By Jeff Wagner

MINNEAPOLIS (WCCO) — Online shoppers now have a new way to spend digital money. Tuesday, PayPal announced it will allow customers to use cryptocurrency, like Bitcoin, as a form of payment.

The unique step had us wondering: How will spending cryptocurrency online work? And what is the future of e-commerce? Good Question.

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When we’re not shopping in a brick and mortar store we’re often spending our dollars online via credit cards or payment platforms like PayPal.

According to spendmenot.com, 361 million people use PayPal. That’s more than the U.S. population. And one-fifth of all online transactions in the country go through PayPal.

And now instead of just linking a bank account or credit card, PayPal users can link their cryptocurrency account.

How big of an announcement is this for PayPal?

“I think it’s pretty impactful,” said Vivian Fang, an accounting professor at the University of Minnesota. “I do think that it helps legitimize Bitcoin as a currency.”

Although there are thousands of forms of cryptocurrency, only four are currently useable on PayPal with Bitcoin as the most well-known and valuable. The others are Bitcoin Cash, Litecoin and Ethereum.

If a user wanted to buy something online with cryptocurrency, PayPal would convert their funds into fiat currency, such as U.S. dollars, as payment.

Because of this announcement, should people start investing in cryptocurrency?

“That’s a million-dollar question,” said Fang. “Like every investment, it has risks. There are many more institutional investors that’s investing in bitcoin, like Mass Mutual which typical invests and goes for safe assets.”

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Brandon Quittem, head of user acquisition at swanbitcoin.com, thinks people should solely focus on Bitcoin as a crypto investment opportunity.

“Bitcoin is the only that is truly decentralized. It has the most security. It has the strongest brand recognition,” he said. It’s also proven to be highly profitable.

“It’s averaging about 200% annual growth over the last decade,” he said.

Tuesday evening, one Bitcoin unit is worth more than $58,000. When WCCO’s Heather Brown did a Good Question segment about Bitcoin in May 2017, one unit was worth only $1,700.

The huge spike means it’s volatile. So how should someone invest?

Fang and Quittem say start small.

“Maybe that’s $50 a week, maybe that’s $500 a month, whatever it suits you,” said Quittem. “This is not money you need for the bills this week or next month, think of this as a long-term investment, five-plus year time horizon.”

Because of the growth potential, some feel spending cryptocurrency on PayPal isn’t the right move just yet.

However, simply giving people the option to spend it is a turning point in the e-commerce world, a turn that Fang and Quittem feel will happen slowly.

“The reason for that is the U.S. dollar works pretty well as long as you’re in a western country, VISA works well. 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 usage of digital currency.

Jeff Wagner