How to Buy PayPal’s Stablecoin (PYUSD)

PayPal introduced its stablecoin, PYUSD in August 2023, making it the first major fintech company. This stablecoin, backed 1:1 by the US dollar, aims to enhance the experience of PayPal’s 429 million active users by offering faster transactions and lower fees.

Although PYUSD is not the first stablecoin on the market, PayPal’s strong brand recognition could give it a competitive edge.

The announcement positively impacted the market, with PayPal’s stock price seeing a significant rise.

This comprehensive guide covers the definition, usage, and most importantly, how to buy PYUSD. Here’s what you need to know.

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What is PYUSD?

PYUSD is a regulated stablecoin fully backed by the US dollar, combining the stability of traditional currency with the speed, efficiency, and programmability of cryptocurrencies.

Essentially, PYUSD is a stablecoin pegged 1:1 to the US dollar, with its value guaranteed by real dollar deposits in bank accounts.

This sets it apart from algorithmic stablecoins, which rely on complex mechanisms to maintain their peg. By being tied to the US dollar, PYUSD shields users from the high volatility common in cryptocurrencies like Bitcoin and Ethereum.

Some Innovations that come with PYUSD 

Beyond stability, PYUSD brings three key innovations:

• First Crypto Initiative by a Major Payment Provider: This is the first cryptocurrency initiative by a global payment provider like PayPal, allowing seamless integration with PayPal’s extensive existing infrastructure. This paves the way for practical use of the stablecoin by consumers and merchants on the PayPal network.
• Regulatory Compliance: PYUSD is fully compliant with US regulations, having obtained a conditional BitLicense from the New York State Department of Financial Services (NYDFS). This regulatory oversight establishes trust and reliability, giving PYUSD an advantage over unregulated stablecoins.
• Programmability on Ethereum: As an ERC-20 token on the Ethereum blockchain, PYUSD is programmable through smart contracts. This allows developers to integrate PYUSD into decentralized finance (DeFi) applications and web3 services, enabling new functionalities and opening up untapped opportunities.

Another crucial aspect to consider when evaluating the opportunity to purchase PYUSD is its regulatory framework. PayPal’s stablecoin is issued and managed by Paxos Trust Company, a regulated blockchain infrastructure company under the supervision of the NYDFS. This ensures that PayPal USD adheres to strict regulatory standards, fostering trust and transparency among users.

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How and Why You Can Use PYUSD

What does PYUSD enable for everyday PayPal consumers like us? It unlocks new useful features that enhance existing services through the efficiency of blockchain technology.

For example, we can use PYUSD for peer-to-peer payments, payment financing, and smoother crypto-to-fiat conversions, all within PayPal applications. With the dollar pegged at 1:1, we avoid the risk of volatility.

Here are the use cases for PYUSD as of November 2023:

• Transferring PYUSD: Easily move PYUSD between PayPal and compatible external wallets.
• P2P Payments: Send PYUSD directly to friends or family, streamlining the digital payment process.
• Purchasing with PYUSD: Choose PYUSD at checkout to fund purchases, integrating the stablecoin into everyday transactions.
• Crypto Conversions: Convert supported cryptocurrencies to and from PYUSD, ensuring a smooth transition between digital assets.

As PayPal integrates PYUSD into its extensive network of merchants and partners like Venmo, real-world use cases will expand significantly. Imagine expatriates using PYUSD for low-cost remittances or shoppers relying on the stablecoin for simpler digital payments. With such practical use cases, PYUSD can offer convenience to millions worldwide.

Looking ahead, PayPal intends for PYUSD to play a key role in the web3 space. In the future, users are expected to have greater control over their data, interactions, and digital identity in web3 environments. By connecting PYUSD to the web3 infrastructure, PayPal strategically positions the stablecoin as a crucial bridge between traditional finance and blockchain innovations.

The promise is of secure, direct peer-to-peer transactions in web3, eliminating unnecessary traditional intermediaries like banks or payment processors. This shift ultimately means faster, more efficient, and cost-effective transactions.

For creators especially, PYUSD provides a way to monetize without intermediary fees, extracting maximum value.

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How to Buy PYUSD

You can purchase PayPal’s stablecoin, PYUSD, through any reputable cryptocurrency platform that supports it, such as Coinbase or Kraken. Alternatively, you can buy it directly on PayPal.

How to Buy PYUSD on PayPal

To buy PYUSD on PayPal, follow the same steps as you would for purchasing any other supported cryptocurrency on the platform:

1. Add Funds: Add funds to your PayPal account via a connected bank account or card to ensure you have dollars available for purchasing PYUSD.
2. Access Crypto Section: In your PayPal dashboard, go to the “Crypto” section. Here, you’ll see PYUSD listed alongside options like Bitcoin.
3. Select PYUSD: Choose the PayPal USD (PYUSD) option and enter the amount in dollars you want to convert to the stablecoin. Select your linked card to fund the purchase.
4. Review Transaction: Carefully review the transaction details, including the purchase amount, fees, and the total PYUSD you’ll receive.
5. Confirm Purchase: After reviewing, confirm the transaction to finalize it. The equivalent amount of PYUSD will then be credited to your PayPal digital wallet.

Finding the right platform shouldn’t be an issue, as many cryptocurrency exchanges (both centralized and decentralized) have listed PYUSD.

For clarity and demonstration purposes in this guide, we’ve chosen Coinbase as the primary example. However, note that the purchase process is nearly identical across all platforms.

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How to Buy PYUSD on Coinbase

1. Download Coinbase Wallet: Download the Coinbase Wallet app or browser extension. This self-custody wallet allows you to buy and store cryptocurrencies yourself instead of relying on an exchange custodian like traditional Coinbase.
2. Set Up Your Wallet: When creating your wallet, you’ll receive a 12-word recovery phrase. This phrase gives you access to the wallet and its cryptocurrencies. Write it down and store it securely, as anyone with this phrase can access your funds.
3. Understand Ethereum Fees: Be aware that Ethereum network fees apply to transactions. These fees vary based on network activity levels. Plan for additional funds to cover gas fees.
4. Fund Your Wallet: Fund your Coinbase Wallet with Ethereum (ETH) purchased from traditional Coinbase. Follow Coinbase’s guide to transfer this ETH from your Coinbase account to the self-custody wallet.
5. Swap ETH for PYUSD: In Coinbase Wallet, use the Swap feature to exchange your ETH for PYUSD stablecoins. You can directly swap the desired amount of ETH for PYUSD. Ensure you leave enough ETH to cover transaction fees.
6. Confirm and Approve: Confirm the details of your PYUSD purchase and approve the transaction in your wallet. Once successfully completed, your Coinbase Wallet balance will reflect the exchanged amount of PYUSD.

Is PYUSD the Start of a New Era?

Although the launch of PYUSD wasn’t immediately embraced by the crypto community, this stablecoin stands out due to its purpose and potential.

It enables fast peer-to-peer transactions within the PayPal network and simplifies exchanges between cryptocurrencies and fiat currencies. Additionally, it facilitates direct financing for purchases through PayPal’s established payment services.

As integration with PayPal’s merchants and partners, like Venmo, expands, PYUSD’s role in streamlining digital payments is likely to grow.

Thus, understanding how to buy PYUSD is just the beginning of appreciating its potentially transformative role in digital finance.

Read Also: How To Buy Bitcoin With PayPal: A Simple Step-By-Step Guide 

Frequently Asked Questions

1. Can I Buy PYUSD?

Yes, you can buy PYUSD just like any other stablecoin or cryptocurrency, such as USDT or USDC. Leading exchanges like Coinbase and Kraken have already listed PYUSD on their platforms. Alternatively, you can purchase PYUSD directly through PayPal. Refer to the guide above for a step-by-step demonstration of the buying process.

2. How Much is One USD Compared to One PYUSD?

The value of PYUSD is pegged to the US dollar, ensuring stability and maintaining parity with traditional currency. Therefore, the exchange rate between USD and PayPal’s stablecoin PYUSD is designed to be 1:1. One PYUSD is equivalent to one US dollar. When exchanging USD for PYUSD, you should receive an equal amount of PYUSD for each dollar, minus any applicable transaction fees.

3. How to Buy PYUSD on PayPal?

Buying PYUSD through PayPal follows the same process as buying any other supported cryptocurrency on their platform. Add funds to your PayPal account to finance the purchase, go to the “Crypto” section of the dashboard, select PYUSD and the amount in dollars you want to convert to the stablecoin, carefully review the fees and details, and confirm the transaction to have the digital currency credited to your wallet.

4. What is the Purpose of PYUSD?

PayPal launched the PYUSD stablecoin to capture a share of the growing cryptocurrency market and support next-generation payments. As a regulated and web3-compatible token, PYUSD serves as a bridge for transferring funds between traditional finance and decentralized blockchain applications. Its stable value and seamless integration with PayPal’s infrastructure enable faster and cheaper transactions, aiming to accelerate mainstream adoption.