Ethereum could become internet’s money layer as PayPal issues PYUSD stablecoin as an ERC-20 token

  • PayPal is rolling out a so-called stablecoin as the payments giant makes a foray into cryptocurrency. 
  • PYUSD stablecoin will run on Ethereum blockchain as an ERC-20 token.
  • With 70% of eBay transactions going through PayPal, the venture could make Ethereum the internet’s preferred money layer.

Ethereum (ETH) price is suffering in the wake of Bitcoin’s falling dominance, recording lower highs and lower lows as overhead pressure continues to abound. Nevertheless, this gloomy outlook has not prevented the Ethereum blockchain from contending as a potential money layer for the internet.

Also Read: Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Low BTC dominance leaves investors wary of touching altcoins

Ethereum blockchain to support PayPal’s PYUSD stablecoin

Ethereum could become the money layer of the internet, a position that comes as payments giant PayPal makes a foray into the cryptocurrency realm. As reported, PayPal has launched a stablecoin, which means it will henceforth track the price of a fiat currency.

PayPal’s PYUSD  is not only pegged to the dollar, but also backed by short-term treasuries, dollar deposits, and cash equivalents, and christened PayPal USD with the PYUSD ticker. For the layperson, pegged means it is backed by cash equivalents, but then there is the added bonus of short-term treasuries backing.

PayPal CEO Dan Schulman in a statement to Bloomberg, talked about the PYUSD, which is Paxos Trust Company-issued, saying that the stablecoin is poised to become “a part of the overall payments infrastructure.”

Noteworthy, the PYUSD stablecoin will run on the Ethereum blockchain as an ERC-20 token, working in jointly with the rest of the payment giant’s cryptocurrency offerings, including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH). This means that users will be able to swap the dollar-denominated tokens for cash or other crypto assets on its platform.

Cryptocurrency offerings on PayPal

Ethereum as a possible money layer

Ethereum could become the internet’s money layer as PayPal, a reputed payments giant, leverages the blockchain protocol’s “speed, cost and programmability.” Being an ERC-20 token means PYUSD is a fungible token, meaning it is interchangeable with different tokens. More specifically, the announcement notes:

The stablecoin will be accessible to an already large and growing community of external developers, wallets and web3 applications, can be easily adopted by exchanges, and will be deployed to power experiences within the PayPal ecosystem.

With PYUSD structured to curb friction for in-experience payments in virtual spaces, the fact that it runs on the Ethereum blockchain facilitates expedited transactions and enables seamless developer-to-creator flow, while promoting digital asset growth.

Further supporting the money layer thesis is that PayPal facilitates approximately 70% of the transactions on eBay, and with Ethereum now playing in, the integration could increase the transaction volume on the American e-commerce company as customers and vendors now have more options to execute their transactions.

Citing the industry sleuth and digital asset consultant in a Crypto X post:

$51.8 billion (70% of $74b) could flow through PayPal Stablecoins from eBay alone.

eBay is poised to benefit from the 426 million active accounts on PayPal’s registry, with almost $1.2 trillion in volume across 19 billion annual transactions.

eBay PayPal annual transactions

With the year-on-year percentage change slumping, the integration of stablecoins could serve as a catalyst to steer further growth. With these statistics, experts say the move could serve as a catalyst for retail investor interest in blockchain-related technology, with a potential for digital assets being traded on established traditional marketplaces. 

Bitcoin, altcoins, stablecoins FAQs

What is Bitcoin?

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

What are altcoins?

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

What are stablecoins?

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

What is Bitcoin Dominance?

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

Bitcoin tags $60,000 for the first time in more than two years

Bitcoin tags $60,000 for the first time in more than two years

Bitcoin hit $60,000 after more than two years below this level. BTC liquidations have surpassed $277 million in the last 24 hours. This massive rally in the pioneer cryptocurrency could be attributed to the spot ETF approval.

More Bitcoin News

Arbitrum price resumes rally with Web3 gameathon plan for March

Arbitrum price resumes rally with Web3 gameathon plan for March

Arbitrum, an Ethereum Layer 2 scaling solution, has announced an event for Web3 gaming. The event is likely to attract community members, delegates and Web3 gamers. This could positively influence Arbitrum adoption and is likely to boost ARB gains. 

More Arbitrum News

Ethereum price hits new yearly high at $3,369 as staked Ether rises to 26%

Ethereum price hits new yearly high at $3,369 as staked Ether rises to 26%

Ethereum price has climbed to a new 2024 high of $3,369 on Wednesday. Bitcoin’s rally to $59,000 and the upcoming Dencun upgrade activation on mainnet have likely catalyzed Ethereum’s price gains. 

More Ethereum News

XRP climbs to $0.58 as SEC pushes for deadline extension in Ripple lawsuit

XRP climbs to $0.58 as SEC pushes for deadline extension in Ripple lawsuit

XRP price rallied on Wednesday in response to the Securities and Exchange Commission’s (SEC) push to delay the remedies briefing deadline in its lawsuit against the payment remittance firm. 

More Ripple News

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin price has formed a potential top signal that forecasts a sell-off. The weekly chart also points to a bearish divergence, which adds credence to the bearish outlook. Investors can expect BTC to consolidate between the $52,062 to $45,160 levels.

Read full analysis