How a crypto firm is courting new users in a bear market | Payment source

Even with cryptocurrency in a down cycle, digital asset firms are entering into distribution partnerships to help them quickly find new users for their investment and payment services.

Bitstamp, for example, recently integrated with PayPal to allow PayPal’s customers to fund crypto purchases, adding nearly 400 million potential users. It follows quickly on the heels of Coinbase’s partnership with Google and BitPay’s new collaboration with blockchain development platform Polygon.

“Almost every institution on the planet is trying to figure out what their crypto game is,” said Bobby Zagotta, CEO and Chief Commercial Officer of Bitstamp. “They want to know if they need to have a crypto game and what the risks are.”

The value of cryptocurrency has fallen in recent months, but consumers are still attracted to investing in and eventually using digital assets for payments, creating the need for crypto firms to navigate a market downturn, reach new users and ensure that beginners are comfortable with an asset. which often change value.

Bitstamp recently launched a learning center that explains how the markets work and provides definitions and outlines for staples of the crypto world – such as blockchain, distributed finance, forks, non-fungible tokens and the difference between cryptocurrencies and tokens.

“So if some of these users are new to crypto markets, they can have easy access to help them on their journey,” Zagotta said.

PayPal is the newest distribution partner for Bitstamp, which previously enabled crypto purchases via Apple Pay and Google Pay user accounts, and has partnered with banks such as Silvergate, the crypto specialist bank that also develops the stablecoin Diem. PayPal, which did not provide comment, is the most requested partner among Bitstamp’s users, according to Zagotta.

“Part of that process is to make buying and selling crypto as easy as possible,” Zagotta said, adding that most consumers are familiar with these larger payment companies.

PayPal considers build your own stablecoinand has supported the buying, selling and holding of crypto for more than a year on the main app and Venmo peer-to-peer payment service. Users of these services, usually consumers, can build crypto balances, and then have a large place of available merchants to make payments.

PayPal, which is also in the process of upgrading its point of sale technology, recently made several moves into crypto. The company has allowed consumers to add crypto to non-PayPal wallets, and earlier in 2022 made its crypto buy/sell/hold service available on its mobile app.

Bitstamp is banking on the appetite of retail customers to resume, or continue to engage, in digital asset trading, even as they face high interest rates, inflationary tailwinds, digital asset price volatility and other challenges, according to Wally Okby, a strategic advisor at Aite-Novarica.

“Bitstamp’s integration with PayPal essentially opens up a new, potentially lucrative distribution channel for retail individuals to transact digital assets,” Okby said.

The decline in crypto values ​​- Bitcoin has fallen from more than $60,000 to around $20,000 in less than a year – has caused losses in the addressable market of investors. Bank of America, for example, has lost more than 50% of its crypto investors, according to Bloomberg.

But the bear market hasn’t completely eroded consumer interest in crypto. Forty percent of consumers between 18 and 45 plan to buy crypto in the next six months, according to Checkout.com. And 80% of US and UK crypto holders in a June PayU survey indicated they were eager to use their crypto balances to make payments when merchants support this option.

While crypto owners prefer to use their digital assets to pay for more expensive purchases, crypto could soon be used for smaller transactions, Elbruz Yilmaz, senior vice president of crypto and web3.0 at Paysafe, said in a written statement. 91 percent of crypto owners in PayU’s survey said that crypto payments will be as common in the future as paying with a credit card.

Bitstamp, which was founded in 2011, claims its experience with multiple crypto corrections gives it experience in dealing with dramatic market swings. “We’ve navigated a lot of market environments, so we have a playbook,” Zagotta said.

Other crypto companies are entering into partnerships to build scale. BitPay, which provides Bitcoin and crypto payment services, recently added support for Polygon, a blockchain development platform that has been adopted by more than 37,000 decentralized applications and processed more than 2.1 billion transfers. BitPay also added support for MATIC, Polygon’s native currency. Polygon’s distribution partners include Stripe, Meta Labs and Adobe.

“Merchants can now offer users more choice in which digital asset to pay with. BitPay users can now purchase store change and use MATIC from our app,” Bill Zielke, chief marketing officer, said in an email.

And in October, Google announced that it would allow customers to pay for cloud services with cryptocurrency, while Coinbase will gain access to Google’s cloud to support its range of payments, crypto services and financial services.

Coinbase has expanded its range of products since then Public listing in 2021 as it builds a super app. The pairing of Coinbase and Google will potentially result in Google accepting more types of crypto for payments. Google did not provide comment by deadline.

Coinbase referred questions to company announcement of the Google partnership. “Web3 is the next generation of the Internet that will allow people to own digital property in an open, decentralized environment,” Coinbase’s announcement said.

The growth of partnerships between stock exchanges and payment companies could threaten the banks, according to Okby.

“I will be on the lookout for statistics that illustrate how much money traditional financial institutions are handing over to crypto exchanges to facilitate customer demand for liquid coins,” Okby said. “To the extent that happens, it will be interesting to see how PayPal serves as a key distribution partner for Bitstamp and other exchanges.”