Global Top Payment Provider PayPal Launches PYUSD: Blessing or Curse?

PYUSD vs USDT: What are the Differences?

On August 7th, PayPal, one of the world's largest online payment platforms, officially launched PayPal USD (PYUSD), a USD stablecoin based on the Ethereum blockchain. With a current supply of 26.9 million tokens, PYUSD can be used for transfers, payments, and cryptocurrency exchanges.

PYUSD shares some similarities with the oldest and largest stablecoin, Tether (USDT), but they are not identical. Here are the specific differences:

PYUSD vs USDT Differences and Similarities, Source: Compiled by Mitrade.

What impact does PYUSD have on the crypto market?

From a funding perspective, the launch of PYUSD indirectly brings off-chain funds into the crypto market. Specifically, when users purchase PYUSD with USD, it represents an inflow of funds into the crypto market, which is a positive development. However, the current volume of PYUSD is relatively small, primarily used by PayPal users in the United States, and further expansion of its application scope and scale is yet to be seen.

Additionally, JPMorgan analyst Nikolaos Panigirtzoglou believes that PYUSD benefits Ethereum. He stated, "PYUSD may promote Ethereum activity and enhance Ethereum's network effects as a stablecoin/DeFi platform. In other words, it will incentivize more companies to choose Ethereum or its Layer-2 for issuing their stablecoins or decentralized projects."

Now, does the launch of PYUSD by PayPal have any negative implications? Ripple's Chief Technical Officer, David Schwartz, believes that "PYUSD is not a true cryptocurrency but rather traditional finance, like money in a bank."

Furthermore, several auditors have pointed out that the PYUSD token contract code includes functions for freezing and unfreezing funds, and the smart contract of PYUSD can be altered by PayPal, indicating a strong centralized characteristic.

Is it suitable to use PYUSD now?

On August 8th, cryptocurrency exchange Huobi announced that it would be the first to support the stablecoin PYUSD on its platform and permanently waive transaction fees for the PYUSD/USDT trading pair. This means that Huobi's users will soon be able to acquire PYUSD. So, is it a good time to use PYUSD now?

PYUSD has only recently been introduced and may carry risks related to security and regulation. Therefore, if there is no potential profit, there is no need to try it. Of course, if there are rewards or one wants to experiment, purchasing a small amount of PYUSD after it becomes available on Huobi could be an option.