The world’s largest payment company, PayPal recently announced that it has agreed to acquire Curv, an Israeli-based crypto-security firm as it expands its portfolio in cryptocurrencies and digital assets.
It is a deal that could potentially open up new use cases for the crypto market. PayPal had recently created a new business unit focused on blockchain, crypto, and digital currencies. Curv will be joining the newly formed group.
Founded in 2018, Curv provides companies with digital asset security technology that is delivered as a cloud service. The acquisition by PayPal presents Curv with an opportunity to expand into a global market while providing the service to over 325 million PayPal users around the world.
“Great step by PayPal and this certainly makes me bullish on payment use cases in general,” Jonathan Habicht, founder of MoonRock Capital, a blockchain investment advisory firm, said on Tuesday.
PayPal is not the only investor deepening the use case for the crypto market. In February, global music icon and rapper, Jay Z and Twitter CEO, Jack Dorsey announced they were putting together 500 bitcoin, which is currently worth $27.2 million in an endowment called ₿trust.
According to Dorsey, the fund will be set up as a blind irrevocable trust used to fund development in Africa and India. Dorsey also donated $1 million to cryptocurrency policy think tank Coin Center, according to an announcement tweeted by the organisation’s director Jerry Brito.
Prior to now, use cases for cryptocurrencies have been limited by their potential to yield high returns. For instance, the price of bitcoin, Ethereum, Litecoin, BNB, and several cryptocurrencies have been moving upward since the beginning of 2021. For many investors, the surging price movement is the biggest attraction to the market and therefore constitutes for them a primary use case – trading.
However, most decentralised cryptocurrencies, such as bitcoin, were created to solve problems and so have a wide range of powerful use cases.
“While cryptocurrencies are most often recognized as new monetary systems and financial networks, the public blockchain networks that they secure can be used to power diverse use cases and create new applications across industries,” said researchers at the World Economic Forum (WEF).
Apart from being a store of value, experts say cryptocurrencies can help address financial inclusion, particularly in regions like Africa. Crypto firms on the continent are coming up with financial tools that enable individuals to access financial services without opening bank accounts or visiting a local branch of a financial institution.
Luno, for instance, launched a Savings Wallet which allows users to save their crypto assets at an interest rate of 4 percent to 7 percent. The company, in March 2021, said it has paid out $500,000 in interest alone and will be adding Ethereum and USDC to the wallet. Binance also offers a flexible and locked savings feature called ‘Binance Earn’ which provides an interest of up to 7 percent per annum on some cryptocurrencies.
There are also features that offer loans to consumers. For example, Binance launched a loan service to satisfy funding requirements, requiring users to pledge corresponding digital assets as collateral to borrow Binance loans. The loan terms of 7,14, 30, and 90 days are available and users can always repay in advance and the interest is calculated based on the days borrowed.
A popular use case for cryptocurrencies is the ability to send and receive money at low cost and high speed. This is particularly suited for people living outside the continent who always have a need to send money back home.
The low fees associated with transactions using coins such as litecoin (LTC), stellar (XLM), or bitcoin cash (BCH) make them excellent payment systems for international money transfers. In one particular transaction, a $99 million LTC transaction took only two and a half minutes to process and cost the sender only $0.40 in transaction fees.
Like Dorsey and Jay Z have demonstrated, cryptocurrencies are increasingly being deployed to fund small businesses and development projects in many parts of the world including Africa.
Cryptocurrencies are also increasingly viewed as a sufficient hedge against inflation and currency devaluation. Billionaire hedge fund managers like Paul Tudor Jones and Stanley Druckenmiller believe that fear of currency devaluation is the major preoccupation of clients who ask about bitcoin. This is partly responsible for the growing curiosity of global financial institutions such as JPMorgan and Goldman Sachs towards the market. In January 2021, BlackRock, the biggest asset manager in the world, decided to dd bitcoin futures as an eligible investment in two of its funds as evidence of broader adoption.
Individuals and organisations are not just the only ones embracing crypto as a store of value. The Mayor of Miami, Francis Suarez, is reportedly considering giving city employees the opportunity to get their salaries paid in bitcoin; local fees and taxes could be paid in bitcoin or some other cryptocurrency, and the city’s treasury might place some of its investment capital into bitcoin.
Experts say with the growing institutional investment it is only a matter of when more regulators would embrace the market.
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