Paypal is partnering up with Coinbase and this could be a step in the right direction marketing wise for Bitcoin. However if this will be the case remains to be seen. let us examine this move from Paypal.
Paypal doesn’t lose anything by adding Bitcoin to their service. This could potentially mean that Bitcoin could be traded on Ebay while accepting Paypal transactions. This will undoubtedly create a greater reach for Bitcoin and will make Bitcoin more “accessible” for the general public.
So it can possibly be a huge and much needed marketing push on the part of Bitcoin. Last July when we were at Coinsummit, most of the Venture Capitalists, start up business owners and the creator of Coindesk all agreed on one thing: Bitcoin is not as strong on the marketing field as it should be. However picking Paypal as a “billboard” may not be the best marketing strategy.
Paypal’s and Ebay legal system.
Paypal and Ebay, both are owned and run by the same owner, have clear stances on what they call “virtual goods”. Both sites do not condone the trade and if anyone does trade in “virtual goods” the sellers of these goods can be hit by chargeback requests from their buyers.
For those new to the whole Paypal and Ebay scamming practices it is where “buyers, aka the scammers” buy a virtual good from a seller and then claim “unlawful transaction” because these “buyers” tell Paypal “they didn’t authorize the buy themselves”. They basically claim their account was “hacked” and as such Paypal believes the buyers on their word and forces the seller of the virtual good to issue a chargeback, while the buyers still hold the virtual good.
Why Paypal is suddenly getting involved in Bitcoin is obviously clear. Bitcoin has great potential and since most governments do not have any legislative actions into place it is a kind of wild west where anything goes as long as you are the quickest draw in the world wide web, or in this case have enough cash to buy the best legal representation money can buy. It is also a way to generate huge sums of money for Paypal.
Think logically for a moment. For example let’s say the EU put out a law that makes “buying/selling and trading Bitcoins illegal” then Paypal can look up all transactions and reclaim every piece of bitcoin and transaction money from their customers. in so doing Paypal gets all the profits AND Bitcoins ( since owning bitcoins is not illegal). For some readers this example “will never come to pass”. For those “over-enthusiastic” community members we would point to the Bit License.
Paypal’s tarnished reputation.
The internet is full of sellers that have been scammed by supposed “reputable buyers” while using Paypal. Even when provided with irrefutable evidence, like papers that show delivery was made, that it was signed for delivery and that delivery was accepted at the buyers location, etc. Paypal still issued a chargeback, probably because the scammers claimed their account was hacked. So the scammers receive the item, virtual or non virtual, and get their money back all thanks to Paypal.
Most of these scamming practices are still in use today and most consumer organisations warn people not to use Paypal for selling items because there is no seller protection whatsoever at Paypal. Of course not all sellers and buyers are bad but the frequency of scamming people, especially using Paypal and Ebay, are continuously rising.
The Dutch consumer organisation has a tv program called “Opgelicht”, loosely translated to “Scammed”, where they expose and confront scammers and companies that do nothing to protect their customers from scamming practices. Paypal and Ebay are frequently mentioned in this program. But the Dutch and Belgian consumer organisations aren’t the only one that are reporting on the Paypal/Ebay scamming tactics and the lack of customer protection. Also American, French, Indian, Chinese, German, Russian, etc consumer organisations are noticing and reporting on this alarming scamming trend.
Furthermore Paypal is being hit with lawsuits every year again and again. In nearly every case Paypal has settled with the wronged party. It does speaks volumes about Paypal’s and Ebays activities. They know what they are doing is wrong and that it hurts their customer basis but still they don’t care. As such it isn’t surprising that anti-Paypal movements are springing up on the net left, right and center. Especially now when some people are selling off some of their treasured possessions to get some extra dollars or euros in these financial hard times but in the mean time they get scammed for their troubles.
The fact that Paypal is receiving hard critiques every year again and again , the dwindling customer basis and the lawsuits, the bad reputation, etc may be the reason Paypal is looking for Bitcoin. it isn’t regulated, there isn’t a legal net yet with the do’s and don’ts, so it is a free for all.
Though the bigger publicity reach for Bitcoin may prove beneficial for Bitcoin It may not be a smart business move for Bitcoin per se. In the business world if someone’s reputation is tarnished by scandals or even fraudulent activity other businesses will be very reluctant indeed to do business with said tarnished person or business.
The fact that Paypal hasn’t changed it stance at all concerning digital or virtual goods is particular concerning even when they allow bitcoin buying/selling to be done with Paypal. This basically allows Paypal to confiscate sellers received payments or do a chargeback.
People should be very wary using Paypal and Ebay in general. There is too much evidence and facts that are contradicting Paypals and Ebay’s policy concerning digital/virtual goods. Nevertheless you do what you think is right for you but be warned: many people, even sellers that had 100k sales and had 100% rating were subject to the hypocritical stance of Paypal and Ebay.