Sadly, this may apply to most people, at least until offline key storage is the norm. Too many people are prone to surfing the internet insecurely and downloading files on the same PC their wallets are on. When I tell people IRL they should have a dedicated offline device or hardware wallet, they look at me like I'm crazy. Most newbies aren't properly securing their wallets, and I honestly wonder sometimes how many ever will.
In a sense, Paypal/Paxos should be more secure than a typical exchange as well since they don't process customer withdrawals. That drastically cuts down on the frequency that private keys are handled and removes the need to ever use hot wallets.
This can be really bad for the future of Bitcoin. In 2017 Bitcoin community defended itself from the SegWit2x attack by clearly signalling that the users won't recognize the fork as new Bitcoin. But if in the future majority of Bitcoin users will only own custodial Bitcoin and won't know anything about the technicals of Bitcoin, it would be easy to hard-fork the network if miners will be onboard.
Well instead of worrying about the danger of PayPal holding a few billion worth of btc if they have that much. The true fear is governments copying Norway's move of putting some BTC into the entire nations retirement fund.
Norway is small under 6 million and it is only 2 dollars per person so well under 20 million.
Pick the UK with 66 million make it 100 per person and you are at 6.6 billion
Better yet Pick the EuroPean union 450 million add 1% vat to the whole union sink it into a BTC fund.
See where I am going. Adaption or adoption of BTC big time.
The upside of Paypal is it may have influenced Norway to invest in BTC for its pension fund. The upside of Graystone buying a lot of coins may have been a factor keep this up and maybe just maybe we see a dozen countries adding btc into its longterm holdings.
Many talk about 1 dollar satoshi's which is a 10,000,000 bitcoin. Paypal Norway Gray-stone so dare I say Singapore and UK along with Italy in 2021. With more to follow in 2022.