If you’ve shopped on Overstock in recent years, there’s a good chance you encountered a surprising payment option at checkout. Next to MasterCard, American Express, and PayPal, there’s Bitcoin. The cryptocurrency that investors are enjoined to hodl can now be spent on patio furniture.

Unlike Bitcoin, PayPal is a familiar option at check-out. The payment rail system rose to prominence alongside not just Ebay, but online shopping itself. However, PayPal’s founders originally imagined PayPal as a money system that circulated free of centralization. In other words, a proto-cryptocurrency.

Ebay bought PayPal in 2002 and the founding team (which included Elon Musk) shelved its ambitions. Still, PayPal has gone on to play a central role in the future of digital currency — first by offering the public an alternate method of moving money through the internet, and second by unleashing Venmo.

PayPal and Venmo, which are integrated with banks and have millions of active users, are familiarizing us with the future of money, by acquainting us with the look and feel of digital currency.

Bitcoin and Venmo … More Related Than You’d Think

While Bitcoin and its altcoin peers are speculatory currencies, far from common usage, we grow more comfortable with crypto-like transactions every time we Venmo someone (yes, it’s a verb now).

When you pay with Venmo, you fill out a simple form, with amount, requesting or sending, and other party. You fill out the same type of form to send Bitcoin. Venmo also has elements that resemble an open ledger. You “validate” transactions by placing them before the public eye. But while crypto depends on an open ledger to prove the ownership of coin, Venmo’s quasi-open ledger does little more than show that everyone is using the app. Venmo’s transactions are presented in the public feed without dollar amounts and experienced much like social media. Still, these heavily emoji’d ledgers playfully recreate the cryptocurrency experience.

Another element of similarity between P2P payment and crypto is the risk. Digital payments of either variety are vulnerable to human error and neither offer the safety net of banks and credit cards. Sent money to the wrong person? Your only true hope for reimbursement is if the receiver sends it back.

One of many peer-to-peer mobile payment services that allow you to swiftly transfer money to friends and family, Venmo has led the way and become ubiquitous. The Wall Street Journal reported in April that Venmo has had 40 million users in the last year. That’s more active users than every big bank in the U.S. except JPMorgan Chase.

Take the Virtual Money and Run

The runaway success of PayPal — and its P2P heir Venmo — shows people are increasingly comfortable with new ways of holding and spending money. For many, crypto might still be too difficult to use or too volatile to trust, but bank-linked mobile payment is a no-brainer. The simple act of reimbursing a friend $20 through Venmo is a decisive one — it’s a step away from physical currency, toward digital currency.

We’re already taking this step in droves. A fast-growing percentage of Americans are ditching physical currency altogether. While 60% of people said they like to keep cash on hand in 2015, just 53% said the same in 2018, according to surveys from the Pew Research Center.

In its annual report, PayPal noted its potential growth partly depends on “the pace of transition from cash and checks to digital forms of payment.” The popularity and prevalence of PayPal and Venmo can only have accelerated that pace.

Banking on Digital Currency

On the spectrum of big bank involvement in today’s digital currency, there’s crypto on one end, PayPal and Venmo in the middle, and Zelle on the other. While Venmo-like P2P apps sync up with financial institutions, allowing you to easily draw money from your checking account or credit card, they still take action away from big banks.

Keen on keeping P2P payments more fully within their own ecosystem, big banks collaborated to form their own mobile payment system. Zelle is the brainchild of Early Warning Services, a consortium owned by five of the biggest banks in the U.S., including JPMorgan Chase and Bank of America. Affiliated with hundreds of American banks, Zelle brings mobile bank transfers in-house.

And people trust Zelle with greater amounts. While Venmo has more users (and name recognition), Zelle actually moves a lot more money: $35 billion in Q4 2018, versus Venmo’s $19 billion for the same period, as finance expert and Forbes contributor Ron Shevlin reported earlier this year.

P2P payment apps integrate banks in digital transactions to various extents but they all prime us for a cashless economy. Zelle argues for bank centrality; the spread and adoption of cryptocurrency (there’s even consumer-friendly Bitcoin wallets) argues for decentralization.

In the meantime, PayPal’s cryptocurrency roots can still be traced to things happening today. The ex-president of PayPal is now heading up Facebook’s cryptocurrency push. The social media company this week unveiled its plan for a digital token usable both in Facebook’s suite of apps and in the physical world.

Everytime you split the bill using Venmo, donate to someone’s birthday fundraiser via Facebook coin, or — who knows — stock up on area rugs with Bitcoin, you’re voting on what the future of money is going to look like. Some options keep you in a world created and organized by mainstream financial institutions; others plant you outside of it.

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