Paxos Standard Token (PAX) is a cryptocurrency developed by Paxos Trust Company, LLC. PAX is a so-called “stablecoin” – a cryptocurrency the price of which is linked to some type of an asset that has a robust value and is widely established as a mean of payment. These coins’ prices are mostly connected with a price of some fiat currency or precious metal (gold, for example. Paxos Standard Token is not an exception – its price is tethered to the United States Dollar in 1 : 1 proportion.
However, Paxos is an outstanding cryptocurrency due to its legal features. Paxos is approved and regulated by the New York State Department of Financial Services (NYSDFS). It means that every token, issued by the Paxos Trust Company is backed by 1 USD on the account of the company. The Paxos Trust Company team aims to combine the speed of the digital assets and security and protection of the old school financial systems.
According to the developers of Paxos Standard Token, cryptocurrencies are mostly used for speculative purposes. In their estimation, this is a major problem for the whole blockchain industry. Lack of trust in the cryptocurrencies can lead to significant crushes on the market and become an obstacle for the widespread adoption. Paxos Standard Token is designed specifically to provide the cryptocurrency market with the stability and user confidence it lacks so much.
Paxos Standard Token is backed by United States Dollar in one to one proportion. If the Paxos Trust Company removes a dollar from their account, the PAX, backed by it, disappears. The tokens are also issued only at the time of their purchase by the customer. It means, that no matter what situation the company is in, any of its tokens could be exchanged for USD. The dollar deposits of the Paxos Trust are held in collateralized by U.S. government treasuries or FDIC-insured U.S. banks and are accounted for as a property of the tokens’ users.
Paxos is a ERC-20 standard-based token. It can be received and sent by users of an Ethereum wallet. Transactions are conducted alongside the rules of the Ethereum network and share all of its features including smart contracts for the elimination of the human errors.
Unlike fiat currencies, PAX is available 24/7 to ensure payments or exchanges of any type of asset. These include cryptocurrency, securities and asset tokens.
PAX can be used in a number of cases:
- As most stablecoins, it is suitable for cryptocurrency traders to use during the time of high volatility on the market
- It has an advantage over fiat currencies in terms of cryptocurrency exchange. It is faster and cheaper to use for exchange, which is of high utility in terms of purchases that need to be performed fast
- In can be used as a cash component of transaction at the time outside of traditional banking hours
PAX is an Ethereum-based ERC-20 token. Due to this fact, PAX was automatically listed on most of the Ethereum-supporting cryptocurrency exchanges. As a ERC-20 token, PAX is neither minable or stakable, it can only be bought or exchanged.
The whole structure of the PAX services is based upon a smart-contract that controls one to one exchanges between PAX and USD. As was mentioned earlier, the total supply of Paxos Standard Token is backed by fiat held in reserve. In order to mint and burn the token one supplyController address exists. All the operations considering availability of the coins is based on the actual movement of cash in and out of the reserve in accordance with the customers’ requests.
The Paxos Standard Token is open source and its code is available on the official GitHub page.
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