What’s Good For PayPal Is Good For America

As I am sure you have noticed, there was an interesting development in the world of stablecoins this week with the news the PayPal
PYPL
is going to issue its own digital dollar. The market liked the news. While many observers are asking what its purpose is. Jose Fernandez da Ponte, PayPal’s senior vice president and general manager of blockchain, crypto, and digital currencies is clear about their advantage: “We have always said that our role in crypto and digital currencies is trying to build that conduit between fiat and web3” and they do indeed have potential as an “on ramp” for retail users.

Another Digital Dollar

While the cryptocurrency purists may be unhappy that PayPal’s stablecoin PYUSD (an ERC-20 token issued on the Ethereum
ETH
blockchain) retains centralised control (PayPal is able to cancel accounts, block transactions and so on) I think it is important to see the bigger picture here. The purpose of PayPal’s stablecoin (apart from attracting billions in interest-free loans!) is not to be a competitor to a cryptocurrency such as Bitcoin
BTC
, Dogecoin
DOGE
or whatever else coin. The key role of this new digital currency will be to act as a mass market on-ramp for millions of (initially) Americans who want to access a convenient means of transferring value from what we might loosely label “web 2 money” (online credit cards and bank accounts) to web3, the world of decentralised finance and tokens.