PayPal was revolutionary when it first appeared in 1998 as one of the first online payment processors. Flashforward over twenty years later and the payment powerhouse continues to be a leading method to buy anything online. The ease and convenience of its use allows you to buy virtually anything anywhere. As someone looking to dip their toes into the world of cryptocurrency and being one of the 346 million people with a PayPal account, one question naturally comes to mind: Can you buy bitcoin with PayPal?
Can I buy bitcoin with PayPal?
As simple as PayPal usually makes it for you to purchase things, the answer gets complicated when it comes to Bitcoin. Up until recently, it wasn’t possible to buy bitcoin with PayPal directly.
Intermediary services allowed you to purchase bitcoin, and some of those companies accept PayPal as a form of payment. Many popular trading platforms and peer-to-peer marketplaces fall into this category.
In October, PayPal announced that this is changing. It’s now possible for you to buy bitcoin directly in your PayPal account. However, this feature is severely limited. Only account holders in the U.S. can purchase bitcoin, and it will only be possible to buy and hold the currency.
You won’t be able to make purchases or trade cryptocurrencies through PayPal until at least 2021. While you can’t currently use crypto as a way to pay or send money on PayPal, we like the way you think! Many people have big dreams for the future of crypto and so do we.
Even though you are making the purchase, PayPal will control the private keys. These keys are what keeps your currencies secure and serve as proof that you own the coins. Any time cryptocurrency changes hands, there will be a public address and a private key.
People can send money to your wallet without the key, but they would need the key to access it. If you think about your wallet like a mailbox, anyone can put letters into the slot, but only you have the key to unlock what’s inside.
By controlling these keys, PayPal has ultimate authority over what happens with your crypto. The company can take your Bitcoin away from you on a whim and you face a difficult appeal process to have any chance of getting it back.
You only have the illusion of control over any Bitcoin you currently purchase from PayPal, and you are not allowed to transfer your assets to a wallet that you control.
Wire transfers from a bank are more secure but take longer to complete. Buying cryptocurrencies with a credit or debit card is just as easy, and you have more freedom to spend your Bitcoin. Using other methods to acquire Bitcoin through exchanges or marketplaces give you full control over private keys and encourage you to store them in any wallet you choose.
How do you purchase bitcoin using PayPal?
Trading platforms and exchanges are digital marketplaces where traders buy and sell cryptocurrencies. These exchanges act as the intermediary between buyers and sellers, like a brokerage. To purchase bitcoins on one of these platforms, you deposit money into your account; then, you use your account balance to trade Bitcoins. The process is fast and convenient and makes it easy for beginners to start purchasing cryptocurrency.
Peer-to-peer marketplaces work by connecting people who have Bitcoin with people who want to buy Bitcoin. Both work together to determine a price and a payment method, and then the bitcoin goes into escrow until the money transfer goes through. The marketplace takes PayPal as a form of cash for transactions.
The platform doesn’t take fees, and these marketplaces make it easier for people to get paid how they want. Users can directly exchange hundreds of fiat currencies, gift cards, and other cryptocurrencies.
What is PayPal’s position on Bitcoin?
Up until the release of its services, the payment giant was ambivalent towards cryptocurrencies. PayPal wasn’t taking these currencies seriously and made little effort to make them available.
The anonymity of the blockchain-powered Bitcoin means that many companies are wary about accepting it. Even though using Bitcoin to launder money digitally isn’t a common practice for most cryptocurrency users, the possibility has held crypto back in the past. That, along with the currency’s volatility, have been obstacles for Bitcoin being accepted by mainstream retailers.
The change of heart that the company is having with cryptocurrencies will have profound effects on the market. The most exciting announcement may not be that PayPal has its own cryptocurrency wallet, but that companies that use PayPal to process payments will be able to accept Bitcoin. This opens up 26 million new retailers to accept Bitcoin within the coming year.