MINNEAPOLIS (WCCO) – Online shoppers now have a new way to spend digital money. On Tuesday, PayPal announced that customers could use cryptocurrency like Bitcoin as a means of payment.
The unique step asked us: How does it work to spend cryptocurrency online? And what does the future of e-commerce look like? Good question.
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When we’re not shopping in a brick and mortar store, we often spend our dollars online through credit cards or payment platforms like PayPal.
According to spendmenot.com, 361 million people use PayPal. That’s more than the US population. And a fifth of all online transactions in the country are done through PayPal.
And now PayPal users can not only link a bank account or credit card, but also link their cryptocurrency account.
How big is the announcement for PayPal?
“I think it’s pretty effective,” said Vivian Fang, professor of accounting at the University of Minnesota. “I think it helps legitimize Bitcoin as a currency.”
Although there are thousands of forms of cryptocurrency, only four can currently be used on PayPal, with Bitcoin being the most famous and valuable. The others are Bitcoin Cash, Litecoin, and Ethereum.
When a user wants to buy something online using cryptocurrency, PayPal converts their money as payment to a fiat currency such as US dollars.
Should people start investing in cryptocurrency because of this announcement?
“That’s a million dollar question,” said Fang. “Like any investment, it involves risks. There are many more institutional investors investing in Bitcoin, like Mass Mutual, which typically invests and uses safe assets. “
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Brandon Quittem, head of user acquisition at swanbitcoin.com, believes he should focus solely on Bitcoin as a crypto investment opportunity.
“Bitcoin is the only one that is really decentralized. It has the greatest security. It has the strongest brand awareness, ”he said. It is a problem to be highly profitable.
“It’s an average annual growth of about 200% over the past decade,” he said.
On Tuesday evening, a unit of Bitcoin is worth more than $ 58,000. When WCCO’s Heather Brown wrote a story about Bitcoin in May 2018, one unit was worth only $ 1,700.
The huge top means it is volatile. How should anyone invest?
Say Fang and Quittem, start small.
“Maybe that’s $ 50 a week, maybe $ 500 a month, whatever it suits you,” Quittem said. “This is not money you will need for bills this week or next month. Think of this as a long-term investment with a time horizon of more than five years.”
Given the potential for growth, some believe that issuing cryptocurrency to PayPal is not the right move just yet.
However, just giving people the chance to spend it is a turning point in the e-commerce world, a turn that Fang and Quittem will find slow.
“I don’t see Bitcoin or any other cryptocurrency as a primary medium of exchange anytime soon. The reason for this is that the US dollar works pretty well as long as you are in a western country. VISA works fine. We have these tools, ”said Quittem.
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“But it’s definitely a selling point for PayPal,” said Fang, adding that the platform has positioned itself as a pioneer in the use of digital currencies.