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The headlines were filled with the news last week about eBay Inc.'s (Nasdaq: EBAY) plan to spin off its PayPal unit as a publicly traded company in 2015.
Coverage points to a similar obvious fact: That the spin-off comes months after a highly publicized suggestion by Carl Icahn that was brushed off.
To be clear, I'm a big believer in this spin-off, for a number of reasons.
But, the truth is the really big story here – and all the profits that will come with it – was missed. Until now…
A Good Move (and a Lot More) for eBay Investors
The spin-off will provide eBay investors with shares in fast-growing PayPal as a tax-free special dividend.
After all, PayPal is one of the world's leading payment companies. It has a remarkable 152.5 million users, and Wall Street believes PayPal could have a market capitalization of as much as $31.5 billion.
PayPal clearly isn't taking any chances. It hired former American Express Co. (NYSE: AXP) executive Dan Schulman as its new CEO.
But there's an angle to the story that almost no one has taken the time to mention – this spin-off is great news for Bitcoin.
The move comes just days after PayPal announced a whole new level of support for the virtual currency. Taken together, PayPal's moves are a sign that the digital payments world is getting hotter by the minute, and that Bitcoin ranks as the leading virtual currency in this rapidly growing ecosystem.
Last year in my webinar Edison's Revenge on the Dollar, I noted that Bitcoin was an unstoppable global force that would transform the way people pay for goods and services, particularly over the Internet.
I believe a series of events unfolding daily proves this is true. It also means that Bitcoin has moved well beyond the realm of a pure currency play into an advanced, secure digital payments platform.
Let's start with PayPal's Bitcoin move. Last week PayPalannounced it had struck a deal with three leading Bitcoin processors, Coinbase, GoCoin, and BitPay. Under the agreement, eBay merchants who work with PayPal can now accept Bitcoin.
Over the last several months, PayPal senior leaders have expressed keen interest in Bitcoin's Web-centric technology. Scott Ellison, the company's senior director of corporate strategy, told CNN Money that integrating Bitcoin was part of PayPal's status as "the original payments disruptor."
For a new company like BitPay this is a pivotal moment, but not the first big break it's gotten. Just six months ago, it received $30 million in venture funding from a group that includes Yahoo! Inc. (Nasdaq: YHOO) founder Jerry Yang and Richard Branson, chairman of the Virgin Group Ltd.
I met with BitPay CEO Tony Gallippi in late 2013, and I can tell you he's always looking for new ways to further integrate Bitcoin as an online payment system.
Bitcoin Will Get a Lift from a Combined Tech Push
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.