What value drives what value. Since Ebay bought Paypal the greater value is Ebay. Paypal while a success does not provide any value added to Ebay that is significant as per Ebays 10k http://www.sec.gov/Archives/edgar/data/1065088/000095013405003827/f05426e10vk.htm#001
They state that they have two lines of business Ebay
""We currently have two major businesses: the eBay Marketplace and PayPal. Our eBay Marketplace Mission is to create the world’s online marketplace. Our PayPal Mission is to create the new global standard for online payments.""
Ebay is stuck because the value of an auction site is limited and there is no barrier to entry whil the payment sector can grow beyond the boundaries of the Ebay auction. The Payment sector of Ebay is experiencing significant growth despite the limited vision management has.
""Payments Segment Net Transaction Revenues
Payments segment net transaction revenues increased 59% in 2004, 360% in 2003 and 452% in 2002, compared to the respective prior year. Payments segment net transaction revenues as a percentage of total net transaction revenues was 21% in 2004, 20% in 2003, and 8% in 2002. The growth in our Payments segment net transaction revenues, both in absolute terms and as a percentage of total net transaction revenues is primarily the result of increases in PayPal transaction volume driven primarily by the growth in the eBay Marketplace and, for 2003 and 2002, our acquisition of PayPal in October 2002.
During 2004, over $18.9 billion in total payment volume was transacted on the PayPal platform as compared to $12.2 billion during 2003. As of December 31, 2004, PayPal had 63.8 million accounts, compared to 40.3 million accounts at December 31, 2003. Our Payments segment net transaction revenues as a percentage of total payment volume was 3.6% in 2004 and 3.5% in 2003. The growth in Payments net transaction revenues was positively affected by PayPal’s continued penetration of eBay Marketplace transactions in all countries, particularly in the United States and the United Kingdom. Further, Payments net transaction revenues have grown in connection with the increase in our eBay Marketplace gross merchandise volume during 2003 and 2004. The relative strength of foreign currencies, primarily the Euro, against the U.S. dollar and the British pound, resulted in increased net revenues of approximately $12.9 million during 2004 when compared to the results if the weighted-average foreign currency exchange rates used in the preparation of our 2003 consolidated financial statements were used.""
Paypal will vanish even though they have garnered more accounts and this is due to the traditional view Ebay management has on payments that of a banks with merchants and customers. Paypal did not have this limited view but under the Ebay management team have accepted the growth and financing availible. Paypal is the one eyed man in the land of the blind however they are being towed around by the blind with a one trick pony. Innovate or die is still the code perhaps a suggestion under the current economic pull back. Ebay does not innovate they brand and drive towing a Paypal. The twin models are both far from the answer and the need in the current world. In 2010 the withdrawal of assets will begin in mass and the banks and financial institutions are not geared to handle outflows. The alternative banking market is running right into a demand wall and Paypal is not ready they have been burdened with the banking scheme. Concerge services whereby folks can pay their gardener and maid without the hassle of banking fees is required. Since the retiree babyboomer will probably hire an informal worker the payments need to be done in cash or something very close to it. Borrowing will dry up and banks will have to adopt alternative payment schemes with lower fee structures or die.

Seems like you're taking the cryptography out of financial cryptography. Paypal+ebay is a financial business, but it's not cryptography. Just because there's an ssl connection in there somewhere doesn't make it FC.

> Seems like you're taking the cryptography out of financial cryptography.

Close, I'm saying it is a driven feature, not a requirement. That makes it "optional but likely," see those rants I wrote last week for more on that.