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Here's evidence suggesting that cryptocurrency isn't wholly negative: Following the news of PayPal, a trailblazer in online payments, unveiling a stablecoin on the Ethereum platform, the company's stock surged by 2%. While this might appear as a modest increase compared to the triple-digit surges seen with speculative cryptocurrencies, it stands as a commendable achievement within the realm of mature, slow-expanding technology firms that have nearly attained maximum market penetration. (PayPal has reported a user base exceeding 400 million active accounts and contributes to approximately 70% of transactions on eBay.)
Certainly, as is often the case in the realm of cryptocurrency, the situation is not entirely without challenges. Following the unexpected introduction of the PYUSD stablecoin, a multitude of fraudulent tokens such as "pepeyieldunibotsatoshidoge" (also going by PYUSD) have emerged on platforms like Ethereum, various layer 2 solutions, and BNB Smart Chain. These impostor tokens aim to exploit the initial lack of awareness and the excitement generated after the PYUSD announcement. Among these tokens, the most prominent one recorded a trading volume of nearly $3 million within a few hours. Regrettably, many of these tokens are likely to turn out to be deceptive schemes.
However, this phenomenon is far from novel in the cryptocurrency realm, an industry plagued by conflicting ideologies, opposing approaches, and sporadic ethical dilemmas. As the saying humorously encapsulates: within the crypto sphere exist dual personas – monetary enthusiasts and technological purists; proponents of regulation and champions of evasion of the law; the faction that thrives on innovation and disruption, and the group that opts for gradual and cautious progress.
There has been so much conflict and discord that it's truly perplexing to comprehend how the cryptocurrency industry has managed to progress this far. Even with the substantial transaction fees, a prominent payments company is choosing to utilize the Ethereum mainnet for its upcoming phase of growth.
Therefore, PayPal's stablecoin follows the same trajectory: PYUSD, initially limited to the U.S., will progressively transform into a widely available payment solution that undergoes comparable levels of monitoring and control, akin to the oversight imposed on PayPal and its branch, Venmo, in the present day. This represents a form of cryptocurrency without the conventional characteristics of cryptocurrency – a financial technology innovation enriched by the advantages of blockchain. It encapsulates the essence of two opposing forces locked in a struggle.
It should come as no surprise that the prevailing force within PayPal is the faction inclined towards working within established systems rather than operating from the outside. The publicly-traded entity, renowned for launching the careers of notable figures like Elon Musk, Peter Thiel, and the rest of the "PayPal Mafia," swiftly grasped that its initial aspiration of creating a borderless, global payment platform would eventually be subdued by the influence of banks and governments. While PayPal has consistently championed cryptocurrencies since it first displayed interest in Bitcoin back in 2013, it eventually relinquished the utopian notion of a "new world currency" that typified the cypherpunk movement.
PayPal's stablecoin might arrive with certain limitations (a "terms of use" agreement is not typically embraced by dedicated extropian coders), but the company deserves praise for its evident dedication to transparency. Former PayPal communications director and enthusiast of typewriters, James Wester, remarks that as long as the possibility of freezing and seizing assets is explicitly stated in the terms and conditions, there's little ground for objection regarding the inclusion of functionalities in the PYUSD smart contract code that facilitate token confiscation and burning.
I imply that the practice of freezing tokens is commonplace among major stablecoins supported by corporate entities, including USDC and USDT. This practice aligns with the commitment made by Paxos, the issuer of PayPal USD, to release a monthly "reserve report" from September onwards. However, does all of this contradict the notion that cryptocurrencies should liberate themselves from third-party financial firms that exert control over online transactions, account accessibility, and the collection of clients' transaction histories? Without a doubt, my dear sir, we are entering the era of Restricted Crypto; a trend that commenced a decade ago and is steadily gaining momentum.
(In all fairness to Tether, it had previously indicated that it might not consistently adhere to the regulations outlined by the U.S. Treasury's sanctions program.)
However, when significant news of this magnitude emerges from prominent non-crypto brands, the industry's ideological stances appear to diminish in importance. A co-host of the "Bankless" podcast remarked that this development is the most significant since PayPal's 2020 announcement regarding the inclusion of cryptocurrency transactions. This comparison is primarily drawn because PayPal serves as a preliminary step for more complex aspects like decentralized finance (DeFi). Strikingly, it has gone relatively unnoticed that PayPal's expansive user base of 435 million individuals does not universally enjoy access to the stablecoin; rather, only U.S. residents who have previously engaged with crypto on the platform are granted this privilege.
The anticipated constraint is likely to be removed over time, and PayPal might eventually bring onboard a larger number of individuals into the realm of cryptocurrencies compared to Coinbase (which had 108 million users as of the most recent tally). Furthermore, even if only a small portion of these users engage with Web3 beyond the PayPal platform, it doesn't necessarily diminish the authenticity of cryptocurrencies (which has, to be honest, already been compromised to some extent). The introduction of PYUSD doesn't imply that bitcoin, ether, or dai will cease to exist. And as Austin Campbell, who formerly managed the BUSD stablecoin reserves at Paxos, wrote: “A player like PayPal entering the field is material, for credibility, for access, for public education and to force everyone else to start grappling with the reality of blockchains and the types of commercial applications they enable.”
However, it sparks fascination to envision the potential appearance of Web3 with a significant crypto services provider such as PayPal at its core. One might even speculate about the company's own projection of Web3 five years down the line. It's undeniable that PayPal would need to adhere to U.S. sanctions, establish extensive blacklists, and employ automated software to occasionally and mistakenly freeze accounts. This could result in the utilization of underpaid communication personnel for its crypto customer service. While a greater number of individuals may venture into the realm of cryptocurrency, the evolution could parallel the trajectory of the internet post the "Eternal September," a period that brought a substantial influx of users online and consequently necessitated digital-first payment alternatives like PayPal. As more people embrace crypto, its landscape might transform to a point unrecognizable to present-day users.
Deciding whether it's favorable or unfavorable is akin to choosing a side in a confrontation among wolves – a fruitless endeavor in trying to impose human ethics onto the natural world. After all, what could wolves possibly comprehend about Web3?
