EBay is freeing payment subsidiary PayPal, spinning it off into its own company by 2015. We're all wondering: could this separation affect Bitcoin?

PayPal has a developing relationship with cryptocurrency. Since the two are squeezing into the same space – digital payments – the relationship was in the spirit of competition, although, truthfully, for most of its history Bitcoin has been nothing more than a blip on PayPal's radar.

“I think Ebay is seeing the writing on the wall and the dynamics of financial privacy, encryption and decentralized markets like Open Bazar are inevitable,” Tone Vays commented to Cointelegraph. “It is smart to cut ties with oppressive payment systems while they still have value. This move should have no effect on the price of bitcoin [or] its adoption.”

The relationship however has recently evolved into a budding partnership. Braintree, a PayPal subsidiary, announced that it would integrate Bitcoin. Barely a week later, PayPal put forward an announcement that digital goods vendors would be able to accept Bitcoin. Suddenly PayPal's every move, regardless of motive, looks like an opportunity-in-waiting for Bitcoin.

Whatever the reasons for the split, this umbilical cut could have interesting, and perhaps unintended, affects. Some argue PayPal may have more space to grow and experiment, which would bode well for cryptocurrency.

But maybe PayPal and Bitcoin will have no lasting relationship at all.

“As for what it means for PayPal, unless they are willing to provide more freedoms to their customers where people are not afraid to put notes on payment like ‘here is the $20 I owe you for the NCAA basketball betting pool’, it will find itself on the wrong end of the technological evolution within 5 years,” Vays added.

John Biggs meanwhile writes at TechCrunch, “eBay and PayPal’s half-hearted efforts to support cryptocurrency – in very specific situations for very specific clients – speaks to both their inability to innovate and their failure to give the people what they want.”

Community Commentary

Paul Snow (Texas Bitcoin Association):

"Ebay and Paypal are both feeling the pressure of greater competition, and finding their relationship constrains how they might respond.  They are demonstrating a great deal of insight and pragmatism in splitting to allow each other to better react to the market, unhindered by the interests of the other.   Bitcoin holds quite a bit of promise for Ebay as a payment platform that reduces fees, while Bitcoin provides a value transport for Paypal that allows easier international transactions.   The value proposition for both is very different, and requires them to act independently in the face of competition."

"Ebay and Paypal cannot expect to win a 100 yard dash running as if it were a three legged race.”

Patrick Dugan (Crypto Currency Concepts):

“I think in the tech business, a 10 or 20 year old company is less likely to catch the next wave than a 3 year old company. Ecommerce is going to be again revolutionized by escrow-driven supply chains. So Ebay is probably a long-term short position in my book. This may give Paypal more latitude to progress with the cryptocurrency experiment.”

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