First it was China hinting that where Silk Road failed in monetizing, pardon the pun, BitCoin, the world’s most populous nation could soon take the lead. Then, none other than private equity titan Fortress said it had great expectations for the digital currency. Now, it is eBay’s turn to announce that it is preparing to expand the range of digital currencies it accepts, adding that “its payment unit PayPal may one day incorporate BitCoin.” But not just yet. FT reports that according to eBay CEO John Donahoe, “digital currency is going to be a very powerful thing.”
The ecommerce group, which has more than 124m active users, is initially focusing on incorporating reward points from retailers’ loyalty schemes into its PayPal wallet.
“We are building the container so any retailer could put their loyalty points into the PayPal wallet,” Mr Donahoe said.
“There is a limit to how many cards you will carry, or remembering what points you have or don’t have,” he said. “But in a digital wallet, you can put 50 different loyalty cards.”
Mr Donahoe said Ebay was not expanding the PayPal wallet to include Bitcoins, “but we are watching it”.
“That same technology could accept other digital currencies,” he said.
While traditional retailers have so far balked at even the vaguest idea of considering allowing BitCoin as a viable payment method, all that would take to start a seismic shift in perception would be one angel idea “investor” to show that it can be done. That someone may well be eBay, which in a radical attempt to curry favor with “fringe” buyers and sellers, could open up its ecommerce platform, which started as an auction side for small traders, but may well become something far bigger.
eBay’s efforts raise the possibility that virtual currencies such as Bitcoin may in time move beyond a niche role in online commerce. Some enthusiasts believe Bitcoin and other currencies that exist outside the traditional banking system represent the future of online payments.
The work to expand the PayPal wallet underlines the emergence of virtual payment systems as the latest front in the battle between the global technology giants, including Google and Apple, to increase consumer reliance on their products.
Corporate initiatives have sought to drum up interest in digital wallets for use online and on the high street. Companies from mobile and technology groups to banks and retailers are racing to use new mobile wallets to upend the payments business.
Most of these efforts have focused on new ways of paying with traditional currencies such as the pound and the dollar, rather than with niche mediums of exchange such as loyalty points or Bitcoin.
Bitcoin transactions are conducted through a peer-to-peer network of computers, outside the traditional banking system and largely beyond the control of governments and monetary authorities. The digital currency is accepted by very few retailers at present.
Paradoxically, the more accepted BitCoin becomes in the conventional marketplace, the more subject to various forms of mandatory regulation, supervision and enforcement it, its purchases, and its users will be. So will BitCoin ultimately become a victim of its own success? That remains to be seen, although what we do know is that neither eBay nor anyone else tightly embedded within the monetary fiat framework, is even close to contemplating expanding the Petrodollar cycle to include gold or other precious metals as viable legal (or illegal) tender.