No way in hell would I want paypal handling my bitcoin...they could freeze an account at their sole discretion the same way they do already. I don't even remotely trust them to store money. I use paypal for 2 things that let me make transactions without tying up my bank info. Once those two adopt bitcoin as a payment method, good riddance paypal...forever.

Here's the thing - bitcoin IS a payment processor, same as paypal. Bitcoin does the job 100 times better and more efficiently than paypal.

There really isn't much paypal can do because it's already established itself and its policy. In order to compete with bitcoin, they'd have to eliminate their fees or just offer an annual payment option in a low enough amount it is the equivalent of pennies. They'd have to completely decentralize itself in holding people's bitcoin.

It'll never happen. Once bitcoin as a payment processor gains traction, I fully predict paypal will implode - they have millions of unhappy customers who hate them but use them because they have no other viable options. Once bitcoin becomes one, pp will lose a solid core of their business. It will respond with raising fees to offset the loss, then tightening restrictions which will meet backlash, to then surrendering to "free" right before they go out of business. Western Union will also follow suit, probably before paypal does. Walmart money grams will also fall.

Paypal had the right idea when it started out...but once it got beyond a certain point, it became more or less draconian because it was the only option.

I'd imagine paypal closes its doors in the next 5 years.