PayPal tried and failed in its stated mission to create a “new world currency,” but Bitcoin is stepping up and fulfilling PayPal’s original vision.
It’s a long road to travel for a new means of commerce to gain traction and eventual acceptance. Bitcoin has finally reached such a stage as the digital currency has soared in value over the last year. While digital currencies are all the rage, there have been notable attempts at creating a new economic ecosystem in the past, and the most successful of these is PayPal. What is interesting, and pointed out by VentureBeat, is that Bitcoin is actually accomplishing the original purpose of PayPal, which was to create a “new world currency.”
Picking Up the Standard from PayPal
When PayPal was first started, it was not intended to just be an online wallet, but rather an entirely new economic ecosystem. David Sacks was the original COO of PayPal, and he talked with CNBC about how Bitcoin is now fulfilling the original mission of PayPal. He states:
"But bitcoin is fulfilling PayPal’s original vision to create “the new world currency.” We actually had T-shirts printed in 1999 with that mission statement.
A payment is just a credit to one account and a debit to another. That’s a database entry. We believed that, if we could get enough people to participate, money would never need to leave the system. PayPal could become the database of money.
Sacks then added:
"But cryptocurrencies like bitcoin are now fulfilling that original vision. They are doing it in a decentralized way (with a decentralized database called the blockchain) whereas PayPal tried to do it in a centralized way."
David Sacks goes on to argue that Bitcoin and other cryptocurrencies are actually “real” despite being virtual assets. He points out that software is real and that the US dollar remained real even though it stopped being backed by gold. He rightfully points out that any currency is actually an agreed-upon confidence amongst a trading ecosystem.
David Sacks - DR
Early Bumps in the Road
The Bitcoin comparison to PayPal is also apt in that both entities had some early troubles. PayPal exploded in popularity, which caused massive slowdowns on the network and the influx of fraudsters looking to cash in by doing credit card chargebacks and such. Then eBay bought PayPal and essentially changed its original mission to becoming instead a digital wallet for online merchants.
Bitcoin has had its share of troubles when it first started. It took some time for acceptance to grow, and fraud has always been a boogeyman lurking in the shadows. Bitcoin was hit with a massive blow early on as the Mt. Gox exchange, which was handling a full 70% of all Bitcoin traffic, shut down after crooks managed to pilfer 850,000 bitcoins.
Still, Bitcoin persevered and has become widely accepted. All of the Big Four accounting firms are heavily involved in cryptocurrency, and many of the global financial giants are jumping on board as well. While PayPal was never able to deliver on its initial promise of creating a new world currency, Bitcoin has picked up the gauntlet and is making that dream a reality.