The electronic payments giant, PayPal, is planning to launch its own cryptocurrency. The brand issued a report last Friday indicating that this will be a stable coin that is linked to the US dollar. So why is PayPal thinking about entering the crypto realm and will the PayPal coin be a success?
It was a bold start to 2022 when PayPal made the announcement about its proposed stable coin. While the brand has said that it will be working with regulators to ensure that the cryptocurrency is launched with the appropriate legal framework, it’s yet to be seen whether the PayPal Coin will be available to trade on centralized crypto exchanges. Similarly, there are no further details about when the cryptocurrency would be available to use.
Of course there’s every chance that PayPal might cancel its potential cryptocurrency, as the brand is merely saying that it was exploring the possibilities of creating its own stable coin. The announcement about a PayPal Coin wasn’t actually planned and it was instead enforced after a developer found hidden code about the crypto during a ‘hackathon’ of the PayPal iPhone app.
Stable coins are those cryptocurrencies that have their value linked to another kind of asset – most commonly the US dollar or a commodity such as gold. This is done in the hope that the stable coin would be protected from the kind of volatility suffered by other cryptocurrencies. With the value of stable coins skyrocketing from $20 billion to $160 billion in little more than a year, it’s easy to see why PayPal would start exploring options for releasing its own coin.
The announcement that PayPal is considering launching its own cryptocurrency is part of a move from the brand to embrace cryptos more fully. Late 2021 saw the electronic payments platform giving its customers the opportunity to buy, sell, trade and hold cryptocurrencies such as Ethereum, Bitcoin, Bitcoin Cash and Litecoin.
This move was extended to its sister payment platform – Venmo – where customers got chance to pay merchants via the new Checkout with Crypto feature. It will be interesting to see how far PayPal gets with its cryptocurrency ambitions. After all, Facebook’s recent efforts to develop its own crypto via Libra and Diem didn’t exactly go according to plan, and companies ranging from IBM to Amazon have had their initial efforts into creating their own cryptocurrencies thwarted.
It’s clear that there’s plenty of goodwill about PayPal and given that it is the second most trusted global brand, it means that it has the reputation required to be seen as a valid cryptocurrency option. Plus with 392 million users worldwide as of 2021, PayPal has the global reach required to give its stable coin project an appropriately large send-off. However, with uncertainty about the economy in the US and beyond, the timing of launching a cryptocurrency could be a gamble for PayPal at the moment.
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