After dabbling into cryptocurrency and enabling Bitcoin payment system, payments company PayPal has announced it is planning a stablecoin. This is a move outed by a developer who caught it in the code.
For years, cryptocurrency has been heralded as a technology that will eventually supersede centralized payment systems by lowering transaction costs and eliminating the need for a financial intermediary. Those older services, on the other hand, are increasingly attempting to include crypto into their toolkits.
After a developer spotted text regarding a “PayPal Coin” within its iPhone software, PayPal revealed that it is developing on its own stablecoin. The news was initially reported by Bloomberg.
According to Bloomberg, the code was created as part of a hackathon and may not be reflective of the final product. “We’re looking into a stablecoin,” Jose Fernandez da Ponte, Senior VP of Crypto and Digital Currencies, told Bloomberg. “Of course, we will cooperate closely with applicable regulators if and when we seek to move forward.”
What are Stablecoins?
Stablecoins are cryptocurrencies that are backed by another asset to keep their value stable. The two largest stablecoins by market capitalization, Tether (USDT) and USDC, are supposed to always be worth $1.
They’re important for navigating blockchain-based platforms that don’t use traditional currencies for regulatory or other reasons; they keep their value so consumers can move their portfolios around.
The PayPal-Crypto move
PayPal has already dipped its toes into the bitcoin waters, which is unusual for a major corporation. It began allowing users to buy, hold, and sell digital assets such as Bitcoin and Ethereum in late 2020.
It then took this concept and applied it to Venmo, creating a “checkout with bitcoin” function for paying merchants. It teamed with Paxos, a financial startup that issues the Pax Dollar (USDP) stablecoin, as part of its crypto strategy.
According to CoinGecko, USDP’s market valuation is slightly over $1.05 billion, up from under $500,000 last year. USDT, on the other hand, now has a market capitalization of $79.2 billion, up from $23.5 billion a year earlier.
PayPal, on the other hand, has a market capitalization of $220 billion. Its own stablecoin might be extremely valuable.