actually this is a good question. In 1993 Jon Postel registered most of the single letter domains and dedicated them to the public domain. Only 4 of the domains were already registered out of 144~ he registered.
x.com was one of those all ready registered. and was grandfathered in which is which is why paypal is using it.
Read this link. The first part of it should answer your question.
http://lists.elistx.com/archives/int.../msg00085.html