Notes From A Bitcoin Whale - Part 3

Updated: Sep 29, 2020

I read recently that PayPal, a long term Bitcoin naysayer, is now considering adding Bitcoin payments to their offering. What this means, in practice, is that PayPal merchants can offer Bitcoin as a payment option, exchange it into their local fiat currency, and then withdraw the exchanged currency to their linked bank account. If and when this happens, I, for one, won't touch it with a bargepole.

My wife runs a very successful cupcake business and used PayPal for some years. This worked well for her as long as her individual sales stayed under £10. Then one day, a largish corporation ordered 200 cupakes in one go, and she processed a sale for £300. PayPal immediately froze her account "pending further enquiries". In practice this meant that my wife not only had to upload the invoice for this sale, but also re-ID herself. This nonsense took 72 hours to resolve, and repeated itself everytime she made a larger than usual sale . And of course each time PayPal earns interest on funds which aren't theirs.

Then, when her monthly sales of cupcakes exceed £10,000, they wrote to her saying they would keep 15% of her sales for a rolling period of 90 days to cover any chargeback risks. My wife had never had a chargeback ever, and the notion that someone would eat a £1.50 cupcake, decided they didn't like it, and then contact their card company to initiate chargeback proceedings was just too ridiculous, even for a housewife with limited business experience. My wife didn't process a single further sale with them, and moved her business to Barclays Merchant Services.

PayPal hides behind big words like Fraud Prevention, Know Your Customer, and prevention of Money Laundering for one reason only: to earn interest on YOUR funds. If and when they start offering Bitcoin Wallets, you will find they will not only temporarily stop you from exchanging your funds into fiat, but even stop you from simply sending your Bitcoin to another wallet you own...and thus violate the 2 key principles of why Bitcoin resonates with so many people: decentralisation and anonymity.

Be warned.

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