PayPal USD: A Blessing and a Curse for Crypto
PayPal’s recently launched Ethereum-based stablecoin, PYUSD, has been met with mixed reactions from the crypto community. On the one hand, it could be a major step forward for Ethereum’s mainstream adoption. On the other, it could signify a step backward in terms of decentralization and individual control of assets.
PayPal USD was launched on Aug. 7 and is issued by Paxos Trust Co., the same firm behind Binance USD (BUSD). It is an ERC-20 stablecoin designed for use in digital payments and Web3, and is expected to be available to US customers soon.
The news has been met with enthusiasm by many Ethereum supporters, including Anthony Sassano and Ryan Sean Adams, who believe that the stablecoin will help move Ethereum closer to becoming the money layer of the internet.
However, some in the crypto community fear that PayPal USD could lead to a decrease in decentralization and personal control of assets, making it a bittersweet blessing for Ethereum.
Web 3.0 and Ethereum
Etherscan reports that the number of daily active users on Ethereum is around 300,000 to 400,000. However, Sean Adams noted that 430 million accounts use the online payment processor PayPal, which could mean that up to 5% of the world’s 8 billion people could be onboarded onto Ethereum through PayPal’s new stablecoin, PYUSD.
Martin Koppelmann, the CEO and co-founder of Gnosis, added that PYUSD is based on Ethereum’s base layer, and Ethereum layer-2s will be able to interact with it too.
The launch of PYUSD has been seen by some, including lawmakers, as an example of larger institutions embracing crypto, which could potentially breathe new life into the traditional payments system.
PayPal’s PYUSD Stablecoin
In an Aug. 7 statement, Patrick McHenry, chair of the United States House Committee on Financial Services, said stablecoins like PayPal’s PYUSD “hold promise as a pillar of our 21st century payments system.”
However, not everyone is convinced about PayPal’s new PYUSD stablecoin. Several smart contract auditors highlighted that its smart contract contains “freezefunds” and “wipefrozenfunds” functions, which they claim are textbook examples of centralization attack vectors in Solidity contracts.
This concern was echoed by cryptocurrency researcher Chris Blec, who believes that PayPal will use the controversial functions where necessary, such as for Luno Crypto, MBL Crypto, Maple Crypto, LQTY Crypto, MDT Crypto, Luna Terra Crypto, and other examples of Web 3.0.
PayPal’s Stablecoin
Digital asset lawyer Sarah Hodder believes many features of PayPal’s PYUSD stablecoin resemble those of a censorship-enabled central bank digital currency. Similarly, smart contract auditor noted that the PYUSD smart contract can be changed by PayPal at any time.
In October, PayPal was criticized for proposing a policy that could have imposed a $2,500 fine on those who spread “misinformation.” However, the firm later retracted the policy, stating it was published “in error.”
Blockchain engineer Patrick Collins was more neutral in his opinion, suggesting that PayPal’s PYUSD could have been “epic” had it made some different engineering choices, such as opting for an up-to-date version of Solidity to program the contract, making the contract upgradeable and more gas efficient.
Sassano further explained that, despite its centralized nature, Ethereum users are still free to choose whether to use PayPal’s stablecoin or not.
PayPal recently stated that PYUSD will be released in the forthcoming weeks. According to CoinGecko, ETH is trading at almost the same rate as 10 hours ago when PayPal made the announcement, with only slight variations in its price.
For instance, web 3.0 examples like luno crypto, mir crypto, mbl crypto, maple crypto, lqty crypto, web 3.0 vs web3, mdt crypto, luna terra crypto, and other examples of web 3.0 have seen minor changes since then.
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