As cryptocurrencies are always in the news nowadays, it seems only a matter of time before it becomes part of the mainstream economy. With growing interest in cryptocurrencies among individuals, businesses, and institutions, more and more businesses are getting ready to accept cryptocurrencies for payment. In the US, big tech companies like Microsoft and Tesla have been doing it for a long time. But in recent times, many smaller companies are accepting crypto payments. If the growing popularity of cryptocurrencies is pushing businesses towards it, another reason is the minimal transactions fees involved in the transactions. To increase the customer base, PayPal accepted cryptocurrencies for a long time. Still, in the latest development, according to Bloomberg News, the company has introduced its cryptocurrency named Stablecoin.
Awaiting the Arrival of Stablecoin
Those eager to know what is Stablecoin must have got their answer by now. But, Stablecoin is still in the conceptual and exploratory stage, as admitted by the PayPal officials in a statement released a few days ago. The company revealed that it organized an internal hackathon in its digital currencies and blockchain division, indicating its interest in introducing its cryptocurrency. However, it is yet not clear about the progress made by the company and when we can expect to see the new cryptocurrency making its appearance.
The company’s move comes when cryptocurrency payments are fast gaining popularity, hoping that the currency will appear sometime soon.
Why is PayPal keen to Introduce Stablecoin?
It might appear a bit surprising that PayPal is now contemplating launching its cryptocurrency despite accepting cryptocurrencies for long. So, why did the company think about having a cryptocurrency of its own? The reason is that the extreme volatility of cryptocurrencies has been an enormous concern to ensure stable transactions. Although the crypto exchanges facilitate converting cryptocurrencies into fiat currency when making payments, the chances of recipients getting lower than the actual value of transactions loom large.
PayPal aims to create a stable cryptocurrency that avoids volatility concerns to ensure genuine value transactions between parties when making payments. The company wants to peg the coin to a reserve asset like a dollar or gold, and it will ensure that the currency will retain the same value in US dollars or the currency used during mining.
Many cryptocurrencies currently in circulation, like Bitcoin, Ethereum, Dogecoin, Cardano, etc., are unpegged, making them volatile. Undertaking commercial transactions with cryptocurrencies often become unviable because of the lack of stability. And it’s the reason PayPal is trying to make a difference by introducing a new cryptocurrency that would remain stable like any fiat currency.
Pegged Cryptocurrencies are not New
Although the concept of pegged cryptocurrencies might sound new, it is not new at all. The USD Coin, Binance, True USD, DAI, Tether, Digix Gold Token, and TerraUSD are some stable coins linked to the US dollar. When Stablecoin comes to the market, it will be an addition to the existing list of pegged cryptocurrencies but how much help it will be for payments remain a question.
The company understands the limitations of the existing pegged coins because none of these are built to make payments. It is necessary to have a regulatory framework and clarity about the licenses needed to use the currency for payments for facilitating payments. With a global user base of 377 million, PayPal needs to ensure the stability of the coin and match the scale of its vast user base. Additionally, there must be a robust security protocol to ensure safe payments as it happens with fiat currencies.
The company is maintaining a low profile about the prospects of the new cryptocurrency. However, the idea of introducing a stable cryptocurrency with built-in payment arose from the need to provide more payment options to users. It will give the company a shot in the arm and help meet its growth targets. The wider acceptance of cryptocurrencies is the need of the hour, and PayPal is moving in the right direction.
