What is PayPal's PYUSD Coin?
PayPal has its own special digital coin called PYUSD. Think of it like a digital dollar. It's meant to always be worth one U.S. dollar. So, 1 PYUSD should always equal $1.
This coin works on special computer networks called blockchains. It started on a network called Ethereum, then expanded to Stellar, and is also on Solana. PayPal wants PYUSD to be easy to use for many different things, like sending money.
Where does PayPal get the dollars for PYUSD?
This is an important question! For every PYUSD coin that exists, there's a real U.S. dollar (or something very much like it, like a super safe government bond) sitting in a bank account. PayPal works with a company called Paxos to do this.
So, when you buy 10 PYUSD, Paxos makes sure there are 10 real U.S. dollars put aside. This makes sure that PYUSD is always backed by real money, so it can stay worth $1.
How Does PayPal Make Money from PYUSD?
PayPal mostly makes money from PYUSD in a few ways:
- Interest on the Money They Hold: When you have PYUSD, PayPal (through a partner called Paxos) holds real U.S. dollars in a bank or in safe government bonds. These dollars earn interest, and that's how PayPal makes money. The more PYUSD people hold, the more interest PayPal can earn.
- More People Using PayPal: PayPal doesn't charge you a fee just to buy, sell, or hold PYUSD in your PayPal account. But they hope that offering PYUSD will make more people use PayPal for other things, like:
- Paying for stuff: You can use PYUSD to pay at stores that accept PayPal.
- Sending money to other countries: PYUSD can make sending money abroad faster and cheaper.
- Using crypto stuff: PYUSD can connect to other digital money tools, bringing more users to PayPal's crypto services.
- Small Fees for Some Trades: If you swap your PYUSD for other digital currencies on PayPal, there might be a small fee. Also, if you send PYUSD to a wallet outside of PayPal on networks like Ethereum, there might be a small network fee, like a toll for using the road.
- Staying Important: By having its own digital dollar, PayPal wants to stay a big player in how people use digital money. This helps them keep their current users and get new ones.
Can I Make Money Just by Holding PYUSD in My PayPal Wallet?
Yes! Starting in Summer 2025, PayPal will start a special program:
- Earn Rewards: If you keep PYUSD in your PayPal or Venmo wallet, you can earn a reward rate of 3.7% each year. This is like getting a small payment for just holding the money.
- How You Get Paid: The rewards will add up a little bit each day and then be paid to you in PYUSD once a month.
- Easy to Use: You can join or leave this program whenever you want. And you can easily change your PYUSD back to regular U.S. dollars if you need to. The rewards you earn can be used right away for anything in PayPal, like sending money, paying bills, or buying things.
Just remember that while PYUSD aims to be stable, the value of your rewards is still tied to PYUSD staying at $1. Also, you might need to think about taxes on any money you earn from these rewards.
Are There Other Ways to Make Money with PYUSD?
Yes, since PYUSD also lives on those public blockchain networks, there are other ways people can try to earn:
- Lending it out: You can lend your PYUSD on special websites (called "DeFi lending platforms") to other people who want to borrow it. You earn interest on the money you lend.
- Helping with trades: You can put your PYUSD into special pools on digital trading places (called "decentralized exchanges"). When people trade there, you earn a small part of the trading fees. This can be a bit more complicated and has some risks.
- Finding small price differences: Sometimes, the price of PYUSD might be slightly different on two different trading places (like $1.01 on one and $0.99 on another). Smart traders might quickly buy it where it's cheaper and sell it where it's more expensive to make a tiny profit. This is for experienced traders only.
- Other Crypto Apps: As PYUSD becomes more popular, other crypto apps and websites might offer their own ways to earn interest or rewards if you hold PYUSD with them.
The End
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