Policy Update Makes Bitcoin Cheaper and More Private Than Paypal

  • Paypal are updating their privacy policy to ban accounts that are unverified
  • For US users sending funds outside the US, a fee of $4.99 will now apply - more expensive than Bitcoin. 

Bitpal.png

One of the main issues with the adoption of cryptocurrency is the competition with existing, centralized forms of fiat services. Paypal, one of the world's leading services in that area, have announced plans that may take them out of the running.

The go-to method of eBay transacting recognize the threat of cryptocurrencies to their business, which could explain the sudden fee increase - perhaps the popular payment service is taking steps to amass funds in what may be the beginning of the end as Bitcoin and other cryptocurrencies become more widely used.

Whatever their reasoning, the changes are drastic - users in the United States will now be hit with a fee of $4.99 for sending funds internationally, plus an additional 2.9% of the transaction and an additional flat rate where the transaction is partially funded by an alternative method such as credit or debit cards.

ppfee.png

This is a massive increase in their fees and will make small transactions and microtransactions completely unviable, making feeless cryptocurrecies a more attractive option. However, feeless cryptos are of course already are more cost-effective method of transferring funds, but aren't used due to their low public profile.

Bitcoin, the cryptocurrency that everyone in the world knows about, is now a cheaper method of transferring funds with fees of approximately $0.21 at the time of writing, it's about to be more private as well.

PayPal Compromises On Privacy

Paypal are introducing new measures to prevent people with unverified addresses or even multiple addresses from using their service other than to withdraw to a linked bank account, effectively banning unverified users. 

"We’re changing the balance functionality for your PayPal account depending on whether we have been able to verify identifying information that you provide to us. If we have not verified your identifying information, a balance in your PayPal account can generally only be held in your PayPal account and transferred to a linked bank account or debit card."

PayPal

Today's announcement could be the beginning of a major shift in the usage of cryptocurrency as a mainstream form of peer-to-peer payment.

Trans-Fee Mining Exchanges Saw Trading Volumes Rise 124% in April, Report Reveals

Cryptocurrency exchanges using the controversial trans-fee mining (TFM) revenue model have seen their trading volumes rise by 124% in April of this year, a month that saw cryptocurrency exchanges overall see their volumes increase.

According to CryptoCompare’s April 2019 Exchange Review, cryptocurrency exchanges using the controversial revenue model, which some see as a ‘disguise ICO’ over its nature of rebating transaction fees in the form exchange tokens, have been succeeding as the market recovers.

The report reveals that FCoin, a cryptocurrency exchange that hit a $5 billion daily trading volume after introducing the TFM model in June of last year, saw its trading volume increase by 300% to $37.1 billion throughout the month, making it the largest crypto exchange by trading volume.

FCoin’s was followed other exchanges using the TFM model, including CoinBene and ZBG, which saw their volumes grow 51.5% and 81% to $27 billion and $16 billion respectively.

TFM Exchnages' trading volume growthSource: CryptoCompare Exchange Review

Cryptocurrency exchanges that don’t use the trans-fee mining model also saw their trading volumes grow. OKEx and ZB were the second and third largest cryptocurrency exchanges by trading volumes, registering $35.1 billion and $32.4 billion after seeing their volumes rise by 12.4% and 18.5% respectively.

Overall, exchanges that charge fees traded a total of $52 billion in April, as their volumes rose by 30%, while TFM exchanges traded a total of $115 billion, as their volumes rose by a total of 124%.

Notably, CryptoCompare’s Exchange Review from December of last year showed that exchanges using the TFM model were gaining market share, presumably thanks to incentives given to traders. At the time, Binance was the leading cryptocurrency exchange.

The trend may be concerning for traders, as data has shown exchanges using the controversial model have poor traffic to volume ratios. This means that to see cryptocurrency prices by 10% on these platforms it would take a relatively small amount of their trading volume, compared to other exchanges.

This lack of stability comes from traders being incentivized to trade large amounts in order to rake in token rewards, and could easily lead to ‘flash crashes’. An analysis of CoinBene’s order books in February of this year showed an order taking up 0.3% of its daily trading volume could lead to a 10% price drop. In comparison, Kraken would need an order of 30% of its daily volume to lead to such a drop.