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Pax dollar price prediction: What is pax dollar (USDP)?

13:12, 18 August 2022

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The pax dollar stablecoin logo and USDP ticker
USDP is designed to be worth $1 – Credit: paxos.com

If you want to know “what is pax dollar (USDP)”, then we can tell you that it is a stablecoin, which means that it is designed to be worth $1.

While that might mean that a pax dollar price prediction might seem, for want of a better word, predictable, it does not mean that there aren’t things to take a look at.

What are stablecoins?

First, let’s take a look and see what it is that stablecoins are and what they do. 

The thing about cryptocurrencies is that, on the whole, they are very volatile. If you look at the price histories of most coins or tokens, you will see big highs and deep lows, often taking place within a pretty short space of time. This is something that can and does put potential investors off. After all, if you have a commodity where there is no real way of knowing what could happen to it tomorrow, let alone in five years’ time, then you might be tempted to put less money into it than you otherwise might, or else you might invest in something else entirely. 

On the other hand, though, the reason that cryptocurrency exists is because there are also potential issues with traditional, fiat currency. Crypto evangelists often argue that there are potential concerns about privacy, or rather the lack of privacy, surrounding traditional fiat currencies. 

There are also some people who believe that there is a collective reliance on centralised financial institutions, such as banks and regulators, which does not benefit individuals. While there are also concerns about people who don’t actually have bank accounts, the people who, at least in theory, the whole world of decentralised finance (DeFi) was designed to help. 

The potential slow speed of some fiat transactions is something else that comes in for frequent criticism, as well as high fees charged to those who need to send money internationally. These issues should not be a problem when it comes to crypto, at least in theory, although the growth in platforms designed to avoid high ether (ETH) fees on the Ethereum blockchain might suggest that may not always be the case.

In order to find a compromise, stablecoins were set up. The idea is that a stablecoin is usually pegged to a fiat currency, usually the US dollar. This means, at least in theory, that a stablecoin has the stability associated with fiat currencies, while it also has the apparent advantages of a crypto. 

One thing to point out is that stablecoins are, on the whole, not regulated. While it is common for cryptocurrencies in general to have a lack of governmental oversight, this is a bit more of an issue for stablecoins. 

This is because there is the possibility that, in the United States at least, there remains the possibility that they could come under regulation. A report from the Reuters news agency in July 2022 indicated that American lawmakers were planning a bill that would regulate stablecoins, following the depegging of the UST stablecoin. This in turn caused not only the collapse of the associated LUNA cryptocurrency, but a significant downturn across the entire crypto market in May this year.  

Pax dollar explained

The pax dollar stablecoin, also known by its ticker handle of USDP, aims to show that it is possible to have a successful cryptocurrency that stays within the rules and can thrive under regulation. 

The crypto, which was created by the Paxos blockchain infrastructure company, is designed to stand at a dollar, but what makes it somewhat different is that it is approved by the US Securities Exchange Commision (SEC) as well as Paxos itself having the conditional approval for a national trust bank charter from the Office of the Comptroller of the Currency. The stablecoin, along with its sister crypto pax gold (PAXG), which is a stablecoin pegged to the price of gold, has been given the OK by the New York State Department of Financial Services.

Pax dollar, which came onto the open market in 2018 and was known as pax standard (PAX) until August 2021, was created by Paxos’ founders, financial analysts Charles Cascarilla and Rich Teo. 

Paxos has hired auditing firm Withum to issue an attestation report as to the state of its finances at the end of every month. The most recent available report at the time of writing (18 August 2022) was issued on 30 June and said that there were 855,098,266.74 USDP in circulation, which were backed by $855,098,266.74 worth of assets, comprising dollars and “amounts backed by US Treasuries”. 

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The crypto’s whitepaper says: 

“Pax dollar is designed to leverage the new innovations of blockchain technology to improve the function of money, while being supported by traditional infrastructure that can ensure it is trustworthy. In other words, as a regulated trust company and financial institution issuing a token backed by US dollar deposits, Paxos can offer a token that combines the trust and stability of fiat currency with the utility and immediacy of digital assets.”

Pax dollar price history

USDP price history from launch to present

The pax dollar stablecoin price history from 2019 until June 2022

Although pax dollar is intended to be worth $1 at all times, this has not always been the case. If we look at the USDP price history, we can see that the coin sank to an all-time low of $0.8728 on 13 March 2020. This depegging was caused in part by sinking markets across the board in the wake of the Covid-19 pandemic. Likewise, a freakish growth spurt saw it trade at an all-time high of $2.02 on 16 November 2021. 

Nevertheless, at both times, it returned to being, if not at $1 exactly, then as close to it as virtually made no difference shortly after. Despite that, it is very important to realise that past performance should never be taken as any indicator of future results, so you will still have to be cautious if you want to invest in pax dollar. 

For what it’s worth, as of 18 August 2022, USDP stood at $1. According to CoinMarketCap, there were 945,642,940.11 USDP in circulation, representing the total supply. That meant that the coin had a market cap of around $945m, making it the 53rd largest crypto and the sixth largest stablecoin by that metric. In the 24 hours from about 12.15 BST (UTC +1) on 17 August, there had been $3,339,928 worth of USDP traded.

Pax dollar price prediction round-up

In terms of making a pax dollar price prediction, the hope is that it will trade at $1 and stay there. That said, there are still some being made, 

For instance, at the time of writing on 18 August 2022, DigitalCoinPrice had a pax dollar price prediction for 2022 of  $1.01 by the end of the year, while its pax dollar price prediction for 2030, some eight years later, was the same. 

At the same time, CoinArbitrageBot was also pretty sober, suggesting that the stablecoin could trade at a fraction of a cent under $1 in its pax dollar price prediction for 2025. 

When considering a USDP price prediction, it’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin or token’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts and algorithm-based forecasters can and do get their predictions wrong. It is also important to note that, while USDP is designed to be worth $1 at all times, there have been times when this has not been the case and, sadly, it is not that uncommon for a stablecoin to become depegged. 

If you are considering investing in cryptocurrency coins or tokens, we recommend that you always do your own research. Look at the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. Keep in mind that past performance is no guarantee of future returns. And never trade with money that you cannot afford to lose.

FAQs

How many pax dollar are there?

As of 18 August 2022, there were 945,642,940.11 USDP in circulation, representing the total supply.

Is pax dollar a good investment?

It is hard to say whether USDP is a good investment or not. While it is meant to be worth $1, there have been plenty of stablecoins that have, ultimately, lost their value. It is important to see how stablecoins behave and keep in mind the effects of any potential regulation on the sector, as well as the performance of the crypto market as a whole. 

In volatile cryptocurrency markets, it is crucial you do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether the pax dollar  is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors. Keep in mind that past performance is no guarantee of future returns. And never invest money that you cannot afford to lose.

Will pax dollar go up?

Since USDP is a stablecoin, pegged to the US dollar, the intention is that it should stay at $1 for as long as it can. If it does go up, that means that something has gone badly wrong somewhere. Likewise, there is always the risk that, like the ill-fated UST algorithmic stablecoin, it could end up collapsing. 

In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether USDP is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors. Keep in mind that past performance is no guarantee of future returns. And never invest money that you cannot afford to lose.

Should I invest in pax dollar?

With USDP being a stablecoin, a lot will depend on what sort of regulation gets put on the sector, as well as how stablecoins and the crypto market behave as a whole going forward. 

In addition, whether you should invest in pax dollar is a question that you will have to answer for yourself. Before you do so, however, you will need to conduct your own research and never invest more money than you can afford to lose because prices can go down as well as up.

Further reading:

 

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