Paxos Standard (PAX) is the New Digital Dollar for Real?

Paxos Standard (PAX) is the stablecoin creators arrogantly call the new digital dollar. They also call Paxos Standard the “most liquid regulated stablecoin in the world.”

The Paxos Standard website claims to offer instant redemptions in US dollars. To explain, that means you can cash in a Paxos Standard for a US dollar fast.

In essence, Paxos Standard is a US dollar stablecoin built by an organization they call Paxos issues. Paxos has a limited purpose trust charter as the “first company approved and regulated to offer crypto products and services” from the New York State Department of Financial Services.

Meet Paxos

Paxos claims to have raised $93 million in venture funding for its activities. Paxos also issues the BUSD stablecoin in partnership with Binance and the Pax Gold (PAXG) token. The BUSD is a US dollar stablecoin.

Paxos claims to back each PAXG token with one fine troy ounce of gold. The gold is part of London Good Delivery gold bar stored in a Brinks vault. The Gold is in the custody of the Paxos Trust Company.

Paxos Standard

The Paxos Standard (PAX) token is a peer-to-peer (P2P) transfer mechanism. Paxos claims you could use Pax to pay for goods and services. They also intend Paxos Standard as a trading mechanism to convert dollars into cryptocurrency and a holding mechanism form US dollars.

Like all stablecoins, the Paxos Standard is an ERC-20 cryptocurrency that contains a digital robot. When you spend a Paxos Standard, the digital robot makes payment in US dollars from a segregated account at an FDIC-insured US domiciled bank.

Paxos’ plans include using PAX for consumer payments and allowing persons outside the US to store their money in Paxos Standard.  

Paxos is an Ethereum-based cryptocurrency. Ethereum (ETH) is the second most popular cryptocurrency in the world and the most popular blockchain. Investopedia estimates there were over 200,000 ERC-20 compatible tokens in Ethereum’s main network in October 2019.

They build most blockchain mechanisms and cryptocurrencies in Ethereum. Therefore, Paxos is compatible with most cryptocurrencies and blockchain e-commerce products. Popular Ethereum based crytpocurrencies include the Basic Attention Token (BAT) and Tether (USDT).

Is Paxos Standard a Good Cryptocurrency?

Paxos claims its users transmitted $244.305 billion in PAX between 2018 and January 31, 2021.

In addition, Paxos’ estimates its users minted over $3.283 billion worth of PAX and redeemed $2.55 billion in PAX Standard before 31 January 2021. Plus, Paxos estimates PAX Standard’s 24-hour trade volume was $245.326 million.

Conversely, CoinMarket estimated that Paxos Standard (PAX) had a $245.399 million Market Cap and a $181.798 million 24-hour Market Volume on 4 February 2021. CoinMarketCap bases those figures on a circulating supply of 244.952 million PAX.

Like all stablecoins, Paxos Standard is not always worth one dollar. For example, CoinMarketCap gave Paxos Standard a $0.9992 Coin Price on 3 February 2021. However the PAX Coin Price rose to $1 on 4 February 2021.

Is Paxos Standard a Trading Mechanism?

Paxos’ Standard’s value fluctuates because it is a trading mechanism for dollars, not a blockchain container for dollars. To explain, Paxos admits they store the dollars in US banks not on the blockchain.

I think Paxos is a good cryptocurrency, however Mr. Market disagrees. CoinMarketCap listed Paxos as the 100th largest cryptocurrency on 4 February 2021.

I think Paxos Standard (PAX) is a great trading mechanism that could be useful for people who need fast access to US dollars. However, I do not think Paxos Standard is worth holding.

If you want a fast and secure means of moving dollars, Paxos Standard could be a useful tool. However, I believe Paxos Standard is not a stable investment or store of value.

Originally published at https://marketmadhouse.com on February 4, 2021.