PayPal’s PYUSD: Mainstream Breakthrough or Cause For Concern?


The recent news of PayPal launching its own stablecoin, $PYUSD, has further blurred the lines between traditional finance and the crypto world. This is yet another optimistic step forward in the in the ongoing evolution of Web3 and it’s integration into the mainstream consciousness. What’s more, it’s a feat that’s even more impressive given the current period of low volume and attention on the industry.

What Is PYUSD?

If this PayPal news brought you to this corner of the web for the first time, allow me to explain. A stablecoin is a type of crypto token designed to always maintain a stable value, often pegged to a reliable asset like a fiat currency, in most cases, to the U.S. dollar. 1 $PYUSD = 1 $USD, for example.

Unlike the more wildly volatile cryptocurrencies like Bitcoin or Ethereum, stablecoins are used to minimize price fluctuations, making them suitable for use as mediums of exchange or stores of value.

Essentially, stablecoins most practical use cases are for crypto holders looking to go risk-off during uncertain times, as well as for projects aiming to preserve treasuries. They are also convenient for paying for goods and services when a fixed amount has been agreed upon.

What Does This Mean For Crypto?

PayPal’s announcement is a massive step in the right direction towards mainstream adoption. With over 430 million active accounts, PayPal is a fintech beast. While the platform already facilitates the buying, selling, and transferring of popular coins like Bitcoin, Ethereum, and Litecoin, PYUSD adds a new avenue to their involvement; potentially one which has more room for innovation specific to their line of operations. Moreover, the crypto sector gains a substantial boost from the high-profile validation that comes with PayPal’s endorsement.

This move is a clear display of PayPal’s commitment to onboard more people into the world of Web3, and is “backed by a clear vision, strategy, and strong technological partnerships” according to @CarlKVogel, who says they worked on the PYUSD project at PayPal.

PayPal’s Freezing Of Accounts re-examined


It’s not all sunshine and rainbows though. There have been some shadows cast on this development. Shortly after the announcement, sleuths started digging into the PYUSD contract and started to unearth some concerning aspects tied to the stablecoin.

One of the most notable discoveries is that PayPal has the ability to “freeze & seize” PYUSD assets. This revelation has reignited concerns over PayPal’s historical practice of freezing user accounts. In the past, instances emerged where PayPal abruptly froze users’ accounts without clear explanations. Many stated at the time that the affected users had aired political opinions which did not align with the one’s which PayPal promote.

On the surface, the ability to freeze accounts runs counter to the ideals of Web3 and spark important questions about individual rights and financial sovereignty; which is of course the ethos on which crypto was built upon. With that said, to return to @CarKVogel’s thread from earlier, this is a feature shared by other centralized stablecoins like USDC, BUSD, and USDT. This power is often exercised to comply with regulatory requirements and prevent illegal activity, so it is said. Nevertheless, PayPal’s track record of implementing such measures under ambiguous circumstances remains a concern among many commenting on the issue.

Final Thoughts

To sum it up, PayPal diving into the stablecoin game has its ups and downs. On one side, it’s a chance to connect old-school money systems with this new digital money world. But there’s a catch – that whole PayPal freezing accounts problem.

The past is making people worry. Some see it as a trade-off between easy transactions and more mainstream adoption, and giving up control to one big company. Speaking purely hypothetically, there is a lot more nefarious actions a centralized entity can do with digital based money when compared to something like cash.

Yet, we all clamoured for the institutions to come in. “They will buy our bags!” we excitedly cried. Well, yes maybe, but they may also do more than just that, anon.

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