Buying Bitcoin with PayPal is possible but it may not be the best way
PayPal is a useful online banking service that can be used when buying and selling almost anything instantly, even Bitcoin. Unfortunately, support in the cryptocurrency space for buying Bitcoin with PayPal isn’t as widely accepted as other payment methods but it is possible.
Here’s what you need to know about using PayPal to buy Bitcoin.
Understanding Bitcoin and Cryptocurrency
Bitcoin is one type of cryptocurrency, a form of advanced currency that’s powered by a technology called blockchain. Blockchain technology makes cryptocurrencies harder to hack than traditional money networks which is why it has such a loyal following in tech circles.
Bitcoin, and other cryptocurrencies, are completely global and are not reliant on any one country or region. Cryptocurrencies have no physical form and are purely digital currencies. They cannot be saved in traditional bank accounts as all the cryptocoins exist simultaneously online within their relevant blockchain.
Each cryptocurrency has its own unique blockchain.
Ownership of coins is unlocked by a software or hardware wallet. A Bitcoin wallet is needed for receiving and sending Bitcoin, however, some services like Coinbase provide online wallets that users can access and use for storing cryptocurrency and making transactions.
Some cryptocurrencies have similar names but they’re all completely different from each other and use their own unique wallets. For example, Bitcoin is different from Bitcoin Cash and Bitcoin Gold.
How Does PayPal Work?
PayPal is essentially an online bank. Creating a PayPal account is free and, after doing so, you can use it to send and receive funds to and from other PayPal users.
A PayPal account can be connected to a credit card or bank account for deposits and withdrawals and many online stores accept PayPal integration for accepting payments.
Can I Convert PayPal Credit to Bitcoin?
PayPal isn’t a type of currency. PayPal is an online banking service that can store funds in numerous real-world currencies such as the Japanese yen, British pound, or American dollar. PayPal doesn’t support Bitcoin transactions or storage and doesn’t offer a cryptocurrency conversion tool.
PayPal can, however, be used to buy Bitcoin in select locations.
How to Buy Bitcoin With PayPal With a PayPal Debit Card
This is by far the easiest way to buy Bitcoin using a PayPal as it will allow you to use your account credit with every Bitcoin service that accepts credit card payments, which is pretty much all of them.
The PayPal Prepaid MasterCard is a free debit card that’s available to PayPal users in the United States. Each card is given a unique MasterCard credit card number for making purchases and the card is linked to a user’s PayPal account’s funds for payment. This can be a good solution for those that want the security of the larger companies like Coinbase but are unable to obtain a credit card.
How to Buy Bitcoin With PayPal on VirWox
This is one of the most-popular ways for using PayPal to get Bitcoin but it’s also one of the more convoluted methods. VirWox is an online trading platform for digital gaming currencies and is mostly used for selling and buying Second Life Lindens (SLL), the currency for the Second Life online video game.
Using VirWox, you’ll need to buy SLL on the platform using PayPal and then trade the SLL you bought for Bitcoin.
VirWox’s PayPal functionality has been known to go down from time to time but it usually returns within a day or two.
Create a free VirWox account via the register link on VirWox’s main page, confirm your email address, and login.
Click on the deposit link within the Account Balance box in the top-left corner.
Within the PayPal Express Checkout box, type in the amount you want to deposit into your account for trading and click on the Check out with PayPal button.
From the Exchange box on the left menu, click on USD/SLL to trade your deposited dollars into the SLL currency.
After the trade has completed, click on BTC/SLL to trade your newly obtained SLL into Bitcoin.
BTC is the unique code given to Bitcoin on all trading platforms.
Under the My Account menu on the left side of the screen, click on Withdraw.
On the next page, enter the total amount of Bitcoin traded and your Bitcoin wallet address in the relevant fields. Your Bitcoin should appear in your wallet within a few seconds to 30 minutes depending on the amount of transactions happening at the time.
How to Buy Bitcoin With PayPal on LocalBitcoins
LocalBitcoins is an online service for matching individual buyers and sellers, in this case connecting you with Bitcoin sellers that accept PayPal. Because of the one-to-one nature of the site, it’s incredibly important to only do business with users with a high quality reputation.
You can view a user’s reputation by looking at the percentage within the brackets after their username. 100% means they’re generally trustworthy while those with a lower score could potentially have a history of scamming buyers.
From the LocalBitcoins main page, enter how much you want to spend, your currency (USD), your preferred seller location (United States), and your payment method (PayPal) and click the Search button. You may choose other locations or currencies if you like.
On the next screen, will be the list of sellers sorted by their accepted exchange rate, cheapest to more expensive. Click on the Buy button to the right of the one you want to do business with.
Don’t forget to check the reputation of the seller within the brackets next to their username.
Under How much you wish to buy?, confirm the amount of money you wish to spend and the number of Bitcoin you want to receive. The fields should be filled with your previous preferences but will update automatically if you make any changes so there’s no need to perform a new search.
Like other currencies, you don’t need to buy a whole Bitcoin. Similarly to how you can obtain $0.12, you can also by a fraction of a Bitcoin such as 0.001 or 0.314 and make purchases with it.
When everything is as you’d like, click on the green Submit trade request button.
The seller will now receive your request and will choose to accept or reject it. This can happen instantly or could take up to a day if the seller is offline or dealing with a large number of trades.; Depending on the seller, you may be asked to provide a copy of some ID to prove your identity or even a photo of yourself holding the ID. Some sellers may even reject your proposal if you don’t have a positive reputation score yet so as to protect themselves from potential scammers. “Only communicate with the seller on the LocalBitcoins website. This will make it easier to report a seller if he or she scams you.”
- If accepted, the seller will give you instructions for where to send your PayPal payment and will also request your Bitcoin wallet address for sending you your Bitcoin.
Reasons Not to Purchase Bitcoin With PayPal
While buying Bitcoin with PayPal may be your preferred method of getting your hands on this popular cryptocurrency, there are several important points to consider before doing so.
- PayPal isn’t widely accepted on mainstream crypto services. There are some online exchanges and services that will trade you Bitcoin for a PayPal transaction but few of these are as reliable or trustworthy as major companies like Coinbase, CoinJar, or Coinmama.
- PayPal fees can be high. It’s important to remember that PayPal charges fees for each transaction and charges even more when currency conversions are involved, usually at a rate higher than the bank average.
- PayPal isn’t as private as you think. Some people believe that buying cryptocurrency with their PayPal account is more private than using a traditional bank but this is a misconception. PayPal will report accounts with activity over a certain threshold to the IRS and it’s also legally obligated to hand over transaction records for any potential future investigation if asked. PayPal is not an effective way to hide your crypto from the tax man.
Alternatives to Buying Bitcoin With PayPal
PayPal is one of the least cost-effective methods of buying cryptocurrency and there are a variety of alternative methods worth checking out. Here are three of the best ways to get some Bitcoin.
- Buy Bitcoin with your credit card or bank account. Paying for Bitcoin with your bank account or credit card can be much cheaper than using PayPal and both methods are widely accepted on sites like Coinbase and CoinJar.
- Use a Bitcoin ATM. Bitcoin ATMs are available in most major cities and can be used to sell or buy Bitcoin using traditional fiat money.
- Trade other cryptocoins for Bitcoin. If you own other cryptocurrency such as Ripple or Litecoin, you can trade it for Bitcoin using a service like Shapeshift or an online crypto exchange.
There’s still no easy process that allows you to buy actual Bitcoins (not just for price speculation) with PayPal. My personal suggestion is to use a different payment method if possible. If you have to use PayPal, the methods listed here will work, but get ready for some hefty fees. Have you had any experience with buying Bitcoins with PayPal? If so, I’d love to hear about it in the comment section below.