What is PayPal USD (PYUSD)?

In the ever-evolving world of cryptocurrency, stablecoins have emerged as a significant player, providing stability and reliability amidst the volatility of digital assets. One such stablecoin that has garnered attention is PYUSD.  This article aims to provide a comprehensive understanding of PYUSD and how it works.

PYUSD, also known as PayPal USD, is a stablecoin launched by the global payment services provider PayPal. As the financial world gradually shifts towards embracing digital currencies, PYUSD stands out as a noteworthy innovation, combining the stability of traditional fiat currency with the versatility of cryptocurrency.

PYUSD is a stablecoin pegged 1:1 to the US Dollar, meaning one PYUSD is always equal to one US Dollar. This peg is achieved by backing each PYUSD token with an equivalent amount of US Dollar deposits, US Treasury bonds, and similar cash equivalents. It was launched by PayPal to facilitate digital payments and bridge the gap between traditional finance and the rapidly evolving world of digital currencies.

PYUSD operates on the Ethereum blockchain as an ERC-20 token. This enables seamless integration of PYUSD into a wide range of DeFi applications and other financial ecosystems compatible with Ethereum-based tokens, making it a valuable asset. Ethereum, known for its robust security and decentralised nature, utilises a Proof-of-Stake consensus algorithm. This ensures that transactions made with PYUSD are secure, transparent, and verifiable by anyone on the network.

PYUSD is not mined like Bitcoin; instead, it is issued by Paxos Trust Company and is fully backed by US dollar deposits and other cash equivalents. This ensures that for every PYUSD in circulation, there is an equivalent amount of US Dollars held in reserve.  The backing of PYUSD with tangible assets ensures its stability and reliability, making it an attractive option for customers seeking to avoid the volatility commonly associated with other cryptocurrencies. 

The total supply of PYUSD is publicly available, and Paxos, the issuer of PYUSD, has committed to publishing a monthly PYUSD Reserve Report and facilitating third-party audits of reserves. This level of transparency is crucial in building trust among customers and ensuring that the stablecoin remains fully backed by real-world assets.

PYUSD stands out due to its association with PayPal, a well-established and trusted name in the online payments industry. This association provides credibility and security that may not be present with other stablecoins. Additionally, PayPal’s vast customer base and extensive network could potentially facilitate the widespread adoption and use of PYUSD.

Additionally, PYUSD is subject to regulatory oversight by the New York Department of Financial Services (NYDFS), providing an additional layer of security and trust for customers. It also offers broad access to the financial system, enabling fast and efficient money movement, and is programmable, allowing developers to integrate it into various applications.

PYUSD has received praise for its stability, security, and the credibility associated with the PayPal brand. However, like all stablecoins, it faces criticism relating to its centralisation, as a single entity controls the issuance and redemption of tokens.

You can buy PYUSD easily and securely on Yellow Card with your local currency using Yellow Card’s multiple payment options. Yellow Card simplifies the process of purchasing, selling, and transferring PYUSD, eliminating the necessity of a PayPal account and thereby lowering a significant entry barrier for customers.

The future of PYUSD appears promising, given the backing of a major player in the financial industry. Its potential for widespread adoption, stability, and the security associated with Ethereum blockchain position it as a significant player in the stablecoin market. However, like all financial instruments, it is crucial for customers and investors to conduct thorough research and exercise due diligence before participating in PYUSD transactions.

To learn more about PYUSD, you can visit the official PayPal website.