Litecoin is PayPal Coin

You can buy crypto currencies with your PayPal balance.

I'm the proud owner of one whole LTC.


Do I recommend doing this? No

The issue is that your crypto is stuck on PayPal. You have no way to transfer it to a CeFi network like Blockfi or Celcius to earn interest and use as collateral against loans. You also can't transfer it to your own private wallet to lock it down. 
 

So why did I buy LTC?

With Bitcoin and the potential for it to revolutionize capital markets makes it an asset you'll want control over. If you were able to purchase BTC from PayPal and then move it to your own private wallet, then I would have no issue suggesting you take a look at PayPal.

In particular, what really stood out to me was how they state that your crypto is protected and that any hacks you'll be refunded:

"There’s no digital key to lose and we’ll replace your crypto in whole if your account gets hacked."

But because you can't transfer funds, I don't feel comfortable having BTC locked away in PayPal. So instead the options are to buy Litecoin, Bitcoin Cash or Ethereum.

Litecoin, Bitcoin Cash and Ethereum on PayPal

Bitcoin Cash is a fork of the original network to enable a larger block size and thus faster transactions. As BTC dominance continues, Bitcoin Cash simply won't become the dominate layer 1 money supply.

This is not to say Bitcoin Cash is bad, it's just that money is a winner takes all market. We used Gold for 5,000 years and not much else as layer 1 money. So, as far as I can tell Bitcoin Cash has potential to stick around as a payment method for now, perhaps it will be a layer 2 at some point where it's used for small transactions.

As such, it too is pointless to lock away in a PayPal account as you can't use it to buy anything and it's an asset that won't appreciate that much as the lighting network for Bitcoin develops.

Next we have Ethereum. I actually want to use Ethereum for various dapps that are built on the network. I can't do that if it's locked away. Also, you can earn 5% or more interest on various networks with Ethereum while with PayPal you get nothing. So I don't see the value in being able to purchase ETH through PayPal.

So that leaves us with Litecoin, LTC. The original fork of Bitcoin. It's a similar currency to Bitcoin but it uses a different cryptographic algorithm called Scrypt. As it's an original "alt" coin it always gets lumped in with BTC and has the potential to appreciate in price.

So for me, if I'm going to buy something just for a little fun, Litecoin appears to be the best option for an account where your crypto is locked away and the only thing you can do is sell it in the future (which disqualifies BTCH and ETH).

Taxes

Don't forget about taxes. It may be tempting to convert your PayPal balance into a crypto asset, but if you need that money you're going to have to sell it back into dollars in order to transfer it to your checking account which is a taxable event. So if you do buy LTC, plan on holding it for at least a year so you pay short term capital gains.

Asset appreciation

One potential advantage of buying LTC through PayPal is the potential for it to appreciate in value. When I bought my singular Litecoin it set me back $200. The next day after I purchased, it dropped in price to $185, resulting in a $15 loss.

Now, a month later LTC has spiked again to over $250. I made $50 for doing pretty much nothing other than taking a small risk.

Buy things with LTC

 Last thing to bring up is that you can make purchases with your crypto, in this case Litecoin when using PayPal. I recently bought the domain name "ethereumforge.com" and could have bought it with my crypto in my account.

Conclusion

If you're a bit more risk tolerant than me, you could exchange your PayPal balance for BTC, LTC, ETH or BCH. Instead of your balance sitting there doing nothing, you could instead own something that could appreciate in value.

However, as I stated Bitcoin is too valuable to have locked away in PayPal. You can earn a great interest on Ethereum and use it to pay for gas fees and Bitcoin Cash is another alternative, but I chose Litecoin simply for the fun of owning 1 LTC in PayPal.