Venmo is launching a new crypto transfer feature.
In a press release, PayPal, which owns the Venmo payment app, said that users will be able to transfer cryptocurrencies between Venmo wallets. They will also be able to transfer to PayPal accounts and to external wallets and exchanges.
Peer-to-Peer Crypto Transfers Gain Momentum
Venmo first dipped its toes into the crypto market in 2021 when it launched its in-app trading platform. However, until now the app only supported buying and selling crypto assets, not transferring them.
The introduction of full crypto wallet functionality to such a popular payment app marks a significant milestone in the journey toward the mainstream adoption of cryptocurrencies.
Both the PayPal and Venmo brands are well-known among the general population. By integrating crypto transfers, millions of Venmo users will be able to send assets like Bitcoin to their peers. It also opens up an opportunity for the normalization of crypto payments.
Building on the success of its popular interface, Venmo is hoping a straightforward user experience will help attract people to the new feature. Users will be able to identify a recipient with their wallet address. They will also be able to generate a unique identifying QR code that they can share with others.
Venmo Plays Catchup to Cash App
Venmo’s recent announcement could be a reaction to the threat of increasing competition in the mobile peer-to-peer (P2P) payments market.
For example, although Venmo remains one of the most popular payment apps in the U.S., the likes of Cash App have also risen to prominence.
In fact, last year Ark Invest CEO Cathie Wood revealed that her company had ditched its PayPal shares in favor of Cash App owner Block.
“We tend to put our bets with who we believe will be the winners,” Wood commented. “As we consolidate our portfolios during a risk-off period, we chose Block over PayPal.”
Unlike Cash App, which entered the crypto payments space in 2018, Venmo was relatively late to the party.
Cash App now leverages the Bitcoin Lightning Network to power P2P BTC payments. That decision has helped Block facilitate faster, cheaper transactions, allowing it to pass on efficiency gains to users.
Transaction Fees Take Center Stage
Thanks to the way the Lightning Network facilitates low-cost, low-value transactions, it has been a major driver for the adoption of commercial Bitcoin payments because it is faster and cheaper than other crypto transfer options. What’s more, it can even be a better choice than fiat payment channels.
Especially for businesses that trade across borders, the Bitcoin Lightning Network is helping to bring down transaction fees. For proponents of everyday Bitcoin payments, it is helping to realize the dream of a borderless decentralized payment system.
While Venmo has not yet stated how fees and transaction costs will work for crypto transfers, given the growing popularity of mobile wallets powered by the Lightning Network it is likely to be a significant consideration for potential users.
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