Do you know there are more than 400 million plus active PayPal users? And if you are one of them, you can soon use cryptocurrency as a mode of payment.
Yes, you have heard it correctly. You can savor the benefits of PayPal’s stablecoin called PayPal Coin.
PayPal, earlier this year, announced that they are examining the scope of launching PayPal’s cryptocurrency. While there are some significant benefits of PayPal Coin, you may also face thumping challenges. So, keep reading this article to learn everything about PayPal Coin.
What exactly is PayPal Coin
You might be confused about what exactly is a PayPal Coin. Well, you don’t need to worry. PayPal Coin will be a stablecoin. Stablecoins are cryptocurrencies whose value is tied to other external assets like the US dollar, UK pound, or any other commodity like gold, silver, etc.
Stablecoins, as their name suggests, are more stable than other cryptocurrencies like Bitcoins. The volatile nature of Bitcoins makes them very unsuitable for daily transactions. For example, the price of Bitcoin rose from several thousand to more than $50,000 in one year and plunged again to below $50,000 in two months. This shows how risky it is for normal buyers and sellers to have transactions in Bitcoins.
But, with stablecoins, this momentous risk vanishes. Stablecoins are stable because they maintain reserve assets as a form of collateral or control supply by complex algorithms. This makes stablecoins viable for regular transactions. Thus, PayPal coin, which will be a stablecoin, can be the new norm.
What are the benefits of PayPal having an own stablecoin
The benefits of PayPal having a stablecoin can be beyond our imagination. It can unlock new possibilities and revolutionise the cryptocurrency market.
Having their stablecoin will be a game-changer for PayPal. It costs PayPal billions of dollars for transaction-related expenses. While PayPal allows its users to buy, sell and trade in cryptocurrencies like Bitcoin, Ether, etc., the user base using them is still very minimal.
Performing high-value transactions through blockchains can help PayPal save billions. PayPal coin will be an integral part of this process. The Stablecoin will allow high-value transactions without the need to pay exorbitant taxes and other expenses.
PayPal also has a huge user base who trust PayPal for their transactions. Thus, PayPal launching its stablecoin means the huge user base will also trust PayPal coins. This can be a huge boost to the crypto market and can normalize crypto transactions.
The real impact of PayPal having a stablecoin depends exclusively on how the stablecoin is launched, implemented, and promoted by PayPal. If there are even minor complications in the process, PayPal coins can be reduced to any other cryptocurrency available in the market. However, if the process goes as smoothly as possible, PayPal coins can be a dominant factor in the financial sphere. It can even reach or cross the value of Bitcoins without adopting its volatile nature.
The traditional banking and finance structure that rules today’s world will face a mammoth challenge if PayPal Coin become a reality. They will be forced to step into the crypto market and use blockchains to keep up and compete with PayPal. Thus, if this whole project works, it will change the finance market forever.
The possible regulatory challenges
Meta’s Deim, which was Meta’s crypto project, shut down this year due to regulatory challenges from US senators. While PayPal did say that they will work closely with the regulator if they think of launching their stablecoin, they still have to face several other regulatory issues which Meta did not face.
Since PayPal has a global presence, pleasing only the US senators will not work in their favor. They must engage and satisfy all the relevant global regulators with their crypto projects. It will be hard to attain since this will clear the path for global regulatory compliance. It can create a situation where other banking and financial institutions will imitate the path of PayPal and demand their stablecoin be launched without regulations.
This will force regulators worldwide to be more transparent as stablecoins holders demand to know everything regarding the use of their stablecoins. Thus, there is a huge probability that regulators will not accept PayPal coins as a legitimate currency.
However, if PayPal somehow manages to convince regulators worldwide, they still have to improve their transaction system. Once they start using PayPal Coin, they have to better their cross-chain network much faster.
PayPal Coin, possibly an historic swift that will normalise cryptocurrencies
If PayPal can complete this historic task of significant difficulty, and launch its stablecoin, you should definitely go for it. People trust apps like PayPal, hence when there will be something officially launched by them, people will be curious to use them. Thus, they are almost guaranteed to be a success.
However, since there is a huge uncertainty related to cryptocurrencies, you should always be careful. Don’t invest and use PayPal coins blindly. Plan your every move with utmost precision, and enjoy the benefits.