Paxos Standard Token (PAX): What Is It And How Does It Work?

The Paxos Standard Token (PAX) is probably one of the cryptocurrencies you have seen or heard about lately. What you should know is that PAX is a regulated ERC-20 stablecoin, which maintains 1:1 parity with the US dollar. Similar to Tether (USDT) in its function, PAX was issued by the Paxos Trust company on September 14, 2018 and is regulated by the New York State Department of Financial Services (NYDFS).

As an ERC-20 token issued on the Ethereum blockchain, the Paxos Standard Token (PAX) brings a lot of benefits of the technology and stability of fiat currencies together. As the blockchain news show, PAX results in a steady cryptocurrency which offers:

• Instant worldwide transactions
• Immutability
• Decentralized accounting
• 24/7 transactions

On top of all this, every PAX token is fully backed by equivalent amount of US dollars. This means that the coin can also be redeemed for USD at any time. However, as per the United States law, Paxos Standard is not classified as a security.

Here’s how tokenizing USD to PAX works:

1. User sends USD to the bank account of the token issuer.
2. The issuer creates the amount of PAX using the PAX smart contract.
3. The freshly minted PAX are delivered to the user. Meanwhile, their USD is held in a bank account.

Established in the light of the infamous Tether controversy when the Tether news showed USDT coming under scrutiny for printing Tethers out of thin air during the early 2018 crypto market bull run, the team at Paxos has noticed a major opportunity. This was how the Paxos Standard Token (PAX) was created as a stablecoin that is transparent and audited.

Speaking of which, the stablecoin news often show how Paxos issues and burns its tokens, using an audited smart contract that is inspected by smart contract auditor Nomic Labs. In addition to this, another regulatory body observes the reserves of PAX.

All in all, Paxos Standard Token (PAX) is a coin with big vision – a future in which blockchain is not a part of a major financial revolution, but an essential element of its evolution. In this big picture, the company wants to contribute and improve the economic ecosystem by creating a global frictionless network for simple, mobile and instant exchange of assets.