There is a piece of good news for all the cryptocurrency trading lovers in the USA. PayPal announced in November 2020 that all its registered account holders would be able to buy, hold, and sell cryptocurrencies, including Bitcoin, through its online platform.
PayPal further announced in October 2020 that it would give the account holders different cryptocurrency options to buy and sell, too- all this would happen through PayPal’s partnership with a major Crypto Brokerage.
So, it means to buy Bitcoin with PayPal; all you need to do is follow some steps. Here is a caveat, though, the Bitcoin buying through PayPal is only restricted to US users (minus Hawaii). But in the second half of 2021, PayPal will roll out this feature in some selected markets.
If you are from the US and looking into buying bitcoin from PayPal, here is how you need to get started. Plus, you should know about the fee structure, pros, and cons of buying Bitcoin with PayPal. Let’s get started:
How to Buy Bitcoin with PayPal?
Create a PayPal account
You can’t get started if you don’t have a PayPal account. And we aren’t talking about a simple account. In order to buy bitcoin using PayPal, you need to have a PayPal Cash or PayPal Cash Plus account.
If you don’t have a PayPal account, go on PayPal’s website and get your account registered. You will need to provide your credit card or bank account information and an email address for your account.
Go to PayPal’s Home Screen
From this step onwards, you will learn how to buy bitcoin with PayPal. The steps to follow are almost similar on PayPal’s website and PayPal’s application. For this tutorial, these steps are for purchasing bitcoin from the website. Don’t worry; we will cover some of the application steps, too.
Go to the home screen on PayPal’s website (alternatively, the payments screen in the application). Press on “Buy Bitcoin and more”, present on the top of the page.
Select the Desired Cryptocurrency
In this case, select the Bitcoin option. PayPal offers tons of useful information about cryptocurrencies and mentions all the risks involved in this volatile market.
Other than Bitcoin, PayPal currently offers Ethereum, Bitcoin Cash, and Litecoin. So, you have more than one option to trade in the future.
Tap on the “Buy” Button
Additionally, PayPal provides you with an option to select a present amount of Bitcoin to buy. You can tap on the buy button to choose the amount of Bitcoin you want to buy. PayPal offers its users to buy Bitcoin as little as $1 worth.
Agree to PayPal’s Cryptocurrencies Terms and Conditions
Before you can pay for it, you will have to confirm some account information and agree to PayPal’s terms and conditions of cryptocurrency purchasing.
Enter the Value to Purchase Bitcoin
To buy Bitcoin with PayPal, enter the amount you would like to buy. For example, $10, $20, $500, etc. A footnote on the pop-up screen will tell you that the exchange rate includes a spread and refreshes from time to time until you press on the buy or sell option. Click on the “Next” button to move to the next screen.
Choose Your Desired Bank or Credit Accounts
Another screen will pop-up that shows a bank account or credit/debit associated with your PayPal account. If you want to add another bank account or credit card, you will find options to add them too.
Review Your Purchase and Buy the Bitcoin
After pressing on the “Next” button, it is time to review your purchase. PayPal charges a transaction fee depending on the amount of Bitcoin you will buy. Usually, the transaction fees are relatively reasonable.
This fee ranges from 50 cents to 1.5% of the transaction if the purchase ranges under $25 and over $1,000 respectively. Whenever you are ready to purchase the Bitcoin, click on the “Buy Now” option.
- Click on the “Crypto” Option to See Your Purchase
After completing the purchase, the PayPal screen will show an updated version showing the amount of Bitcoin you bought and its current value. Go back to the home page and click the “Crypto” option to see your Bitcoin purchase. You will also find the option to buy and sell bitcoin.
When sold through the PayPal account, the Bitcoin cryptocurrency you bought will convert into fiat and be shown in the Cash Account balance section of your account. For all the charges details, PayPal has created its fee chart and conversion spread for the users to determine how much charges will potentially be applied to your transactions.
Features PayPal Offers When Buying Bitcoin
With its friendly interface and tons of amazing features for its users, PayPal also provides excellent perks when buying Bitcoin. Here are a few of these additional perks:
Ease of Use
Buying Bitcoin is quite simple and easy with PayPal. With its simple steps that are easy for users to understand, purchasing Bitcoin can be done in a few minutes. With every step you take, PayPal provides navigation and short messages to assist your every move.
PayPal provides high security to its users. That means every transaction you make for buying bitcoin will be safe and always return you with bitcoin worth your amount within a few seconds.
PayPal allows the users to own the bitcoins they purchased just by remembering their account’s password instead of getting in the hassle of remembering the long private key.
Safety from Fraudulent
PayPal gives 24/7 protection to its users from theft and scams. If you suspect any fraudulent activity in your account while purchasing the bitcoins, simply contact their customer service to resolve the issue.
Hidden Dangers and Restrictions While Buying Bitcoin
There are two sides to a coin, and the same case is with PayPal. Although PayPal strives to make every move secure for its users, bitcoin is a new service they provide. This service has its own set of disadvantages:
Only the PayPal users of the US (minus Hawaii) can access this bitcoin purchasing perk. No one else around the world can buy bitcoins with PayPal. PayPal will release its bitcoin service in the next half of 2021.
No Transferring of Bitcoins On or Off PayPal Account
An important point to note is that PayPal’s bitcoin purchasing and selling service is fairly new. As of now, PayPal restricts its users to only holding bitcoins and other cryptocurrencies on its platform.
You can’t transfer the bitcoins out of PayPal’s digital wallet other than making purchases. At this point, the bitcoin is converted into fiat during the sale. But even this feature isn’t available to the users yet. As PayPal has clearly mentioned, the user can’t transfer the bitcoins or other cryptos to other accounts on or off PayPal accounts.
It is unclear when the transferring feature will change and be available for the users. Till then, the effect it has on its buying and selling cryptocurrency process will remain adverse.
Considerably High Fees
The transaction costs can become significantly higher due to high PayPal fees when you buy bitcoin with PayPal on other platforms. Many platforms can charge as much as 10% of the transaction amount as a fee.
Another point to notice is that if you buy from another exchange and it doesn’t accept your local currency, the conversion fees may also be applied to the transaction. These are charges upon charges that prove detrimental instead of being beneficial.
No Ownership to Private Keys
The private key is a long string of alphabets and numerals or a private code for the user to access and manage their bitcoin. If a person loses the key, forgets it, or someone steals it, you can never access the crypto again. But, a private key is the only way to retain ownership.
On the other hand, PayPal doesn’t provide users with private keys, which gives you no ownership of your bitcoin. It means PayPal can decide to take away this control and your bitcoin from you at any time.
This could mean being forced to go through a tricky appeal process to get your bitcoin back. That doesn’t sound exciting at all. And with PayPal’s history of freezing users’ accounts, that sounds totally dangerous.
You Can’t Use Bitcoin for Anything
Since bitcoin hasn’t allowed the transferring of bitcoins on and off PayPal accounts, there is no way you can use it to buy anything from it. Plus, PayPal might lock you out of your account whenever they please. Purchasing various goods through bitcoin is available in other wallets but not in PayPal. You simply can’t do anything with your bitcoin once you buy it.
With that being said, the venture of Bitcoin with PayPal has only just begun. The future doesn’t seem bleak. If PayPal weren’t a reliable service, people all around the world wouldn’t be using its services. As time passes, you will find advancements in bitcoin purchasing with PayPal service.
Plus, you can easily buy bitcoin with PayPal from various p2p crypto exchanges as well. The process is simple, find a P2P (Peer-to-Peer) Bitcoin trading platform (the internet is full of them).
When you find your desired Bitcoin rate to buy from the list of traders displayed in front of you, click on their profile.
Create a deal with them and while paying for your Bitcoin, select the payment option like PayPal. Remember, the platform has to support PayPal as its Bitcoin purchasing option. Was that not simple? Within a few steps, you learned to buy Bitcoin with PayPal using other P2P platforms.