PayPal CTO Says Cryptocurrency, Blockchain to Democratise Finances

PayPal, the digital payments major, said on Thursday that the technical transformation ushered in by blockchain and cryptocurrency will help democratise financial services and increase financial inclusion.

PayPal also stated that it has a cybersecurity offensive and defensive plan in place to ensure that its platform remains safe and secure for users. Sri Shivananda, PayPal's EVP and Chief Technology Officer, stated that the company's infrastructure will not just support digital currencies, but that the company's long-term goal is to support all central bank digital currencies as a kind of digital money.

"We are very interested in blockchain and crypto as well. We truly think that this is a paradigm and a shift in technology that will help us deliver to our mission to democratise financial services and make financial inclusion possible for those 1.8 billion people around the world that are not included in today's system," Shivananda said during a virtual briefing. He said that the ultimate goal is to expand the accessibility, ubiquity, and use of digital assets while also making money movement and management easier.

"The infrastructure we are building will not only support digital currencies, which we are already beginning to do, but the intent over time is to also support all of the central bank digital currencies as well, as a form of digital money," he said.

PayPal currently supports four cryptocurrencies. Shivananda explained that the decentralised aspect of crypto opens a plethora of opportunities. "There's been a lot of innovation in the experiences related to payments, but the underlying infrastructure has remained exactly the same, and what the cryptocurrency and blockchain ecosystem does with the decentralised protocol is offer us the ability to go re-imagine that underlying substrate and make access, much easier for everyone," he said. He noted that it is still early in the world of blockchain and cryptocurrencies and that there is a lot to learn in this area going forward.

Cryptocurrencies are digital or virtual currencies that operate independently of a central bank and employ encryption techniques to regulate the unit generation and verify payment transfers.

In 2018, the RBI virtually outlawed cryptocurrency trading and ordered all central bank-regulated firms to stop dealing in virtual currencies. In 2019, the Supreme Court ordered the Centre to draught crypto rules, and in 2020, it overturned the RBI's restrictions. 

Asked if the company was engaged in a dialogue with the Indian government on cryptocurrency, PayPal Vice President, Guru Bhat, said regulators in India have been at the forefront of innovation in the fintech space.

"We are very pro-innovation and progress when it comes to fintech and on those topics, we continue to be actively engaged with regulators around the world, including in India, to make sure that we are able to lend a hand wherever it's appropriate to progress the FinTech ecosystem in the country," he added.

Bhat said the pandemic has helped in the acceleration of digital adoption but there has also been a surge in cyberattacks via phishing, ransomware, botnets, and crypto-jacking among other methods.  He said that while nearly two-thirds of the fintech companies it surveyed employ at least two people or more in Southeast Asia to deal specifically with information security requirements and cybersecurity, two in five companies spent less than 3 per cent of their operating budget on cybersecurity.

"This means that there is a severe level of under-investment, and that causes a specific cause for concern because the cost of a breach, not just in terms of costs but in terms of brand, in terms of a breach of trust, etc. it can be so expensive, and especially in the realm that we are in financial services," he said. Bhat added that nearly 1.16 million cases were reported last year, which is up three times compared to 2019, and more than 20 times the level in 2016.