PayPal makes strides in crypto payments with launch of US Dollar-pegged stablecoin
|- PayPal is working with the Paxos Trust to issue a US Dollar pegged stablecoin for the consumer-payment sector.
- The launch of the USD-pegged stablecoin is first for a large financial firm with potential impacts on the adoption of digital tokens worldwide.
- PayPal’s stablecoin will gradually be rolled out to customers in the US.
PayPal, a Silicon Valley-based payments firm, has announced its launch of a US Dollar-pegged stablecoin. The payment giant has partnered with Paxos and the new stablecoin will be gradually rolled out in the US.
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PayPal’s new stablecoin could revolutionize adoption of digital assets in payments
PayPal, one of the largest payments companies in the US, is committed to the digital asset ecosystem, with its launch of the first USD-pegged stablecoin for retail customers. The new digital token is developed in partnership with Paxos, and the coin will be labeled PayPal USD or PYUSD.
PYUSD will be fully backed by US Dollar deposits, short-term Treasuries and cash equivalents. PayPal USD has been designed to offer several features to retail customers:
- Transfer PayPal USD between PayPal and compatible external wallets
- Send person-to-person payments using PYUSD
- Fund purchases with PayPal USD by selecting it at checkout
- Convert any of PayPal's supported cryptocurrencies to and from PayPal USD
In a press release by PayPal, Dan Schulman, president and CEO of the payment giant, said:
The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar. Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.
PYUSD transparency and monthly reserve reports
PayPal has announced that starting September 2023, Paxos will publish a public monthly Reserve Report for PayPal USD that outlines the instruments composing the reserves. The report of the PYUSD reserve assets will be attested by a third party and will be conducted by an accounting firm in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA).
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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