PayPal may soon Create its Native Crypto Asset and Blockchain: Here’s Why Avalanche is its Best…
PayPal may soon Create its Native Crypto Asset and Blockchain: Here’s Why Avalanche is its Best Option
AvaLabs continues to showcase the beauty of blockchain technology and cryptocurrency as MoneyDance virtual conference, powered by Avalanche, continues. Watch John Wu, the president at Avalabs, moderate a panel of speakers, and leaders talk about “ When will Institutional and Decentralized Finance converge “.
Things that Personally move me About Avalanche
This week Emin Gun Sirer, founder of AvaLabs, responded to questions in an interview by Paradigm Fund. In the interview, he related stories that began Avalanche as a project. He reported that when he began pointing out an inherent weakness in Bitcoin namely selfish mining, people “denied its existence and crowdfunded” research to debunk it. They later found the truth and became the best partners. You can read the research report here.
Collin Cusce also related his story with Avalanche this week via Twitter thread. He reported how he read the paper that highlighted Avalanche’s consensus as to the best of both Classical and Nakamoto consensus. In his words, his conclusion at first was “It seemed interesting, but I was unsure.”. 2019, two years after his first encounter with Avalanche, he saw the project in its glory, his faith was sealed. He later sold his house and moved to New York where he joined AvaLabs as an early hire.
After sharing his story on my timeline, I received a comment from Conleth, a Digital Currency Maximalist:
Conleth’s testimony holds for me too. Every week I dig deeper about Avalanche, I find something new and great which solidifies my personal belief and changes me somehow. Chat with more Avalanche supporters (individuals and projects) today and you will see that the story is the same. Why am I writing about these stories? Read on.
PayPal Turned Crypto Bullish
The biggest news this week for the whole crypto universe has been the intention of PayPal to include cryptocurrency (Bitcoin, Ethereum, Litecoin, and Bitcoin cash at first) in its operation from early next year. The news is so great that it led to the surge in Bitcoin’s price to a YTD all-time High. PayPal is one of the biggest payment processors in the world today. It has 346 Million active user accounts and 22 million merchants. So you can see why this is huge.
The official announcement from PayPal highlighted:
“In effect, cryptocurrency simply becomes another funding source inside the PayPal digital wallet, adding enhanced utility to cryptocurrency holders, while addressing previous concerns surrounding volatility, cost, and speed of cryptocurrency-based transactions.” (Emphasis mine)
In an article, while reporting the development by PayPal, I pointed out the opportunities and risks attached ( PayPal will Onboard 300 Million Users on to Cryptocurrency come Q1 2021-The Great, The Meh, and The Ugly). While the opportunities are great, I reported that the risks attached are surrounding:
- Daily transaction counts and its impact on the speed and transaction fees
- Hard forks (Reorganization attacks from unfaithful nodes or offline nodes).
The company may be opting for custodial wallets for users. From the press release, it was stated that PayPal has been exploring the potentials of digital currencies. Rumors have it that the company is seeking to buy crypto firms like Bitgo. Adam Cochran of Ethereum said he confirmed that PayPal is in discussions with crypto companies. He stated that the most interesting is that they spoke with companies with smart contracts and tokens. See the thread below:
Do not forget that PayPal was one of the founding members of the envisioned Libra Blockchain by Facebook.
A PayPal Chain?
All these are the reasons why I believe that at some point in the nearest future, we might see PayPal launch its crypto asset and blockchain using existing foundations. But if this is going to happen, they must have a standard that will not fall short of the current platform’s performance especially in the aspect of transaction speed, and fee. For all of these criteria and many more huge potentials that blockchain can offer, there is no better fit than the Avalanche platform.
I began this article by stating why it seems to have become a tradition for in-depth researchers to become a great supporter of the Avalanche Platform. If PayPay’s R&D team is as good as they might have been perceived, they will find that the Avalanche platform can give them far more than they can imagine.
I won’t go into details on explaining about Avalanche consensus and platform, read them here.
Avalanche platform is a platform that can be used to create highly decentralized crypto assets and blockchains. Research has it that it can process way over 4500 transactions per second. Its operation is has a green footprint as its operations do not consume as huge power as Bitcoin and other coins that use Proof of Work Sybil control mechanisms. It can be used to create subnets which is simply the collection of validators to reach consensus. Subnets can be used to create private and public blockchains with any virtual machines- so smart contracts are part of the deal. The platform also supports cross-blockchain transfers. Avalanche platform supports network layer programmability. Subnets can be programmed to include validators with certain qualities such as KYC, professional qualifications, geographical location, etc. I have written much about the potential of the platform in previous articles.
Avalanche powered PayPal Blockchain Architecture and its Potential
I foresee that after PayPal researches Avalanche they will not only want to create a native asset (PYPL maybe), they will also want to have a native blockchain with validators from their branches worldwide and maybe trusted merchants. They can use any existing consensus algorithm and anti-Sybil mechanism combinations they like.
Assets
With this kind of blockchain, we might see popular blockchain coins wrapped on the platform for internal use. Just imagine you may have BTCp (wrapped Bitcoin on PayPal chain), or ETHp (Wrapped Ethereum on PayPal chain), etc. on the created blockchain with decentralized custodial services run by the validators (PayPal branches all over the world). The blockchain can include delegators who are the current merchants and other users who wish to generate income from the platform’s operations. Because of the network layer programmability of the Avalanche platform, the blockchain can have fees paid in its native coin (PYPL maybe).
Smart Contracts
Subnets on Avalanche support virtual machines from any existing blockchain e.g. EVM for Ethereum. Smart contracts on the PayPal chain powered by Avalanche can be used by merchants and freelancers to make and receive payments transparently and securely.
Transaction Fees and Speed
Because of the way the Avalanche platform is built, the fees are not affected no matter how huge the number of transaction requests is. This is because it scales faster than many systems today. On Ethereum, on the other hand, fees are determined as a result of competitive offers from initiators (just like in auctions). Therefore, fees are bound to go up when many people are processing transactions at once. This has an impact on the transaction speed too because only transactions with fees high enough are processed first.
Read Jstodd’s recent article about fees on the Avalanche platform.
Because of the way the Avalanche platform is built, the fees are not affected no matter how huge the number of transaction requests is. This is because it scales faster than many systems today. On Ethereum, on the other hand, fees are determined as a result of competitive offers from initiators (just like in auctions). Therefore, fees are bound to go up when many people are processing transactions at once. This has an impact on the transaction speed too because only transactions with fees high enough are processed first.
Reorganization Threats and Avalanche Consensus
The previous article I wrote about Avalanche consensus and its characteristics explains how the blockchain prevents reorganization attacks due to offline nodes submitting out-of-sync transactions. The article also covers attack preventions from Sybil and double-spending. Researchers have concluded it will be easier for Bitcoin to be hacked (if possible) than for Avalanche to be taken over by unfaithful nodes.
Let me stop here for now. Do you also foresee the same or something bigger? Let me know in the comments.
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Disclaimer!!!
This article contains my opinion and speculations, it is not investment advice. Please do thorough due diligence and contact your licensed financial advisor before making any financial decision.
Originally published at https://cryptostocksreviews.org on October 23, 2020.
PayPal may soon Create its Native Crypto Asset and Blockchain: Here’s Why Avalanche is its Best… was originally published in Avalanche Hub on Medium, where people are continuing the conversation by highlighting and responding to this story.
