Original source: TheBlock
Translated by: Kate , Marsbit
PayPal said its PYUSD stablecoin allows customers to “buy, sell, hold and transfer” the newly created digital currency.
But some social media users questioned PayPal's use of an older version of the programming language in its smart contracts.
Stablecoins are ERC-20 tokens issued on the Ethereum blockchain, which can make transactions costly due to the high gas fees required to use the protocol.
After at least two years of consideration, development, and delays, digital payments giant PayPal has finally launched its own dollar stablecoin, allowing users to “buy, sell, hold, and transfer” tokens on its platform. That might not sound like much, since it’s essentially what people can already do with a checking account or an existing PayPal account that holds dollars.
“What can you do with PayPal USD (PY USD) on PayPal?” the company asks in an explanation posted on its website. The token can be sent to eligible accounts in the U.S. for free, the company says. It can also be used for online purchases, just like you would with regular dollars or a credit card.
“If you want to change things up, you can use PYUSD in our conversion feature to buy different cryptocurrencies we support,” the company added.
While PayPal said the stablecoin would be available to eligible U.S. customers starting today, its website, which requires users to provide a Social Security number to access crypto services, did not immediately show an option to buy PYUSD when The Block checked.
The company said it will allow users to buy PYUSD and then convert the funds into bitcoin and ether using “exchange rates that include the spread PayPal earns on each purchase and sale.”
CT’s response to PayPal’s stablecoin
Users on social media also questioned what the token could be used for and who might want it.
“Who’s going to buy PayPal’s stablecoin?” asked a self-proclaimed smart contract researcher on Twitter who goes by the handle @ShieldifyAnon, noting that the payments company’s new stablecoin “uses an old version of Solidity from 2018.”
Other users, including @0xCygaar, a software engineer who frequently talks about crypto on the social media platform, questioned how PayPal’s new token would allow “owners to pause all transfers…freeze addresses to prevent actions taken…(and) administrators to arbitrarily increase total supply, among other things.”
The decision to issue PYUSD on Ethereum has raised a lot of eyebrows, with some stating that the choice is a watershed moment for the protocol.
“PayPal has 430 million active accounts,” said Ryan Sean Adams, founder of Bankless. “Sleep on this if you want. Ethereum is becoming the money layer for the internet.”
Ethereum Fees
But others have questioned the strategy, arguing that using Ethereum for transactions is expensive.
“PayPal launched a stablecoin on the Ethereum mainnet instead of dozens of stablecoins that cost two cents each, which they could have used instead. Honestly, it was a clever way to ensure their own high fees looked like an insignificant speck next to gas,” wrote web3 enthusiast David Phelps.
PayPal itself seems to acknowledge that it’s possible to feel high outside of its ecosystem, too.
“However, please note when purchasing PYUSD, you may find different prices and fees when you purchase outside of PayPal,” it reads in an explanation about the token.
PayPal Crypto History
PayPal has been active in the crypto space for some time and allows customers to hold cryptocurrencies such as Bitcoin, Bitcoin Cash, Ethereum and Litecoin. In its first quarter earnings report this year, the company revealed that it was holding nearly $1 billion in cryptocurrencies for its customers.
Users have been able to transfer cryptocurrencies between PayPal and other wallets since last year.
The firm has also invested in blockchain startups, including recently leading a round in Magic, a digital wallet provider that helps businesses migrate their customers to web3.
PayPal’s Stablecoin Journey
The Block reported in 2021 that PayPal had been speaking to some stablecoin protocol developers in the industry as it began exploring its own dollar-pegged token.
At the time, the cryptocurrency industry was at a high point, with billions of dollars in new capital pouring into the sector and a series of disastrous bankruptcies and regulatory actions yet to occur. Earlier this year, PayPal’s stablecoin ambitions hit a roadblock, and it put its plans on hold amid reports that Paxos was under investigation.
Despite the scrutiny, Paxos remains PayPal’s partner in launching a stablecoin, and the company said Monday the partnership is a milestone for the industry.
"The world's most secure dollar-backed digital asset"
“PYUSD is the first of its kind and represents the next phase of the dollar on the blockchain,” Paxos wrote. It is called “the world’s most secure dollar-backed digital asset.”
As expected, the news was not welcomed by all crypto enthusiasts, with Joe Burnett, lead analyst at Blockware Solutions, being blunt about the launch.
“The crypto community cheering Paypal launching a USD stablecoin shows they have completely lost their minds,” he wrote. “Buy Bitcoin. Put it in cold storage. That’s innovation. Not “Big Tech investing in blockchain.”
PayPal and Paxos did not immediately respond to questions from The Block about the launch of the stablecoin.
