved for are solved for.’
In other words, it will still be up to a merchant whether or not to accept bitcoin. PayPal users won’t be able to open up their digital wallets and add bitcoin the way they would a credit card or cash from their bank accounts. But considering some of Braintree’s most prominent merchants include hot startups such as Airbnb and Uber, chances are good that many more people who never thought to pay with bitcoin will start to see it as an option.
“We think this has come far enough that it’s still very much cutting edge, but it’s past bleeding edge,” Braintree CEO Bill Ready says of bitcoin. “A lot of the things that needed to be solved for are solved for.”
Not Just Gold 2.0
Ready contends that not so long ago, both merchants and consumers lacked any easy way to make use of bitcoin. He cites regulatory and user experience concerns, both of which he says Braintree has overcome through partnering with Coinbase, a startup that has turned paying online with bitcoin into a very PayPal-like experience. Much like clicking on a PayPal button will take you to a page where you enter your username and password to pay, paying a Braintree-backed merchant with bitcoin will mean entering your Coinbase credentials to access your bitcoin wallet.
Coinbase co-founder and CEO Brian Armstrong says the Braintree integration is just the latest signal that bitcoin is maturing into a genuine currency for buying and selling, not just a speculative investment. “We want to build a new efficient payment network for the whole world,” he says, “not just gold 2.0.”
Beyond the increased visibility and opportunities to pay using bitcoin, the Braintree support is also significant as a measure of mainstream corporate interest in the preferred currency of anti-corporatists. If Braintree were still a purely independent startup, supporting bitcoin would seem like a given, a way gain cachet among early adopters and venture capitalists bullish on the crypto-currency’s potential. eBay-owned PayPal, however, is a division of a publicly traded company valued at the last closing bell at more than $67 billion. On the surface, PayPal doesn’t need to dabble in bitcoin at all to sustain its business.
The Right Ingredients
But Ready says betting on bitcoin now is a lot like betting on mobile commerce three or four years ago. People shopping on their phones back then was a very small part of the online shopping market. But that percentage has grown, and Braintree was able to ride that wave to its current success. Coinbase has only 1.6 million users compared to PayPal’s 150 million, according to figures from both companies. But getting into bitcoin now means gaining the opportunity to start figuring out how to work with a new payments system while that system is still new.
That kind of deep integration gives Braintree a competitive advantage if bitcoin moves toward the mainstream. It also allows Braintree itself to become an agent of that mainstreaming, a trajectory that can only help bitcoin shed whatever remains of its fringe reputation. Ready, who describes Braintree’s support as PayPal’s “first foray” into bitcoin, says the move was a conscious decision by the PayPal leadership to work more closely with bitcoin.
“Bitcoin as a protocol, where there’s an alternate way to move money separate from the legacy payments infrastructure that’s built up over decades—that I think is more interesting even than bitcoin as a currency,” Ready says. “It’s still early days, but we think there’s enough of the right ingredients there.”
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