After the pandemic hit, PayPal CEO Dan Schulman seized on digital cash to speed e-commerce transactions. MicroStrategy CEO Michael Saylor filled his company’s treasury with Bitcoin as a bet against devaluation of the dollar. The move made him a billionaire.
Up 300% in 2020, Bitcoin is suddenly getting respect in the C-suite. Here’s how PayPal, Square and the 48 other big companies on Forbes’ third annual Blockchain 50 are outpacing their competition using Bitcoin and the underlying blockchain.
Locked down in his Palo Alto, California, home last March, as the coronavirus spread across the U.S., PayPal chief executive Dan Schulman knew that the pandemic was a once-in-a-lifetime business opportunity.
The pioneering electronic-payments company he took over in 2014 had been working toward a world without cash for two decades, but recently its growth had begun to slow. Over the decade after eBay acquired the startup in 2002, PayPal’s revenue grew at an average annual rate of 38%, but today, the company, again independent, is growing at half that rate. Now, as people retreated to their homes, online commerce and digital payments had suddenly become necessities in everyday life—for grocery shopping, banking and more.
Almost immediately, PayPal’s active accounts began increasing—by more than 50 million, to 361 million, by the end of 2020. Its stock took off along with other digital-economy shares, from $86 last March to a recent $247. In April, some $269 billion in stimulus payments needed to be distributed, and PayPal stepped in to help get cash to the 7 million American households without bank accounts. As PayPal worked to accommodate the unbanked, Schulman felt a sense of urgency.
“You were seeing the acceleration of trends that would have typically taken maybe three to five years happening in three to five months,” says Schulman, 63. “I thought it was important that PayPal help shape what that future could look like and not react to it.”
PayPal’s existing technology, integrated with traditional banks, was clunky and slow, taking as long as ten days to complete a transaction. First, it relied on a Georgia-based startup called Ingo Money to upload and verify the images of stimulus checks, and then a bank in Georgia to clear and settle them. Five to ten days later, the cash showed up in an account at PayPal or its Millennial-friendly subsidiary Venmo. If the customer is willing to pay a 1% fee, the cash is credited in minutes, but behind the scenes the bank assumes the risk if the check doesn’t clear.
Schulman, who was already familiar with blockchain, the technology underlying Bitcoin, knew there was a better way. Blockchain technology could easily—and much more quickly—distribute cryptocurrencies like Bitcoin directly into electronic wallets. Sure, the unbanked would need an internet connection to spend it—or turn it back into plain old greenbacks—but that was…