The biggest news in the crypto universe last week was the launch of PayPal’s own stablecoin. It was the first time such a major player in the global financial market launched its own stablecoin. PayPal did this on Monday, August 7, with the help of Paxos Trust Company, which took care of all the technical stuff.
PayPal USD or PYUSD is a digital currency that’s completely backed by US dollar deposits, as well as short-term US treasuries. Being a stablecoin, one PYUSD is always equal to one USD.
As per the CEO of Paxos Charles Cascarilla, this is a huge leap forward for the cryptocurrency industry. The decision by PayPal to get involved with stablecoins is another proof that there’s a “real-world value” to this technology.
What is a Stablecoin?
Stablecoins belong to the category of digital currencies that have a stable value, which is achieved by pegging them to a certain external asset, such as US dollar deposits. The point of this is to ensure that the cryptocurrency has a stable value.
In the case of PayPal USD, its price is always equal to the US dollar. With non-stablecoins such as the world’s most popular crypto Bitcoin, the price can change by several hundreds of dollars on a daily basis.
Because they’re stable, these sorts of crypto coins can be used for all sorts of purposes. One of those is being a medium of exchange.