"Regulated stablecoins do not compete with bitcoin."

— Matt Odell

Welcome to the latest issue of the Bitcoin For Families newsletter. This issue covers PayPal’s launch of a stablecoin pegged to the US dollar.

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This week PayPal launched the PayPal stablecoin PYUSD pegged to the US dollar. It joins Tether USDT, Circle USDC, and Binance BUSD in the quest to extract wealth from unsuspected crypto enthusiasts.

All stablecoins are the same. They all run on top of Ethereum and therefore offer the same programmatic capabilities.

The only way that these companies differentiate themselves is by promising to be more trustworthy than the other ones. Because, and here is the crux of the matter:

PayPal, Tether, Circle and Binance are borrowing your money and you are implicitly deciding who is most likely to pay you back.

By the way, all these promises of programmatic benefits are hollow promises that depend on someone else building an app that uses their stablecoin and these programmatic capabilities to deliver something that is yet to be determined but that somehow will be of great value to you.

You can read about PYUSD here.

Stablecoins steal wealth from you

Why is PayPal doing this? The answer is here: When you buy one PYUSD, you’re giving $1 to PayPal and receiving in exchange a token that returns no interest to you and costs them nothing to issue.

Congratulations! You’re lending money to PayPal at zero interest rate!

PayPal then turns around and buys $1 worth of US Treasury with a 5% interest rate.

You can buy US Treasuries yourself and pocket the 5% interest rate. But instead you give them the money, they pocket the 5% and you assume the risk of PayPal defaulting on its reserves.

They make the money and you take the counterparty risk. Now you know why PayPal just launched PYUSD.

Bitcoin trumps stablecoins

People are lured to stablecoins because they want to protect their savings from the theft that inflation represents. They are very popular in Argentina or Turkey, where access to real US dollars may be limited and stablecoins provide an easy way to convert the useless peso or lira into what is perceived as a more trusted currency.

But you’re being fooled because your wealth is also stolen from you when you store it in US dollars thanks to inflation and you’re assuming the counterparty risk of PayPal, Binance, Tether or Circle not being able to maintain the parity of 1 PYUSD = 1 USD.

There is only one crypto currency that is free from inflation theft and free from all counterparty risks: Bitcoin.

Once you’re ready to move your savings into sound money, choose Bitcoin. It’s the only sound money where you have full control. All other cryptocurrencies are scamming you in one way or another and transferring the risks from the founders of the cryptocurrency to you.

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Notable notes

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Recommendations

Maxibitcoiner

Fantastic account to learn about Bitcoin for Spanish speaking audiences.

You can follow him here.

Bitcoin Breakdown

Bitcoin Breakdown gives you the TLDR summaries of the biggest events in Bitcoin. It's a very effective way to stay up to date with the industry.

Just this week he also covered PayPal’s PYUSD and reported how apparently PayPal has the option to freeze or wipeout your PYUSD funds unilaterally.

Check it out here.

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See you again next week! — Alejandro

This newsletter is for educational purposes. It does not represent financial advice. Do your own research before buying Bitcoin.