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What Is Paxos Standard (PAX) Stablecoin?

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by staff writer · 5 min read
What Is Paxos Standard (PAX) Stablecoin?
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The purpose of this guide is to provide a comprehensive guide about Paxos Standard (PAX) stablecoin. It can be used for making informed investing decisions.

Paxos Standard (PAX) is a collateralizable fiat currency based on Ethereum (ETH) blockchain technology. It is pegged against the US dollar, hence referred to as a stablecoin. It’s also widely known as the digital dollar. The Paxos Standard stablecoin initially appeared with the aim of revolutionizing the financial landscape, thanks to its capacity for speedy, flexible, and accessible seamless transactions.

History and Founders of Paxos Standard

Paxos LLC, formerly iBit, was founded back in 2012 by three partners: Charles Cascarilla (overall CEO of Paxos), Andrew Chang (Paxos COO), Richmond Two (CEO of Paxos Asia). The company has two headquarters, in New York and Singapore.

Additionally, this venture is supported by several capital firms. They include Liberty City, RRE, and Canaan Partners. In May 2015, Paxos entered the American market after acquiring a license from the authorities, the New York State Department of Financial Services (NYDFS), that allowed the company to issue a stablecoin. Three years later, the Paxos team created the Paxos Standard (PAX) stablecoin, which officially began trading in September 2018.

Functioning of Paxos Standard

The growth and popularity of cryptocurrency trading came with a fair share of miseries, which prompted the Paxos team to develop a product that addressed price volatility experienced by cryptocurrencies. Besides, they wanted to find a reliable alternative for blockchain-based digital assets or cryptocurrencies transactions.

Moreover, the infamous Tether (USDT) controversy only made things worse. In particular, the Tether stablecoin had allegedly printed fake Tethers leading to mistrust. As a result of these challenges, coupled with the changing times, the Paxos team explored other alternatives. Their research led to the creation of a more transparent and efficient stablecoin, the Paxos Standard (PAX).

The new product was Ethereum-based, meaning data could be stored in inter-chained blocks, which prompted security. Also, the Ethereum blockchain provided a decentralized environment for secure transactions, as well as eliminated the chances of interference by third parties. Unlike an ordinary stablecoin, Paxos Standard boasts of the following superior features:

  • Instant, seamless global transactions.
  • Immutability.
  • Price stability, with the US dollar serving as its reserve currency.
  • Decentralized accounting.
  • Support of 24/7 transactions.

With further development and improvement, the Paxos Standard (PAX) stablecoin came with more advanced features that contributed to its supremacy. The new features included:

  • Compliance and regulation. The digital asset is regulated by the New York State Department of Financial Services (NYDFS).
  • Guaranteed deposits that only FDIC-insured American-based banks oversee.
  • Regular account audits under control of Withum, a US-based auditing firm.
  • All transactions are monitored for transparency hence and security.
  • Transactions, purchasing, or redeeming are processed in regular intervals, promoting convenience and easier movement of funds.
  • No transactional charges.

Paxos Standard’s Use Cases

The PAX stablecoin has several use cases. The most helpful ones include inflation hedging, volatility mitigation, eliminating fees on cross-border transactions, payment for blockchain-based digital assets and cryptos.

Firstly, the PAX Stablecoin provided an alternative to the ordinary cryptocurrencies, which was a huge relief to investors. It’s not subject to market conditions hence, not volatile, unlike the other cryptocurrencies that are subject to the status of the market.

Secondly, PAX stablecoin is a borderless digital asset that anyone may transfer and store as value or wealth. Cryptocurrencies are widely becoming popular, and most people are generally more receptive towards them, which explains why PAX is gaining popularity.

Paxos can also be used as a payment solution for blockchain-based digital assets and cryptocurrencies. Additionally, this masterpiece is convenient when converting physical assets to digital assets.

Though Paxos Standard is in its maturity, most companies that accept cryptocurrencies as the payment options are receptive to PAX. With the increased popularity of cryptocurrencies, stablecoin definitely has a bright future in the E-commerce space.

Pros and Cons of the Paxos Standard Stablecoin

As any digital asset, Paxos Standard has its advantages and risks that you should considers.

Its pros are as follows:

  • Ethereum basis makes it convenient, transparent, efficient, and more secure.
  • Availability in major exchanges, which leads to increased liquidity.
  • Regular audits that promote transparency.
  • Regulation from the NYDFS, which makes it compliant.
  • Customer balances maintained by FDIC-insured US-based banks.

Meanwhile, there are also several disadvantages:

  • Centralization which may attract censorship or confiscation from authorities in the event of suspected malpractices or the breaking of terms and regulations.
  • Reduced privacy as most exchange platforms demand KYC info to process large amounts. The same is required when redemption or purchase of Paxos Standard with fiat is needed.

Conclusion

The Paxos team identified the need for a cryptocurrency that would focus on stability by eliminating volatility, and one that would be autonomous, free from traditional financial institutions. Besides, they desired to incorporate convenience, security, and efficiency in a single protocol. Luckily enough, their zeal gave birth to a decentralized, stable, and trustworthy cryptocurrency.

With PAX, investors have the ideal opportunity to save, invest, transact, or trade without the worries of volatility caused by market conditions and unforeseen malpractices. Even though the PAX stablecoin is Ethereum-based, the transactions are not affected by the high fees charged and scalability of Ethereum.

The stablecoin is totally changeable to dollars or any other cryptocurrencies desired, including Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETH). After purchasing PAX, the user can convert it to other cryptocurrencies without interference of third parties and without the risk of fluctuating volatility.

PAX has definitely taken the crypto space by storm. In comparison to other stablecoins, its performance (market cap and trade volume) can only be rivalled by Tether (USDT) and the USD coin (USDC). Additionally, liquidity has greatly increased, which has resulted in its popularity. Besides, to ensure that the company runs smoothly, the Paxos team strives for a cordial relationship with the financial regulators.

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FAQ

What is Paxos Standard (PAX)?

PAX is a collateralizable blockchain-based stablecoin pegged against the US dollar. It was designed as an alternate digital asset that is less volatile, and one that provides instant borderless transactions, unlike ordinary cryptocurrencies.

Who created Paxos Standard?

Paxos LLC, formerly iBit, was founded back in 2012 by three partners: Charles Cascarilla (overall CEO of Paxos), Andrew Chang (Paxos COO), Richmond Two (CEO of Paxos Asia). They all have extensive experience drawn from different sectors including finance, technology product development. The company has two headquarters, in New York and Singapore. 

Additionally, this venture is supported by several capital firms. They include Liberty City, RRE, and Canaan Partners. In May 2015, Paxos entered the American market after acquiring a license from the authorities, the New York State Department of Financial Services (NYDFS), that allowed the company to issue a stablecoin. Three years later, the Paxos team created the Paxos Standard (PAX) stablecoin, which officially began trading in September 2018.

Why is Paxos Standard Ethereum-based?

Ethereum is a blockchain-based ledger that incorporates smart contracts to provide a secure end product that promotes end-user trust. Therefore, Paxos chose this network to operate on.

How is Paxos Standard secured?

All PAX Stablecoins have parallel dollar reserves maintained by FDIC-insured banks, which means your funds are insured. Besides, the accounts are regularly audited by Withum, a US-based auditing firm.

What can Paxos Standard be used for?

This stablecoin can be used in many ways, including making cross-border transactions, storage of monetary value when physical assets are converted to digital assets. Moreover, it provides a better option for a less volatile digital asset. Simply speaking, Paxos Standard is a more stable digital asset that incorporates storage of value, efficiency, convenience, and transparency.

How to buy Paxos Standard?

The process of acquiring the Paxos Standard stablecoin is quite simple. You can readily purchase it from several reputable exchanges like Binance, Digifinex, Bittrex, VCC, and many more. The first step is to create an account in your preferred exchange then navigate to “Buy Now”, where you’ll be required to fill in some details. Finally, proceed to check out and wait to receive PAX.

How many PAX coins are there in circulation?

As of May 2021, as many as 1,189,947,713 PAX stablecoins are in circulation.

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