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With a tiny addition at the bottom of an obscure page on their website this week, eBay sent a swirl of excitement through the bitcoin community. By adding a section for virtual currencies, it seemed clear that eBay is making moves to embrace bitcoin. Immediately the bitcoin community went wild with activity, with many applauding eBay's move. But then, as quietly as the line was added it was removed.
Had eBay changed its mind? Was it a hack?
Its likely we will never know. But digging further reveals something even more elaborate. Around the same time, another page on eBay called DEALS released a well produced introductory bitcoin video. However, the 2 minute animation, is peculiar in its own right, almost like a two minute blurb of indecision, and it makes no comment whether eBay intends to go forward with bitcoins.
Still, eBay is no newcomer to the bitcoin world. This past May, CEO, John Donahoe made numerous comments hinting that Ebay might even begin to accept bitcoin as a form of payment, a move that many bitcoiners view as a potential windfall. Yet just by selling bitcoins on its site, eBay becomes a massive free-market exchange, and as such, an easy entry point for many into the bitcoin world. With the legal framework in place to avoid the pitfalls of startups like TradeHill and Mt. Gox, Ebay's entry into bitcoin would likely be smooth.
But, for eBay, the adoption of bitcoins presents one glaring problem. Ebay owns paypal. And bitcoin's acceptance could likely signal paypal's demise. So, if Ebay were to move forward with bitcoin, the auction giant would be sacrificing billions of dollars of paypal profits, a move they are likely not going to make any time soon.
And though, you can still buy and sell bitcoins on the site today, at enormous markups with some obvious risks, its not clear that eBay is doing anything more than just flirting with the enemy.