If you’ve read our Beginner’s Guide to Stablecoins, then you must be aware of the term stablecoin. To further your knowledge, we are bringing you this guide which teaches you what Paxos Standard Token is. It is the right place to brush up your skills on this specific stablecoin.
While there are many stablecoins in the crypto market, none have promised full dollar reserves or have been able to claim the backing of a financial institution. This is where the Paxos Standard comes into play.
Paxos Standard is secured by the United States Dollar and is the first crypto asset to be issued by a financial institution.
Theoretically, 1 Paxos Standard (PAX) will always be equal to a United States Dollar.
While it is to be seen if that remains the truth, however comprehensive auditing and destruction of the tokens which are exchanged with a dollar are some of the ways to hold up this claim.
An ERC-20 based token, the Paxos Standard was first released on the iBit crypto exchange. Since then, the popularity of the token has meant that it has been adopted by some of the top crypto exchanges such as the Binance and OKEx.
When it comes to cryptocurrencies, PAX is no different from other stablecoins in the market such as TrueUSD, Gemini, and Tether. (You may want to read our Beginner’s Guide to Tether to understand all about Tether.)
What differentiates Paxos Standard from other currencies is that PAX was not devised for trading, rather it was created as a utility coin to be used on Paxos platforms.
The Paxos Trust, which created the Paxos Standard Token, had been in the financial services realm for the past six years, however, the Blockchain- based Paxos platform is very new to the market.
Although the Paxos platform has a robust value proposition, however, it is difficult to ascertain how successful it will be in the long run. As Tether has many cons, it is very possible that PAX could trump Tether in popularity and replace it as the most popular stablecoin in the market.
To conclude, we’d have to say that while the crypto market is filled with various stablecoins, the real strength of PAX lies in its backing by the financial institutions. This backing in the form of additional trust and auditing gives PAX a real advantage over other stablecoin projects.