The Era of The Digital Wallet

By Sam Zaduk

PayPal Accepting Bitcoin

• Bitcoin accepted across the Paypal network for merchants of digital goods

• Handful of Launch Partners – BitPay, Coinbase, and

GoCoin• PayPal will earn revenue

through referral fees

The Last 24 Hours

What is a Bitcoin?• Software-based online

payment system• Payments are recorded in a

public ledger using its own unit of account – called Bitcoin

• Payments work P2P without a central repository

• “Decentralized Virtual Currency”– Crypto-currency

Digital Currency• Bitcoins can be obtained

in exchange for fiat money, products, services

• Users send and receive Bitcoins electronically for an optional transaction fee – using wallet software (Mobile devices, Web Apps, etc.)

• Format has seen growth

The Positives

• Fees are lower than 3% typically imposed by credit card processors

• Speed and low cost of transactions

• Overstock.com, Dell, Dish Network, Expedia, Newegg, NBA’s Sacramento Kings

The Negatives• Consumer Protection

Issues – Bitcoins can be stolen

(hacking)– Chargebacks are impossible– Any fees are paid by the

purchaser not the vendor• Price Volatility ( 7 times

that of Gold)• Illegal Activities / Online

Black Market

Mo’ Money Options, More Problems

• It may be awhile before you can buy and sell on eBay with Bitcoin

• Crypto-currencies acceptance could spread

• Exchange rates • Refunds would be tricky• Scenario of higher or lower

refund rates than original Bitcoin payment amount

Industry Effect• Will more payment

companies start to embrace Bitcoin or whether they will fall behind Paypal?

• Google Wallet and Apple Pay may find Bitcoin more troublesome to integrate since they only used stored credentials from credit card or debit card payments.

Work Cited

• http://online.wsj.com/articles/paypal-payments-hub-to-permit-bitcoin-payments-for-digital-goods-1411494837?KEYWORDS=bitcoin

• http://eprint.iacr.org/2012/584.pdf• http://techcrunch.com/2014/09/23/bitcoins-p

rice-skyrockets-following-paypals-hug/• http://www.forbes.com/sites/ryanmac/

2014/09/23/paypal-takes-small-step-toward-bitcoin-partners-with-cryptocurrency-processors/