Crypto is the future and acknowledging this fact; almost every fintech company is embracing crypto payments. Similarly, PayPal (PYPL), an American multinational fintech company operating as an online payments system for over 24 years, announced in January 2022 that PayPal is moving into cryptocurrency. For this, PayPal is developing a stablecoin. But how PayPal’s stablecoin will benefit the community, and what plans PayPal has regarding this stablecoin?
Let’s find answers to these questions through this blog.
A Developer Found Evidence of PayPal’s Stablecoin – PayPal Coin
Steve Moser, a developer, discovered evidence that PayPal was developing a stablecoin when he noticed hidden code and images for such a stablecoin within the source code of the iPhone app of PayPal. According to his findings, PayPal Coin will be backed by the U.S. dollar.
Moser shared this news with Bloomberg, and Bloomberg published an article about it on January 7, 2022.
Later, on January 8, 2022, PayPal confirmed the findings of Steve and its intent to launch a stablecoin by announcing that it is “exploring a stablecoin.” Senior vice president of crypto and other digital currencies at PayPal, Jose Fernandez da Ponte in an interview with Bloomberg News said,
“We are exploring a stablecoin; if and when we seek to move forward, we will, of course, work closely with relevant regulators.”
The company’s spokeswoman further clarified that the images and code of stablecoin that Moser found were developed in an internal hackathon by the company’s blockchain, crypto, and digital currencies division. It also indicates that PayPal’s ultimate logo, name, and features may also change in the future if the PayPal Coin sees the light of day.
PayPal Stablecoin: What It Could Mean for Payments?
PayPal has been engaged in expanding its cryptocurrency services since 2020. In October 2020, it opened trading to all U.S. users, which allowed them to buy, sell and hold Bitcoin, Ethereum, Litecoin, and Bitcoin cash. U.S. customers do not have to pay fees for buying and selling crypto through December 31, 2020, and no fees for holding crypto in a PayPal account. It ultimately enabled them to use crypto holdings for payments at more than 26 million PayPal merchants across the globe. Moreover, PayPal increased its crypto buy limit to $100,000 per week, dumping its previous $50,000 annual limit.
These endeavors indicate that PayPal has always been hopeful about cryptocurrency and is now working on launching its stablecoin.
On the Unchained podcast in November 2021, Fernandez said that PayPal had “not yet seen a stablecoin out there that is purpose-built for payments….” PayPal believes a stablecoin should support payments without compromising security. He further said that “there would have to be clarity on the regulation, the regulatory frameworks, and the type of licenses needed in this space.” PayPal is opting for this approach because it can help the company avoid the consequences that brought destruction to Diem cryptocurrency project of Meta when it faced the wrath of the U.S. senators.
Other online payment companies also appreciate the effort of PayPal to develop a stablecoin. Marwan Forzley, CEO of Veem, an online payments platform, said,
Similarly, Max Galka, CEO of Elementus, a blockchain search engine, agreed with Forzley’s valuation. He believes PayPal will “definitely open up cryptocurrency to more people…” through its PayPal Coin. In an interview with Cointelegraph, Galka said,
Rytis Bieliauskas, CTO of CoinGate, told Cointelegraph that PayPal stablecoin is not “fundamentally different from what PayPal already does….” He further added that “it is interesting to see that PayPal wishes to use crypto as a positive P.R. move,” about which Rytis believes people now see crypto as positive not rather than negative.
Potential Characteristics of the PayPal Stablecoin
PayPal stablecoin will be supported by fiat currency to provide a better and more stable cryptocurrency option than traditional ones to undergo transactions.
PayPal Coin with the Same Characteristics as Cryptocurrencies but Without Volatility
Stablecoins provide a more reliable form of payment and investment than cryptocurrency. As the name suggests, a stablecoin establishes stability in a cryptocurrency by pegging itself to a reserve asset, for instance, the U.S. dollar or gold. This coin will always have the same value as the U.S. dollar. In comparison, cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, or Cardano are unpegged. That’s why these are highly volatile.
However, stability is crucial for businesses and users who want to use crypto as a payment method.
As of March 2022, PayPal has over 429 million active accounts, and with such scale, it seems practical to go for a stablecoin by PayPal. It will eliminate the worry about currency volatility. Users can undergo even larger transactions securely, regardless of market trends.
Moreover, Fernandez believes merchants who want large-scale sales operations must switch to digital currency- stablecoins have the potential to provide reliability for such transactions.
PayPal Coin Guarantees Security with Support of Ethereum Blockchain
Security is of great importance in an online world. The Ethereum blockchain will support PayPal Coin, which guarantees security and trustworthiness.
Ethereum blockchain is a vast computer network that verifies every transaction and offers security in such a manner that it becomes nearly impossible for any third-party to intervene.
It makes PayPal stablecoin highly attractive from a financial point of view.
Stablecoins are also safer because these are not created or destroyed but are regularly maintained by a system injecting new coins into the economic system of reference.
Benefits of PayPal Stablecoin
PayPal stablecoin can offer several benefits. Some of them are as follows:
PayPal Coin Provides Peace of Mind to Customers
Since PayPal Coin is a stablecoin, it does not have to go through the usual cryptocurrency volatility. It ultimately provides peace of mind to users that whatever amount they hold in their wallets will have the same value over time, irrespective of market trends.
PayPal Coin is based on the Ethereum blockchain, which makes it treated just like other standard currencies; accepted and used in the same manner.
Using PayPal Coin, Users will be able to Make Peer-to-Peer Payments through its App
A competent stablecoin can work alongside Bitcoin to help make purchases using crypto. PayPal could enable its users to make peer-to-peer payments with stablecoin through its app, making the entire process highly convenient.
Moreover, PayPal working with regulators can help ensure appropriate security practices are in place to protect its users from any mishap.
PayPal Stablecoin Plans: PayPal is Expanding its Crypto Services
The world is rapidly moving towards digitalization, and crypto and stable coins are becoming essential. In addition to freedom from price fluctuations, stablecoins can also help reduce transaction costs, allowing more people to adopt the system. PayPal is also planning to develop a system that will provide financial opportunities creating an overall interest in cryptocurrencies.
However, there is very little information about PayPal’s stablecoin plans. Steve Moser later revealed in his tweet that PayPal had evidence of stablecoins linked to the pound and euro within its application. It suggests that PayPal would also launch various stablecoins pegged to different fiat currencies. But after a while, when PayPal Coin was making headlines, PayPal deleted images of its stablecoins linked with Pound and Euro from the app. But the reference to Neo coin is still there, suggesting that PayPal is also working on this stablecoin.
Along with its stablecoin, PayPal is expanding its crypto services to Luxembourg, which will further roll its operations across the European Union. With that, users will be able to buy, sell and hold cryptocurrencies in their PayPal accounts via the website or app. They can start buying as little as €1 of crypto through PayPal.
Overall, PayPal and its stablecoin seem to have a bright future. Dan Schulman, CEO of PayPal told that,
The real impact of PayPal Coin entirely depends on how the company will implement and work for it. The coin has the potential either to go to the moon or be another stablecoin.
Does PayPal have a crypto Coin?
PayPal is working on launching its crypto coin in the form of a stablecoin called PayPal Coin. Or in other words, PayPal does not have a crypto coin, but a stablecoin named PayPal Coin pegged by the U.S. dollar.
Does PayPal accept cryptocurrency?
Yes, users can transfer, send, and receive Bitcoin, Ethereum, Bitcoin Cash, and Litecoin on PayPal via its mobile app.
How do I buy crypto with PayPal?
To buy crypto with PayPal,
1- Go to the marketplace and select a crypto you want to buy.
2- Click on “Add payment method” and select PayPal.
3- Log into your PayPal account.
4- Complete the purchasing process. (Make sure that the email address is the same on PayPal and your selected marketplace.)
What cryptocurrency is available on PayPal?
PayPal supports Bitcoin, Ethereum, Bitcoin Cash, and Litecoin cryptocurrencies for buying, selling, and transferring. PayPal is also working on launching its stablecoin named PayPal Coin.
Is PayPal a crypto wallet?
PayPal is a payment application that also allows the trading of some cryptocurrencies. Users can send, receive, and transfer money on the PayPal app. However, PayPal does allow its users to transfer their cryptos purchased on PayPal to other digital wallets (their own non-PayPal wallets).