PayPal ignites social media with significant change

The company, which supported bitcoin and a few other cryptocurrencies and contributed to the massive cryptocurrency bull run last year, has withdrawn a policy change that would have allowed users to be fined up to $2,500 for disseminating what it called "misinformation," claiming the update was sent out "in error."

Following a barrage of criticism that dubbed the policy "crazy," "Owellian," and "the best thing that has occurred for the adoption" of bitcoin and other cryptocurrencies, past management and regulators reversed course.

A spokesperson for PayPal informed reporters that a recent AUP (acceptable usage policy) message that contained inaccurate information was sent out accidentally. "Because this statement was never meant to be included in our policy, PayPal does not fine users for providing false information. To make our policy pages accurate, our staff are at it. We apologise for the confusion this has brought about."

The so-called PayPal mafia, including former PayPal president David Marcus, founding chief operating officer David Sachs, and cofounder Elon Musk, publicly criticised the policy, and the bitcoin and crypto community used it as justification for the demand for decentralised, digital payment alternatives, before the company finally changed its course.

After failing to launch Facebook's virtual currency, Marcus, who now owns the "bitcoin-focused" business Lightspark, wrote on Twitter, "It's hard for me to publicly criticise a company I used to love and dedicated so much to." "But the new AUP from PayPal goes against everything I stand for. Now, a private firm has the authority to determine whether to withdraw your funds in response to whatever you say. Insanity."

Musk replied to Marcus, "Agreed," while Sachs, now a venture capitalist and co-host of the All In podcast, advised PayPal users to withdraw their funds immediately.

Republican Brendan Carr, a commissioner for the Federal Communications Commission, referred to the proposal as "Orwellian." Carr tweeted, "Paypal reserves the power to remove your money if you submit a statement that Paypal determines to be "misinformation." This is why it's so important for state and federal lawmakers to enact rules that forbid digital businesses from discriminating against their customers and safeguard free expression.

Supporters of bitcoin and cryptocurrencies have long warned that allowing businesses to manage the payments system runs the danger of giving them an excessive amount of control over people and their financial decisions.

The creation of a digital yuan, or so-called central bank digital currency (CBDC), has raised concerns in China, though, that the government would be able to control how citizens may spend their money. The creation of their own digital dollars and digital euros is something that governments, including those in the U.S. and Europe, are looking at.

Popular cryptocurrency investor Santiago Roel Santos tweeted, "PayPal limiting speech and banning payments is the finest thing that has happened for the acceptance of crypto payments using stablecoins." At this rate, web3 adoption will increase as a result of web2 corporations' careless behaviour.

The concept behind web3 is that a third-generation, decentralised, blockchain-based internet would eventually replace the Silicon Valley-centric web 2.0, which is controlled by companies like Facebook's Meta, Google, Microsoft, and Amazon.

This month, Musk declared his intention to transform Twitter into a "everything app" akin to WeChat, a very successful social networking, messaging, and payment platform in China.

Musk declared after his agreement to take Twitter private was revived that "buying Twitter is an accelerant to constructing X." Musk's early 2000s payments business, X.com, later changed its name to PayPal.