Exploring ways to integrate Bitcoin into PayPal's payment network

John Donahoe, chief executive of ebay, said in Tuesday that the company could open the door to virtual currency Donahoe and was exploring ways to integrate Bitcoin into the PayPal payment network, according to foreign media reports.

"Bitcoin is a disruptive technology, so we're working on it closely," says Donahoe. It may be possible to integrate Bitcoin into PayPal. "The integration into the PayPal network allows Bitcoin to gain the legitimacy it needs. The majority of Bitcoin, currently accepted by only a handful of businesses, is held by speculators who are counting on price volatility. Recently, the value of Bitcoin has fluctuated dramatically.

But Donahoe also said ebay has not made a commitment to use Bitcoin. He says bitcoin is reminiscent of music-sharing sites Kazaa and Napster. Although the two sites were found to violate trademark law, they have created a legitimate web site, Pandora and Spotify.

Donahoe that in the next five years, Bitcoin or other virtual currencies, such as air mileage, will be able to redeem cash or buy goods. By consolidating virtual currencies such as Bitcoin in the payment network, ebay will be helped to push PayPal to physical store retailers, not just online shopping. PayPal brought ebay 1.55 billion-dollar revenue in the first quarter of this year, up from 18% a year earlier.

The US Treasury said last month that the standard Federal Bank regulations aimed at handling dubious dollar remittances would also apply to companies that issue and exchange Internet currencies. This means that companies that issue and exchange network cash will be under the same supervision as the traditional provider of remittance services. Transactions of more than 10,000 dollars must be recorded and reported.

Recently, a company named Coinsetter in New York has invested 500,000 of dollars. The company will launch a bitcoin forex trading market, allowing people to conduct margin-based leverage and short selling. Western Union and MoneyGram International are also being studied to allow customers to use Bitcoin to transfer money around the world.

At present, a few websites have begun to accept bitcoin. These sites include news site Reddit, blog platform WordPress, and pizzaforcoins.com. Pizzaforcoins.com allows users to buy pizzas with Bitcoin.

Because the value of the currency changes greatly, it also makes its prospects in the retail market fraught with risks. In April this year, Bitcoin traded at $50.01 to $266, with an average transaction price of $114.94. Bitcoincharts.com, a website dedicated to tracking the value of Bitcoin, shows that the bitcoin market is already over 1 billion dollars in size.