Re: PayPal could benefit greatly from providing a wallet service
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They could make cash from the fluctuations in Bitcoin's price, as opposed to transaction fees. This would force them to create an exchange and act as a wallet. This would not only help PayPal business wise, but it would help the people who are interested in Bitcoin get involved that aren't too sure about about digital currencies. If they don't do it, they'll be out of business from someone that will.
There is not any reason or advantages to use PayPal to store BTC.
PayPal like holding your money in MtGox, you never know if it is there tomorrow
The whole idea of BTC is to control your own money;
It's not quite like MtGox, I think that's exaggerating it a bit. Perhaps they could do something where they don't have access to your private keys, but tbh none of that matters when you're looking at this from a business sense. It doesn't matter how much we hate PayPal for their sharky fees, if it makes business sense to do this they'll do it. There's no doubt in my mind that a lot of people would get involved if PayPal got involved, and we can use the services we trust. Nobody can stop them, if they can make money doing it they'll give it a go.