Topic: What are the potential side effects of corporations selling fake crypto? - page 4. (Read 571 times)

That "can't withdraw" thing is the most important part, because paypal could have as much as 100+ million bitcoins all sold on their website if they want to, how? They can do that buy just giving people bitcoin on their accounts but as long as you can't withdraw it, what are you going to do? You have to cash it to fiat and then move it around right?

Well, that means they do not have to abide the regular laws of bitcoin, they just put up "you have 0.5 bitcoin" type of thing in text there but where is that 0.5 bitcoin? Where is the proof that paypal has the backing bitcoin right there on their wallets? That part is the problem and I think that will not be fixed anytime soon, I believe it is going to be around for a very long time as well. There will be even more companies who did this and try to get away with it as well. This is why we should try to stop it.

Even Binance can do the same right? I mean they can place as many sell and buy orders they want and manipulate the market. But the problem is that if they do so, they are at risk of being caught in first place and then there is a chance they might be at the losing end too.

Very interesting topic actually and it might be something that is currently going on in the market without us realizing that happening. I mean yes I won't associate illegal and such activities from Paypal but there is no reason to believe them either. That is why a centralized platform selling and buying Bitcoin was not a great thought. The aim of BTC was to remove centralization and now a centralized payment processor is allowing its purchase and selling.

This is basically it. As I've stated before, the average Joe doesn't even care what it means not being able to withdrawal the coins from Paypal. To him the concept is quite straightforward : he can buy the crypto and then use it to pay for other services. To him that's the perfect analogy and ends up suiting his needs. I believe that they could easily implement that feature (withdrawal crypto) but I thin that they thought that it would confuse their clients and simply decided going the other road (the one that will keep whales and other people away from PayPal, but will please the remaining portion o their clients).

I personally don't use Paypal to buy and hold crypto so I have no idea of the matter however its quite alarming to hear such news. Paypal is very popular so for those who are not so familiar with crypto and would want to but btc would most likely resort to using Paypal.

Is there any indication as to why others can't withdraw? Like is there a KYC issue involved here or holding period? Minimum withdrawal? Additional validations needed? Either way, none of these should be sufficient reason to prevent consumers from withdrawing. If its 'fake' BTC then some way or another it will be eventually revealed or held accountable. Paypal can't run away from this given the number of users they have. Or is this there way of making you use the BTC as an option of paying other goods?

Well a company like PayPal are audited regularly and they use cold storage to store their coins, so it will be easy for auditors to compare their database with the actual bitcoins that are reflected on the Blockchain for those wallets.  

Now what some "Ponzi schemes" have done in the past, was to take people's money and then to "fake" their internal ledger systems to show that they are having those coins, but they were selling them and taking the profits. They just keep a small amount of Fiat (cash) of the the total that they were suppose to have to pay the dividends to their network of victims. (When there are no "new" money coming in and before they get exposed, they cut and run with the profits.)  

                                     If you do not control the Private keys, you have zero ownership of those tokens.

The corporations will give the "average Joe" what he wants.He wants profits.He doesn't care about blockchain technology,crypto mining,etc.If he wants numbers on a screen and the illusion of making more money,the big corporations are going to give him this illusion.
Selling fake coins is as illegal as selling counterfeit money or fake goods.The authorities will have to step up,when such crime happens.
Selling shitcoins/tokens,created by those corporations should be strictly regulated by the SEC.

To be honest, things like this ("they don't let you withdraw") should be discouraged on a true cryptocurrency networks because it seriously undermine the ideals/principles of well decentralized cryptocurrency such as self-custody, running nodes, or controlling your own coins/assets. Centralized exchanges even let you withdraw.

I would warn network users (like they were warned about keeping "huge funds" on Centralized Cryptocurrency Exchanges) about the risk of using a true crypto in that manner...

I think it would be a good idea to determine how risky this is to a cryptocurrency that has lots of coins on the platform before deciding whether to use/hold the cryptocurrency long-term

Yes. A lot of reviewers did that already and proved that you can't withdraw the bitcoin's you hold onto your account in PayPal.

It's just them taking advantage of the situation and making it appealing to users and letting them have it virtually but not own entirely. Check their rules and agreement which I'll quote below.

It will be easy, if people have the proof to identify or detect that the cryptocurrency that the company is just a number on the computer and not a real code then they would know for sure and most coin developers wouldn't really want their cryptocurrencies faked, and when the people know that, they will stop using the fake cryptocurrency and in the best case scenario, some of this people will try to sue the company or a far worse scenario is since the cryptocurrency doesn't leave the company and can be spent only on company partnered businesses the people will just overlook it and just keep on using that one.

I'm guessing that they indicate that in their Terms of services and whatnot that users are basically asking Paypal to buy and store crypto in their places. Closer to say that they are much similar to third parties, both in the sense of buying crypto and storing crypto. It can be called fake crypto, and at the same time not maybe? It highly depends on how much you actually trust private companies tbh. I'd consider it fake, though I'd still try it if given the chance.

On that note, I'd say that for the price of having buy, sell, and conversion of crypto to be used to pay to other merchants is that it became more "centralized". It's basically like how the current fiat system works, but they pretty much applied it to crypto. Some may agree, some may not, after all, some value having it easy, and some value having their money be personally managed by themselves.

RobinHood App (they are not actually giving to the poor, quite the opposite) does that too.

The way it works they are printing endless money because people give them $$$ and in return just receive a number in the app.

This money they can loan or hedge out. Like if they have $1bn of virtual bitcoin they would only need to use a small percentage
of that to back it up in case everyone wants to sell suddenly and pull it out.

Banks work this way too, they only have 2% or 3% reserves of the actual money people have in their accounts.

The worst can happen RobinHood gamble away the customer funds and cant pay you out anymore.

The best advice is to not support these systems because you only own your bitcoin if you own your keys.  

The no. of average Joes they can attract right now is probably way higher than the number of people like us, which is already a win for them

It's obviously impressive that they seem to care about something that was previously falsely known as a "criminal's coin", but to me that means absolutely nothing if they don't give you the option to hold it in a non-custodial wallet and only sell a number, an unidentifiable currency. I'm more interested to know about the potential plans they could have to attack crypto markets instead, because I'm quite sure PayPal does feel threatened by BTC's existence. They had enough time to think of an attack strategy, and I suspect this is it.

By integrating BTC in their service offerings (for their US customers so far, according to their press release) has a tremendous impact in the public eye in, at least, two ways:

• It shows to the general public that BTC isn't just something that is being used in the perceived market that they see as "darknet", neither is some sort of currency that is used to finance illegal activities. I mean, it still CAN be used for that, but most of the bad activities in this world are funded by money and I don't see anyone going mad over it. This adoption shows the general public that this is something to be trusted and that should be pursued if they have any interest in it.
• By having such an easy way to access the BTC market, Paypal is able to grab the attention of the average Joe, the one that hears about BTC rising while shopping or while going to work. If that average Joe is able to find a trusted service that is able to sell him this so called "bitcoin" that he just can't stop hearing about and, at the same time, provide him an easy and already established way to give sell him BTC (by means of his already paypal account) why shouln't the avera Joe buy from them? It's a win win scenario for both sides.

Now this flexibility comes with a price (at least from my point of view).  Here's a quote from their press release :


You are only able to "buy, hold and sell". If you truly want to get your coins out of Paypal you can't. That takes us to the next major question : If you can't withdrawal your coins/investment, are you really "buying" BTC? Or are you just speculating on it's price? If we go to the paragraph about how Paypal intends to use BTC/crypto in a transaction we get this :


If I'm understanding this correctly you never end up paying with actual BTC. The crypto is "traded" to it's equivalent fiat value and then used to pay a purchase. The merchant will only receive fiat and not any kind of crypto. While Paypal went to great lengths to "broadcast" BTC to the US base, is this the way forward?

The same concept is adopted by Revolut, a leading fintech in Europe. They are the equivalent of Venmo in the US (from what I could gather). They are basically an online bank, where you can hold for wealth, buy stocks and buy cryptocurrency. If we go to the terms of dealing with cryptocurrency using them as a Broker we get this (Cryptocurrency Terms):


So is this good for BTC/crypto ? If we look from the point of view that it allows people to get more up and close with this world and interact with it's price, yeah it's a good thing. Can it be considered "fake crypto" ? I really hope not. I think that deep down there's some kind of cryptoasset involved mostly because if some agency/entity that regulates them found out that they were handing out "digital numbers" to their customers they would be fined really hard.

Will these services gather the attention of people like us, which understand some basic concepts of BTC, and what it means to have no way to withdrawal our funds? Hell no. These services aren't targeting neither us nor the whales, they are targeting the average Joe that just wants a piece of the action ...

I'm not fully aware and only have limited information about Paypal's term related to Crypto but it is for real that you can't withdraw it?

What's the purpose of buying BTC on Paypal if users can't able to withdraw it?

PayPal has started selling "crypto" but they don't let you withdraw. Hence, if you think about it, they could easily only literally sell numbers on a screen rather than a math-backed, miner-verified real cryptocurrency.

I was wondering what could happen from an economical point of view if they (or any other corporation) did this and suddenly wanted to manipulate markets using false coins. What could PayPal do to BTC?