Altcoin Spotlight: PayPal’s Stablecoin PYUSD
Stablecoins hold a unique spot in the cryptocurrency world, as they are often necessary for functionality but not usable as an investment vehicle. That being said, people are often fooled by sensationalism and find themselves purchasing a token they don’t know how to use or hold.
So, what is PayPal’s stablecoin exactly? And should you buy it? We cover all the basics in tis blog article, so keep reading.
What is PayPal USD?
PayPal USD is a stablecoin which is native to the PayPal platform. It is issued via ERC-20 token requirements via Paxos and is pegged on a 1:1 ratio to the US dollar. Though it is built on Ethereum, PYUSD can also be used for transactions on the Solana blockchain.
For those who aren’t familiar, PayPal is a digital payment platform that is used by individuals worldwide to send currency to one another.
How Does PayPal USD Work?
PayPal USD can only be purchased on the PayPal platform. When you wish to purchase some, you will pay in US dollars, which are locked up in a smart contract, while an equal amount of PYUSD (PayPal USD) is issued to your account.
Once issued, you can send PYUSD to other PayPal users. They can then convert back to US dollars on their end, and an equivalent number of US dollars locked in a smart contract will be released to them when they request.
The process of locking the US dollars into a smart contract is recorded on the public ledger, keeping PYUSD transactions transparent and immutable.
What is PYUSD?
PYUSD is the symbol used to represent PayPal USD on exchanges. While you can transaction PYUSD on any DeFi cryptocurrency exchange, remember that you can only create new PYUSD on the PayPal platform.
What Can You Use PYUSD For?
As weird as it may sound, there are actually several uses for PYUSD. Below are just the most common uses we came across in our research.
· Sending money internationally via PayPal
· Use for transactions on Ethereum and Solana
· DeFi lending purposes, namely though found on Curve.fi
This is just the tip of the iceberg for PYUSD uses. PYUSD functions as an ERC-20 token and can be used on any platform these tokens function on.
Why Use PYUSD?
There are so many stablecoins on the market, most of which are pegged to the US dollar, that it can be difficult to pick one to transact in. PayPal USD is useful because not only is it legal in the US (it is monitored by the New York Department of Financial Services), but it is also integrated into a platform everyone already uses. We suspect if you want to switch to accepting PYUSD for your business and you already use PayPal, switching over should be easy.
While using PYUSD is a personal decision and we cannot recommend one stablecoin over another, we do believe that PYUSD is a better choice than Tether, which has recently come under fire due to dishonest backing practices. PYUSD is much closer to USDC than other stablecoins, but has added functionality and integration that you won’t get with USDC.
Are There Fees for Using PYUSD?
There are currently no fees to buy PYUSD with USD, nor is there a fee for holding it or selling it. That being said, if you are trying to purchase PYUSD with another currency other than USD or trading it for a different cryptocurrency, fees may apply.
Additionally, if you want to move your PYUSD from your PayPal software wallet to another ETH wallet, you will incur a small fee on the side of the ETH wallet.
Should You Buy PYUSD?
As we typically say in altcoin spotlights about stablecoins, whether or not you should purchase a stablecoin depends on whether or not you will use it.
To be clear, stablecoins are not investment vehicles. You will not earn money from holding them, as they are designed to remain at a stable value. So, if you are looking for a cryptocurrency to invest in, do not purchase PYUSD.
But, if you use PayPal already to send money to other account holders, and would rather do so using the blockchain, then feel free to purchase some USD and use it to send the same money. Because although PYUSD isn’t much different from other stablecoins, it is useful.
While stablecoins are typically less risky than other cryptocurrencies, it is important to note that they are not risk-free. As we have learned from other stablecoin platforms, there are instances where a stablecoin can de-peg and go to zero (Terra (LUNA) anyone?) So, proceed with your purchase with caution.
How Do You Buy PayPal USD?
Although you can occasionally find PYUSD listed on DeFi exchanges, the best place to purchase is on the PayPal platform. You must have an account to do so.
Once you have set up a PayPal account, log in and go to the Finances tab. From there, navigate to the Crypto tab, where PYUSD will be listed as an option. (You can also buy BTC and ETH through PayPal for reference).
After that, simply select PYUSD and choose how you pay. Options include your PayPal balance, debit card, or via a linked bank account. There is also an option here to set up recurring purchases. We do not recommend setting up recurring purchases of PYUSD unless you plan to send money abroad regularly. PYUSD is a stablecoin and not an investment vehicle, therefore there is no purpose in attempting DCA (dollar cost averaging) as you might with other cryptocurrency investments.
Overall, while PayPal USD certainly isn’t a bad option for those looking for a stablecoin to send money, it may not be the best fit for you either. We recommend that those who are looking for a stablecoin who already use the PayPal platform to look into it, but if you haven’t used PayPal in the past, then you may want to consider using a different stablecoin for your currency needs.
