A common question we get asked over at TotalCrypto is how to buy bitcoin using Paypal. There are a few different ways to get Bitcoin using Paypal, although it is still not the simplest thing to do.
In this article, I will go through the different ways in which you can use Paypal to buy Bitcoin, with both step by step instructions and discussions of the pros and cons of each method.
Why Is It So Hard To Buy Bitcoin With Paypal?
A common theme that you will see throughout this article is that you cannot simply buy bitcoin using Paypal in the same way you would buy other things over the internet. As much as users are crying out for a simple way to buy cryptos using the same sort of Paypal checkout procedure they use elsewhere, this is currently something that Paypal is not supporting.
There are a number of ideas as to why exactly Paypal are unwilling to make this product work. Some people think that, as Paypal functions like an electronic currency, it is simply trying to cynically block its competition. After all, if cryptocurrencies were adopted on a wide enough scale that most e-commerce supported their use, Paypal would suffer huge losses. Whether or not this is true is hard to know, as Paypal is staying tight-lipped on the issue.
Another less cynical reason for the difficulties is due to the nature of cryptocurrencies. Bitcoin functions like digital cash. And like cash, Bitcoin is almost completely untraceable. This poses a problem for a service like Paypal because there is no public record of someone receiving Bitcoin that they buy. This opens the door for all kinds of scams and legal difficulties.
For example, imagine I buy bitcoin with a Paypal transfer. I send the money, receive the bitcoin into my wallet, but then say to Paypal I have not received the Bitcoin. The fact that bitcoin cannot be traced means that Paypal has a real headache working out whether or not this is true.
Also, Paypal is built around the idea that users can reverse charges – that is that they can cancel a transaction and get their money back. This is key to why Paypal is so popular, as it helps protect consumers when shopping online. However, like I pointed out above, the idea of undoing a Bitcoin transaction is really difficult. Specifically, the legal grounds around forcing someone to return bitcoin are really complex and murky – something that Paypal probably want to steer well clear of.
Finally, some have also pointed to the fact that Paypal has rules designed specifically to stop people using Paypal as a currency exchange. These are in place in part to prevent Paypal being used to launder money, but also for the previous reasons that returning different currencies can lead to difficult legal issues.
At his point then, you may have guessed that Paypal is not exactly in love with the idea of users buying Bitcoin. They have been known to warn users who do buy Bitcoin using Paypal to stop. Also, back in 2017 they suspended a number of Paypal accounts that they believed were being used to sell bitcoin. Luckily, this article will explain your options and let you know which ones allow you to avoid annoying Paypal.
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With all that said about the difficulty of integrating Bitcoin and Paypal, this also provides a huge opportunity for disruption, with lots of services out there trying to find ingenious solutions to the difficulties in getting Paypal and Bitcoin to work together. In recent years, we have seen a number of developments in this field, as exchanges and other crypto companies work to find ways around the obstacles.
This space is an area of crypto that will be continually evolving and changing because it is a huge opportunity for any company that can get it right. This article presents some of the best solutions out there for getting into cryptocurrencies using your Paypal account.
Investing In Bitcoin Using Paypal On eToro
One way that some companies have found to work around the difficulties inherent in integrating Paypal and Bitcoin is through a type of investment known as a contract for difference (CFD). Essentially, using a CFD you can invest in an asset without actually buying that asset. Instead, you enter into a contract with a broker. The broker acts as a middleman, allowing your investment to track the price of the asset. In some sense, it is like betting on the price of the asset – when it goes up you profit, when it goes down you lose.
This method provides a handy way to get around the issue of Paypal and Cryptocurrencies because the broker acts as a middleman, so Paypal accounts never directly buy bitcoins.
If you are outside of the US, eToro is the place to do this. We have an extensive guide to using eToro here, so if you are interested make sure to read that too.
So, if you have an account on eToro, you can use a Paypal account to invest in Bitcoin. However, it is important to realize that although your investment is exposed to the fluctuations in the price of Bitcoin, you never actually own any Bitcoin. So, any profits made through your investment can only be withdrawn in fiat currency.
This can be beneficial. If you are an investor looking to diversify your portfolio by including cryptocurrencies but do not feel comfortable with the nitty-gritty of setting up a Bitcoin wallet, eToro and CFDs are a great way to get involved in cryptocurrencies without actually buying and storing any cryptocurrency yourself.
Furthermore, eToro offers a really broad range of asset classes – you can invest across:
- Fiat currencies
- As well as a host of cryptocurrencies (BTC, ETH, BCH, XRP, Dash, LTC, ETC, ADA, IOTA, XLM, EOS, NEO, ZEC, BNB.)
Get Exposure To Bitcoin Using PayPal.
Still, for most reading this article, I would imagine that you actually wanted to buy Bitcoin that you could withdraw as Bitcoin using your Paypal account. So, while the eToro offering is great, it does not quite satisfy the demand for people wanting to purchase cryptocurrencies directly using a Paypal account. For that, you will need to read on…
Enter Paxful. This is a peer-to-peer cryptocurrency exchange, allowing users to buy and sell cryptos directly to one another within the Paxful marketplace. In this sense, it functions like other e-commerce marketplace economies, like Amazon or eBay, where the site hosts the marketplace but does not mediate transactions directly.
There are lots of peer-to-peer exchanges out there. For some, these exchanges are more fitting with the initial spirit of Bitcoin, because they are decentralized in the same way that Bitcoin is. Of course, if you are using Paypal to buy your Bitcoin you do essentially forgo any anonymity though, because your Paypal account is directly connected with your bank.
- Buy Bitcoin With: Gift cards, Western Union, PayPal, Skrill, Neteller ApplePay, AmEx & more.
- Get Bitcoin Instantly: Paxful eliminates the need to wait around for days for your deposit to hit your account.
- Easy To Use: The peer-to-peer market is easy and simple to use.
Buy Bitcoin Quickly With PayPal.
Using Paxful to buy Bitcoin with Paypal
To use Paxful, you will first need to make an account. You create an account with your email address and a strong password. Make sure the password you select is unique, that is you do not use it anywhere else online. Also, you’ll want to choose a long password with upper and lowercase letters, numbers and wildcards (!,£, $, &, etc.), to keep your account secure.
Once you make an account, you will immediately receive a free bitcoin wallet with your account. This is the wallet you will use if you buy and sell bitcoin on Paxful. You can, of course, withdraw from this wallet to another wallet. In fact, Total Crypto always recommends that you store your cryptos offline, in cold-storage, to increase security.
Paxful’s wallet, and interface as a whole, is designed so that complete crypto beginners feel at home. The idea is that they have made everything as easy as possible to help beginners. This does mean that the wallet does not have some of the more advanced security features, like seeds, that we see with other wallets. However, this should not be a problem, provided that you withdraw your cryptos to a separate wallet once you are finished trading on Paxful.
Also, as a precaution, you should definitely enable two-factor authentication (2FA) on your Paxful wallet, to make it extra secure against hackers.
Once you have an account, you are ready to start browsing the Paxful marketplace to find deals. As it is a peer-to-peer site, you will be buying your bitcoin from another person, who has listed that they are selling Bitcoin on the site.
The central panel of the marketplace screen shows Open Offers – that is live offers from people who are willing to sell bitcoin. You will see listed the seller’s username, next to which is a score that tells you how many positive transactions this person has had. It’s important that you choose sellers with high numbers here, as this means that they have a good reputation. You can click on the seller’s name to bring up a more detailed view of their account, including feedback from previous deals. It is important to check this, to make sure that the account is legitimate. You want to be looking for sellers with overwhelmingly positive reviews – in the region of 98% and above. This way, you know you are dealing with a real and legitimate account.
You can filter all the available offers to find those who accept Paypal by selecting Paypal in the ‘Pay using’ window on the left of the screen.
This will display users who accept Paypal transactions for Bitcoin. Once you have done that, simply select the seller you want to use. This brings up the offer screen, where you can input how much you want to buy and then hit BUY NOW to get started.
Many sellers include the option of live chatting with them as you go through the process, which is a good way of ensuring that both of you get everything right so the sale is a success.
To protect both buyers and sellers, the buyer’s money is placed in secure escrow by Paxful until the seller’s transfer of bitcoin is verified. Once this happens, the funds are released to the seller. Different sellers will demand different levels of protection – many will want your Paypal account to be verified and also to see some photo ID before they enter into the transaction.
So, as you can see, Paxful is a safe and secure way to buy bitcoin using Paypal. They have many procedures in place to protect you from being scammed, especially as a buyer because they hold your funds in escrow until you can confirm that you received the funds.
As a buyer, Paxful themselves take no fees from you. However, the seller sets their own fee, so these can vary depending on who you buy from. Sellers also pay a ‘mining fee’ to Paxful whenever they move amounts of bitcoin, however, if you are only using Paxful to buy bitcoin, you don’t need to worry about this.
Although Paxful does have a range of features in place to help you feel comfortable in trusting the people you deal with, like reputation scores and holding funds in escrow, you still do need to be vigilant when you use the service. After all, it is decentralized, so if you do make a mistake and end up getting scammed it is almost impossible to undo a transaction. This may put some people off using Paxful’s service.
The difficulties surrounding getting Paypal and cryptocurrencies to integrate are probably not going away any time soon. However, this is an area of constant innovation and disruption, as everyone in the crypto space knows that if they can find a way to make it easy to buy bitcoin using Paypal they will be on to a winner.
As it is, eToro’s CFDs are a great way to use Paypal to invest in Bitcoin. Even though you don’t actually buy any usable cryptocurrencies, you can still enjoy the benefits of investing in cryptocurrency.
For those who do want to go further and buy bitcoin using Paypal, Paxful offers a great and secure peer-to-peer service for buying bitcoin direct from other users. However, as with any decentralized system, the onus is on you as a user to be extra vigilant and make sure you do not fall for a scam – because if you do it will be very difficult to get that money back.