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Paxos Standard

Paxos Standard (PAX)

4 min reading

Have you ever heard about Paxos standard? Here is a write-up for you!

what's Paxos

Paxos Standard (PAX)

Paxos Standard (PAX)

In the crypto space, price instability is a major factor that hinders many from adopting cryptocurrency as the ultimate currency of exchange. Market volatility makes the use of these currencies for day-to-day activities very difficult. People always have a need to either fulfill a transaction, make an international transfer, or, better still, purchase an asset. Even though transactions using cryptocurrency are quite fast and less costly, the fluctuation in prices does not push many to get into the crypto business. However, because this has become an issue, developers have sought a way to salvage the situation by creating stablecoins. There are some stablecoins already in circulation. We have written articles about USDT, True USD, and USDC. We will reveal another stablecoin in this article, which is none other than the Paxos Standard (PAX) stablecoin.

What is PAX?

Paxos Standard is a fully backed U.S. dollar collateralized stablecoin released by a Paxos Trust company in September 2018. This company tries to offer an alternative to Tether stablecoin. PAX is an ERC-20 token issued on the Ethereum blockchain. However, given that it is a stablecoin, each Pax will never exceed 1USD. This means you can always make crypto gains without first converting to fiat. We understand the controversy that came with tether and because of that, other stablecoins have emerged as a substitute to Tether.

History of Paxos Standard

Paxos Standard is a stablecoin under Paxos company. The company was founded in 2012 by Charles Cascarilla and Rich Teo as an itBit Bitcoin exchange. Over the years, precisely in 2015, the company’s name was changed from itBit to Paxos Trust Company. In that same year, the New York’s Department of Financial Services granted Paxos a limited-purpose trust charter, making it the first company to be approved to offer crypto products and services. In September 2018, Pax launched the Paxos Standard stablecoin and in 2019 they introduced PAX Gold, the first regulated gold-backed token. 

How does Paxos Standard Token work?

Paxos was designed primarily to bring a resolution to the high volatility in the crypto space, remove friction in transactions, and then become a reliable payment method for crypto assets and other blockchain assets. Even though this payment is only in the U.S., they intend to spread to other countries with unstable national currencies. With Paxos, just like other stablecoins a user sends USD to a token issuer’s bank account. The issuer then creates an equivalent amount of PAX using the PAX smart contract. The minted PAX is delivered to the user’s account and the USD sent at the beginning of the transaction held in the bank. In case the user needs USD, the same steps will be applied but the PAX will be burned so that there is no room for over circulation of tokens. 

In conclusion, PAX, like the other stablecoins, has a lot to offer their users, as Paxos is an accredited crypto platform. It offers a guaranteed cash deposit and there is no need for any fear of fraud. In addition, the tokenization and redemption process are quick and easy to navigate. For security, Paxos undergoes auditing by Withum editing firm. Paxos freely issues and redeems Pax. Meaning no fees are attached to any transaction.