PayPal, a world-famous payment company, has recently launched a new cryptocurrency, called PayPal USD (PYUSD).

Just this Monday, PayPal set a new record and became the first major financial company in the US to launch a dollar-backed stablecoin.

A stablecoin is usually backed by a physical currency or precious material, like The Gold Standard was backed by gold. This helps it stay around a similar price, giving it the title as a safer and less risky option.

The new cryptocurrency is “100% backed by U.S dollar deposits, short-term U.S. Treasuries and similar cash equivalents,” PayPal told a newspaper. One PayPal stablecoin can be traded in for a single dollar, and the same thing the other way around.

PayPal USD is technically part of the Ethereum Blockchain. A blockchain is a system that is decentralized and can keep track of transactions and payment histories across many devices. Paxos Trust Company helps distribute these coins, and specializes in specific cryptocurrency services.

Creating a stablecoin may seem like an unusual move for a company like PayPal, but actually it’s quite similar to what they’ve done before. In 2022, PayPal explored the world of cryptocurrency more deeply, and allowed users to exchange popular cryptocurrencies like Bitcoin.

The most profitable venture PayPal has set up is probably with retailers. The fee that is charged allows PayPal to effortlessly collect revenues, every hour of the day. But, if one day customers and sellers exchange crypto, PayPal will lose control over the fees. As a response, PayPal created their own stablecoin.

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Image Source: CNBC