Stablecoins offer a stable and reliable payment method for cryptocurrencies, avoiding frequent fluctuations like BTC and ETH prices.
A digital payment processor, PayPal, has recently launched its native stablecoin, PYUSD, to join the trend. The new stablecoin is expected to impact the market and its use cases. Let’s explore the stablecoin’s mechanics and its potential influence.
Introducing PYUSD – PayPal’s Very Own Stablecoin
PayPal launched its crypto ventures in 2020 by listing Bitcoin as a payment method for US customers. Over the years, Ethereum, Litecoin, and Bitcoin Cash joined PayPal’s payment listings. In August 2023, the PYUSD token launched as an ERC-20 became a major introduction to the crypto world.
PayPal has introduced the PYUSD token, pegged to USD in a 1:1 ratio and backed by short-term US treasuries and cash capital, aiming to maintain its global leadership in digital payment methods. The stablecoin will benefit digital asset creators, crypto enthusiasts, and commercial entities who want to transact cryptocurrencies.
PayPal clients from the US can use PYUSD to buy other cryptocurrencies like BTC, Bitcoin Cash, Litecoin, and Ether. There are no fees for sending PYUSD funds to other users, but charges are applied when converting between PYUSD and other cryptocurrencies and conducting online purchases and withdrawals. These fees will be disclosed to users during trading or checkout.
Does PYUSD Have a Future?
PayPal USD vies for market dominance in domains such as brand authority, regulatory compliance, and market reach. PYUSD is expanding its market capitalization by leveraging its large user base. It is yet to be listed on major exchanges, but listing on platforms like Coinbase, Binance, and Kraken would enable convenient crypto acquisition for users outside the PayPal ecosystem.
PYUSD vs. Other Major Stablecoins
The stablecoin market has undergone significant changes, including the TerraUSD collapse and the crypto market meltdown. PayPal’s new PYUSD token, built on its decades-old payment processing environment, is designed to ensure robust safety and use a reliable pegging mechanism. The token is in direct competition with USDT and USDC, the two most widespread stablecoins, and PayPal is relying on its expertise in transactions and gateways to gain users’ trust.
USDT Overview
Tether, the third digital money with over $83 billion in market capitalization, is a stable payment method used in various e-commerce platforms, web3 projects, online stores, and major exchanges. Despite being pegged to USD with a 1:1 ratio and not being a tradable instrument, USDT’s usability and applications make it a potential rival to PYUSD in the market. With nearly a decade of presence, many crypto enthusiasts have adopted USDT as their primary online payment option.
USDC Overview
USD Coin, a stable cryptocurrency ranked #6 with a market cap of over $25 billion, is minted using Ethereum’s ERC-20 token protocol and supports interoperability with various blockchain networks. The founding company also developed Euro Coin, which has increased USDC’s usability and adoption in web3 projects and online platforms as a reliable and stable payment method.
So, Can PYUSD Win?
PayPal USD has a competitive edge due to its widespread brand recognition and trustworthiness, while stablecoins USDC, USDT, and BUSD have established a strong track record. PYUSD also has a better regulatory compliance record than other stablecoins. Paxos, its issuer, is under NYDFS regulatory oversight, ensuring investors’ funds are returned in case of Paxos bankruptcy. This gives PYUSD a significant advantage over other stablecoins. Meanwhile, USDT, for instance, is not subject to government oversight.
Bottom Line
PayPal’s PYUSD token is poised to revolutionize the stablecoin market and drive numerous Web 3.0 projects. With PayPal’s expertise and reputation as a pioneer payment processor, it promises an exciting future for customers.
