Bitcoin exchange Coinizy Financial Services, Inc. has launched what it claims to be the world’s first one way Bitcoin to PayPal redemption service.
The service allows users to redeem their Bitcoin into a payment via PayPal, Inc.’s payment service whereas traditionally Bitcoin exchanges have primarily only offered redemption services via wire transfer, although as we’ve seen recently with Coinbase debit cards are also emerging as another way to access Bitcoin wallets.
Given some issues in the past with Bitcoin exchanges that have tried to provide PayPal support (be it two way) who have had the ability to do so canceled or blocked by the uber payment processing giant, Coinizy isn’t dealing with PayPal directly and is instead routing payments through an intermediary financial institution in Hong Kong to handle the payments.
Along with the option of redemption by Bitcoin, Coinizy also supports more traditional payment methods should a user not wish to utilize PayPal, including support for redemptions via Western Union, SWIFT and a virtual credit card that can be used like a normal credit card to purchase items online.
While Coinizy claims to have been granted an MSB license by FinTrac, Canada’s financial regulator, giving it an immediate air of legitimacy, the company itself should be approached with at least some level of caution.
The reason Bitcoin to PayPal services have all failed in the past is that put simply PayPal doesn’t want people using Bitcoin ostensibly due to concerns about the use of the cryptocurrency in facilitating illegal transactions but probably more likely due to the fact that Bitcoin offers a competing service to its online payment business; no, Bitcoin isn’t about to threaten PayPal’s business today but it has the potential to seriously shake up the online payments market well into the future.
Coinizy using an unnamed “Hong Kong intermediary financial institution” to process the payment is of a concern because although Coinizy itself is registered in Canada users then also have to trust this institution as well, and although Hong Kong is a leading global financial center it has also been home to no shortage of dubious business enterprises over the years, including in the Bitcoin space.
If the service works as advertised it is definitely going to find a willing audience among Bitcoin users who need another way to withdraw their funds, but only time will tell just how reliable the service is.
Image credit: Coinizy
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Duncan Riley is a senior writer at SiliconANGLE covering Startups, Bitcoin, and the Internet of Things.
Duncan is a co-founder of VC funded media company B5Media and founder of news site The Inquisitr, and was a senior writer at TechCrunch in its earlier days.
Tips? Press releases? Intersting startup? email: firstname.lastname@example.org or contact Duncan on Twitter @duncanriley
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