PayPal Coin: to be or not be?
According to Bloomberg, the largest international electronic payment system PayPal is looking into the potential of introducing its cryptocurrency pegged to USD. The company’s Vice President of Digital Currencies Jose Fernandez da Pontepo stated to the publication. A reference to PayPal Coin and the logo of the future digital currency was discovered in the code of the online wallet program. The revelation comes from developer Steve Moser, who uncovered the PayPal cryptocurrency’s code and logo in an iPhone app.
What is stablecoin?
This type of digital assets emerged as a result of the banking sector’s digital revolution in 2014. Stablecoins offer many advantages of virtual currencies such as cheap transaction costs, fast payments, blockchain technologies, and eliminating excessive volatility. Against the backdrop of cryptocurrency volatility, coins that combine the benefits of both decentralized currencies and fiat money are rapidly gaining momentum. The tendency is represented in the policies of the world’s largest payment systems, which integrate stablecoins into their payment networks to preserve their competitive market positions. Thus, these factors highlight the critical need for innovative financial institutions, as well as to optimize their technology and business processes.
In 2015, USDT (Tether) was the first stablecoin, with an exchange rate equivalent to one dollar. Since then, many dozen other types of stablecoins have entered the market. The primary goal is to link the world of cryptocurrency and the real world. The necessity for such a bridge developed since there are no such concepts as dollars, oil, or gold in the blockchain. It merely requires a set of numbers and letters of code, a hash rate, and a number of transactions. The universal bridge is made up of blockchain-based assets linked to conventional values.
PayPal and cryptocurrency
According to a corporate spokeswoman, the data concerning the development got into the app as a consequence of an internal hackathon. During such an event, developers create new technologies that may never be released. Based on the statement of Fernandez da Ponte, the vice president of digital currencies, the business hasn’t yet seen a stablecoin expressly built for payments. To use PayPal, stablecoin must allow large-scale payments and have a high level of security. In other words, PayPal requires a currency to provide clarification on the regulation, governance mechanism, and relevant licenses.
PayPal’s US clients were able to buy, trade, and store cryptocurrencies beginning in November 2020, and to pay for purchases at partner retailers beginning in March 2021. Also, users can withdraw digital assets to third-party wallets from May 2021, according to the company. Then, PayPal upped the weekly cryptocurrency purchase limit for US users from $20,000 to $100,000 in July. During the same month, the payment service granted consumers in the United Kingdom access to cryptocurrencies.
However, the adoption of cryptocurrencies by PayPal and other institutional investors were some of the reasons for the recent growth in the value of cryptocurrencies, particularly bitcoin. In 2021 bitcoin surpassed $68,000. Since then, its rates have dropped by 40%.
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