Looks like the famous electronic payment system PayPal has decided to conquer the cryptocurrency market. Such news appeared online at the end of the summer. After some final improvements, the company finally has released its dollar stablecoin – PYUSD. Someone has already called it a competitor of USDT, while others are sure that the longitude of this coin will definitely not last. Let’s talk about this project in detail and find out who’s right and who’s wrong.
What is PYUSD?
PYUSD is a PayPal stablecoin launched on August 7, 2023. It is based on ERC-20 standard, which the USDT token also uses. Main priority of this coin is the maintenance of a constant 1:1 exchange rate with the US dollar. The issuer of the new coin is the New York financial and economic company Paxos.
People can exchange PYUSD for US dollars or other assets within the PayPal ecosystem. Purchases using PYUSD tokens can be made through the mobile payment service Venmo, as well as through PayPal itself. By the beginning of October the market cap of the PYUSD is around 44 million.
Why does PayPal have its own cryptocurrency?
PayPal has earned a name for itself as the largest debit payment system. For quite a long time it has had the status of a reliable, stable and safe company with a good reputation and a huge user audience around the world. The cooperation with cryptocurrency was only a matter of time for such a large market player.
In 2020, PayPal introduced the ability to buy, transfer and accumulate Ethereum (ETH) and Bitcoin (BTC). At that time, this was a good sign for the crypto community – cryptocurrency received a share of recognition thanks to the attention from the global payment system.
By 2022, the platform has expanded the capabilities of its e-wallet and given users the freedom to also work with BCH and LTC. Before this, cryptocurrency could only be exchanged through fiat. In August 2023, PayPal launched its first stablecoin. So far, the developers have defined the scope of its use as a means of payment in the Web3 sector and blockchain games.
Risks and concerns of a new stablecoin
The launch of PYUSD was successful, but there were still skeptics who doubted the reliability of the new cryptocurrency. Here's the main concerns regarding this coin.
- Unreliable issuer Paxos
This is not the first time Paxos has become an issuer of stablecoins. It previously issued Binance USD (BUSD) from Binance. In February 2023, the issue of the stablecoin had to be suspended, as American regulators found signs of securities in it and considered the sale illegal.
SEC is now fighting against many US crypto projects because of the uncertain status of the cryptocurrency. In this regard, skeptics have good reason to doubt the reliability of PYUSD. If the Securities Commission deems Paxos' activities illegal, then the finances of an impressive number of users will be at risk.
- Allegations of centralization of PYUSD
Some users have noticed that the stablecoin code contains strange details, hinting that PYUSD is a completely centralized product. PayPal has full control over user accounts and, if government authorities wish, can easily freeze or block them. This prospect is not at all pleasing to users who came to cryptocurrency for independence and anonymity.
However, there is no official confirmation that PYUSD is completely controlled by the state.
Where is PYUSD sold?
Traders can easily buy or swap PYUSD using SimpleSwap instant crypto exchange services. Just go to our website, choose desired coins and create a transaction. On SimpleSwap there is no need in registration an account, that allows to convert crypto fast.
Future of PYUSD
PYUSD turned out to be very useful for freelancers and international developers. With its help, it became easier to pay for their work. Due to the fact that PayPal is a powerful market giant, the PYUSD users are confident in its success: the platform is currently supported by 430 million users, who, for the most part, react positively to innovations.
It is believed that PYUSD was not developed with the goal of competing with other popular stablecoins. The main goal was to expand the boundaries and capabilities of the PayPal ecosystem.
Conclusion
PYUSD has been on the crypto market for less than two months. Developers are picturing a successful future for it, but users are a bit worried about its stability. But, nevertheless, the launch of a new stablecoin from PayPal created a resonance in Crypto World.
No matter what, the fact that the influential market player like PayPal has created its own stablecoin might have a huge impact on public acceptance of cryptocurrencies. This step proves that it is becoming less and less possible to exist in the modern world abstracted from crypto assets.
If you want to learn more interesting facts about crypto then check out our blog! You might like our articles “How to Pick the Blockchain When Buying a Stablecoin” and “Stablecoin War”.
