PayPalUSD(PYUSD) Complete Guide - The New Powerhouse of Stablecoins
Hello! Have you been curious about PayPalUSD(PYUSD), which has been a hot topic recently?
Today, I'm going to tell you in detail about PYUSD, a stablecoin ambitiously launched by global payment platform PayPal.
I'll explain it in an easy and fun way so that anyone, from beginners to experienced users, can understand!
Introducing PayPalUSD(PYUSD)
PayPalUSD(PYUSD) is not just a simple digital currency. It's an innovative stablecoin that can be used by over 400 million PayPal users around the world. It is pegged to the dollar at a ratio of exactly 1:1, with a simple formula of 1 PYUSD = 1 USD.
Don't know what a stablecoin is? Simply put, think of it as a 'stable cryptocurrency'. It is a digital asset designed to maintain its value at $1 at all times, rather than fluctuating 10% a day like Bitcoin.
• Fully collateralized in the US dollar
• Instantly available within the PayPal ecosystem
• Easy access with your existing PayPal account
• Low transaction fees and Fast transfer speeds
The exciting history of PayPalUSD
On August 7, 2023, a new chapter in the history of digital payments opened. That was the day PayPal officially launched its own stablecoin, PYUSD. This was not just a new cryptocurrency launch, but a historic event in which a traditional fintech company entered the blockchain world in earnest.
PayPal's former CEO Dan Schulman declared in the launch announcement that he would ""lead the future of digital payments."" PayPal, which already provides services in over 200 countries around the world, combined with blockchain technology meant that cryptocurrencies would no longer be a niche market but would leap into mainstream finance.
At first, it was only available to individual users in the United States, but it is now gradually expanding its service scope. In particular, B2B services for corporate customers are also being prepared, so future developments are expected to be even more promising.
How does PayPalUSD work?
PYUSD's working principle is simpler than you think. It was developed as an ERC-20 token based on the Ethereum blockchain. What does this mean? Simply put, you can think of it as a 'PayPal branded car' running on the 'digital highway' called Ethereum.
When a user purchases PYUSD on the PayPal app, PayPal stores the corresponding amount of real dollars in the bank. This is called 'Full Reserve', and it is a key device that ensures the stability of PYUSD.
1. User requests to purchase PYUSD in PayPal app
2. PayPal holds the corresponding amount of dollars as collateral
3. The same amount of PYUSD is created in the user's wallet
4. Transaction history is permanently recorded on the blockchain
5. Can be transferred or paid to other users immediately
The transaction processing speed is also amazing. Unlike existing bank transfers that take hours or days, PYUSD can be transferred anywhere in the world in minutes. The fees are also significantly lower than existing international remittances.
Various ways to use PayPalUSD
The uses of PYUSD are truly endless. Let's start with the most basic use case.
Revolution in online shopping: You can pay directly with PYUSD at millions of online stores that support PayPal. Like Amazon, eBay, Netflix, and other services we frequently use. No need to enter credit card information or worry about exchange rates.
New standard for international remittance: When you need to send money to your family or friends abroad, all you need is PYUSD. Existing remittance services have high fees and long processing times. PYUSD solves these problems at once.
Safe bridge for cryptocurrency transactions: When trading highly volatile Bitcoin or Ethereum, PYUSD acts as a safe 'shelter'. When the market is unstable, you can temporarily avoid it with PYUSD and then invest again when a good opportunity comes.
• Payment without worrying about exchange rate fluctuations when purchasing directly from overseas
• Receive payment quickly when receiving overseas orders from freelancers
• Payment without exchanging local currency when traveling
• Safe portfolio management when investing in virtual currency
PYUSD vs. other cryptocurrencies - what's the difference?
Many people wonder, ""What's the difference between PYUSD and Bitcoin or Ethereum?"" In fact, these are digital assets with completely different purposes.
| Features | PYUSD | Bitcoin | Ethereum |
|---|---|---|---|
| Main Purpose | Stable Payment Method | Digital Gold (Investment Asset) | Smart Contract Platform |
| Price Volatility | Very Low (Fixed to $1) | Very High | High |
| Transaction Speed | Fast (a few minutes) | Slow (10 minutes - 1 hour) | Medium (15 seconds - a few minutes) |
| Trading Fees | Low | High | Medium-High |
| Investment Attractiveness | Low (Stability Focused) | High | High |
As you can see, PYUSD is a digital asset that focuses on 'utility' rather than 'investment'. It's hard to expect big profits, but the biggest advantage is that stable and convenient transactions are possible.
Advantages and Disadvantages of PayPalUSD
Like all technologies, PYUSD also has clear advantages and disadvantages. Let's take an objective look.
1. Overwhelming Accessibility: If you already have a PayPal account, you can get started right away without any complicated procedures.
2. Enterprise-grade Security: PayPal's 20 years of security know-how is applied as is.
3. Extensive Compatibility: It is fully integrated with the existing PayPal ecosystem.
4. Regulatory Compliance: It is operated in compliance with strict regulations of the US financial authorities.
5. Instant liquidity: You can exchange 1:1 with dollars at any time.
1. Limited investment returns: Stability is an advantage, but it is difficult to expect large returns.
2. Centralized structure: It is far from being completely decentralized due to its high dependence on PayPal.
3. Regional restrictions: It is not available in all countries yet.
4. Platform dependency: It can be directly affected by PayPal policy changes.
Platforms where PYUSD can be traded
PYUSD has been available on various platforms since its launch. Each platform has different features, so it's important to choose the one that best suits your needs.
PayPal Official Platform: This is the safest and most intuitive way. You can buy, sell, and transfer PYUSD directly from the PayPal app or website. If you are an existing PayPal user, you can use it right away without a separate authentication process.
Major overseas exchanges:
- Coinbase: The largest exchange in the U.S., easy for beginners to use
- Binance: Boasting the world's largest trading volume and offering a variety of trading options
- Kraken: A platform with excellent security and preferred by professional investors
- Gemini: Strong regulatory compliance and widely used by institutional investors
DeFi platforms: You can also use various services utilizing PYUSD on decentralized finance platforms such as Uniswap and Compound. High yield liquidity provision and staking services are also available.
• Compare transaction fees (usually 0.1-0.5%)
• Deposit/withdrawal speed and limits
• Security level and insurance subscription
• Quality of customer support service
• Regulatory compliance status
Active PayPalUSD Community
Another asset of the PYUSD ecosystem is its passionate community. We will introduce you to communities that are growing rapidly based on PayPal's massive user base.
Official Channels: You can check out the latest news and updates related to PYUSD on PayPal's official blog, Twitter, and LinkedIn. Especially, new feature releases and partnership news are first revealed here.
Reddit Community: Subreddits like r/PayPal and r/stablecoins share their vivid experiences and tips. You can get a variety of information, from beginner questions to advanced usage.
Discord Groups: You can instantly communicate with other users through real-time chat. It is especially helpful for DeFi utilization and technical issues.
Telegram Channel: There are many channels that quickly share market trends and news. However, there are also scams and phishing attempts, so make sure to check if it is an official channel.
• Use the FAQ or search function first before asking a question
• Never share your personal information or private key
• Avoid suspicious investment suggestions
• Actively share and learn from other users' experiences
Things to know before investing in PYUSD
If you are interested in PYUSD, there are a few important things you must know before investing or utilizing it. I will organize the essential knowledge for safe trading.
Realistic expectations for profitability: PYUSD is not an asset that aims for investment income. Since the formula of 1 dollar = 1 PYUSD is maintained, it is difficult to expect large profits. Instead, approach it with a focus on stability and convenience.
Watch the regulatory environment: Regulations on stablecoins are changing rapidly in each country. In particular, policy changes in the US can have a direct impact on PYUSD, so pay close attention to related news.