A developer leaked some details about what seemed to be a PayPal coin, which is expected to be a stablecoin.
In addition to this, several reports stated that it is better than the more mainstream cryptocurrencies since it is backed by reserve assets like gold.
PayPal Coin
PayPal has acknowledged that a stablecoin is in the works, per PCMag.
Within PayPal's iOS app, a developer named Steve Moser uncovered references to something called "PayPal Coin."
Fortunately, PayPal senior vice president of crypto and digital currency Jose Fernandez da Ponte corroborated Moser's findings when Bloomberg requested further information.
Fernandez da Ponte told Bloomberg (via PCMag) that "We are exploring a stablecoin; if and when we seek to move forward, we will of course, work closely with relevant regulators."
However, a PayPal spokesperson claimed the data Moser discovered was the result of a hackathon, which means that this information is not yet final.
PCMag added that over the last few years, PayPal has gradually expanded its operations in the cryptocurrency sector.
For instance, it began facilitating the purchase of some cryptocurrencies in late 2020 and launched the "Checkout with Crypto" option in March 2021, allowing customers to purchase items using their digital tokens.
To further emphasize the findings of the PayPal coin, the developer found out that the PayPal coin logo has similarities to PayPal's logo but it has two horizontal lines running through it. Their software also included images and references to the Neo cryptocurrency.
Additionally, the only cryptocurrencies that PayPal reportedly accepts are Bitcoin, Bitcoin Cash, Ethereum and Litecoin.
What Is StableCoin?
For those wondering what Stablecoin is, Investopedia explained that it is a type of cryptocurrency that is backed by a reserve asset and aims to provide price stability.
Stablecoins have gained popularity since it attempts to combine two things: the rapid processing and security or privacy of cryptocurrency payments, as well as the volatility-free and stable prices of fiat currencies.
Since it is backed by a reserve asset, it is relatively different from other digital currencies that exist.
To simplify, PCMag explained that a cryptocurrency like Bitcoin might be worth $47,000 in one week and $42,000 in the next. Meanwhile, a stablecoin worth one gram of gold one week will still be worth one gram of gold the following week.
Despite the benefit it has, people must keep in mind that the majority of stablecoins are not backed by gold. For instance, USD Coin and Tether are backed by the U.S. dollar.
In relation to this, Bloomberg also reported that PayPal Coin will be backed by the U.S. dollar, which means it is easier for the regular PayPal user to utilize the digital money daily.
On the other hand, it is also worth noting that many fiat currencies are essentially controlled by central banks. Investopedia added that stablecoins are a type of cryptocurrency that attempts to bridge the gap between fiat currencies and cryptocurrencies.
Stablecoins are classified into three groups based on their operating mechanics: fiat-collateralized stablecoins, crypto-collateralized stablecoins, and non-collateralized or algorithmic stablecoins.
Why Is Stablecoin Better Than Crypto Coins?
Aside from the fact that its value will not decrease instantly, the rising popularity of stablecoins will serve as a major operator for the widespread adoption of cryptocurrencies as a popular currency of everyday transactions and other applications, per another Investopedia report.
Some of these applications include trading products and services across blockchain networks, decentralized insurance solutions, derivatives contracts, financial applications such as consumer loans and prediction markets.
However, such transactions are impossible if the transacting currency remains volatile, posing the danger that one of the transacting parties would lose money owing to price fluctuations.
