How To Buy Bitcoin With PayPal In 2022

It is easier than ever to buy cryptocurrency – all you have to do is pull out your phone and open an app. 

The PayPal platform is among the few popular mobiles and online payment platforms that currently allow users to purchase, sell, and hold cryptocurrencies for as little as $ 1. You should carefully consider which platform you use if you want to add cryptocurrency to your portfolio – and whether or not you should invest at all. 

Cryptocurrencies are extremely volatile, even the most common and well-established ones like Bitcoin and Ethereum. For this reason, experts recommend risking no more than 5% of your portfolio on crypto, and not letting it prevent you from saving for emergencies or paying down debt. 

If you decide to invest, making a decision about where to purchase your crypto ahead of time could have important implications. Even though an app that you already trust – and use – like PayPal can be used to buy crypto, there are some disadvantages compared to traditional cryptocurrency exchanges. 

How to decide if it makes sense for you to buy crypto on PayPal and what you should know when doing so.

What You Need to Know Before Buying Bitcoin with PayPal

Bitcoin can be purchased, sold, and held by any PayPal user. Using cryptocurrency at checkout is also an option, but in general, it’s a bad idea to use cryptocurrency for payment. With any long-term investment, experts suggest purchasing and holding your crypto for a long period of time.

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With PayPal crypto, you are protected from fraud on eligible purchases.

Cryptocurrency is becoming more accessible through apps like PayPal, Venmo, and Robinhood. This is particularly appealing to beginner investors. However, greater accessibility increases risk. 

“If you have a PayPal balance on your phone, and you’re curious about cryptocurrency, you can open PayPal, click crypto, and in two seconds own a few hundred dollars worth of cryptocurrency, they just make it really, really easy.” Says Julian Morris , a certified financial planner at Concierge Wealth Management in Boston.

It would be wise to acquire a small portion of the cryptocurrency market given its value, according to David Yermack, a finance professor at New York University Stern School of Business who studies crypto. However, it does not have to be your main priority.

“The tried-and-true formula for success in investing always involves diversification – not putting all your eggs in one basket, but trying to own a little bit of many things,” he explains.

Bitcoin with PayPal: The Advantages

The introduction of cryptocurrencies to a quarter-billion people has definitely got its upsides. PayPal introduces a low-risk approach to cryptocurrency ownership, and the crypto community may not be too happy about it.

Here’s another perspective. Let’s say that a PayPal user makes a cryptocurrency purchase. Having now invested in it, their next step should be to go online to learn more about their asset and cryptocurrencies at large. This is only natural. 

In light of this, it is inevitable that further research will go down the crypto rabbit hole. As a result of this thirst for knowledge, individuals should be looking for direct ownership over their own digital assets.

It will be of the greatest benefit to newcomer users who haven’t yet experienced cryptocurrencies. It will be of greatest benefit to those who are low-risk tolerant. The adoption of crypto by PayPal is regarded as a vote of confidence in their adoption of crypto by users who might find purchasing crypto on PayPal more comfortable. PayPal is one of the largest brands in online payments.

Bitcoin, when transferred via the blockchain, may take up to 10 minutes or longer to appear in the wallet of the recipient. But what about Bitcoin transfers to PayPal? Immediately.

As an added bonus, PayPal partners with interesting stores to further enhance the user experience. By doing so, PayPal users can use their crypto holdings to purchase products and services with PayPal.

Regardless of the move’s intentions, many crypto proponents view it as a ruse to strip the community of greater ownership control. A good rule of thumb may be to remember the old crypto adage: Don’t touch your keys.

How to Buy Bitcoin With PayPal

PayPal Holdings, Inc. ( PYPL ) is another payment processor where bitcoin can be purchased. It’s possible to buy bitcoin with PayPal in two ways. Using your PayPal account coupled with a payment method such as a debit card or bank account is the easiest way to purchase cryptocurrencies. You can also purchase cryptocurrency from a third-party provider with the balance on your PayPal account. Unlike the first option, this is less convenient since very few third-party sites allow users to purchase bitcoins with PayPal.

PayPal users can purchase four cryptocurrencies directly, namely Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. The only exception is Hawaii, where residents can only use their existing PayPal accounts or open new ones. As well as buying products and services with cryptocurrencies, “Checkout with Crypto” allows you to use them to pay for items.

Name, address, date of birth, and tax identification number are required in order to set up a crypto account with PayPal.

PayPal cannot be used to purchase bitcoin with a credit card. PayPal displays a cryptocurrency price during the purchase process. Cryptocurrency prices are volatile, however, so they are subject to rapid change. In order to make sure you have enough money in your bank account for the purchase, make sure it is more than the budgeted amount. 

Paypal makes money by charging you a crypto spread, or a difference between the price of Bitcoin and what it exchanges for in USD. Each transaction costs a fee as well. The fee depends on how much the transaction costs. 

PayPal does not allow users to transfer cryptocurrencies outside of the payment processor’s platform when purchasing cryptocurrencies through the payment processor. Due to this, you will not be able to move your bitcoins from PayPal’s wallet to an external digital wallet or your own personal wallet.

Furthermore, PayPal is not allowed to be used to make payments at many exchanges and online traders. One of the few online traders who allow PayPal to be used to purchase bitcoin is eToro.

Alternative Ways to Buy Bitcoin

Bitcoin ATMs

A bitcoin ATM functions as an in-person bitcoin exchange. The user inserts cash into the machine and uses it to purchase bitcoins, which are then sent to the user’s online wallet. In recent years, bitcoin ATMs have grown in popularity – even Walmart Inc . is testing a pilot program that will allow customers to purchase bitcoin. Coin ATM Radar can be used to find the nearest machine.

ATMs, however, tend to be expensive. Bitcoin purchases at ATMs are subject to two fees: a purchase fee and a conversion fee. Compared to other payment options, both fees are quite steep. The average worldwide transaction fee on Bitcoin ATMs (of the purchase amount) is 8.4%, while the average transaction fee on ATM sales is 5.4%. 

As of early 2020, Bitcoin ATMs require IDs issued by government agencies.

P2P exchanges

Some peer-to-peer exchange services make direct connections between users instead of centralized exchanges, which match buyers and sellers anonymously. A good example is LocalBitcoins. The site allows users to buy and sell bitcoins, including payment information and price information, after creating an account. By selecting potential trading partners from the offered buy and sell listings, users can then transact with them.

The trade is facilitated in part by LocalBitcoins. P2P exchanges provide users the option to shop around for the best deal even though they do not provide the same anonymity as decentralized exchanges. Users can also evaluate potential trading partners prior to transactions by using the rating systems offered by these exchanges.

Mainstream brokerages  

Due to the uncertainty surrounding the regulatory status of cryptocurrencies, very few mainstream brokerages offer bitcoin purchase and trading services. Robbinhood Markets, Inc. is one of many exchanges offering cryptocurrency trading facilities to investors. Neither cryptocurrency purchases nor trades are charged commissions, but it earns money by passing trade volume onto other brokerages and trading platforms.

There are a couple of catches to the lack of a commission fee that makes it attractive to beginners. For one thing, Robinhood has fewer features and coins than Coinbase and other prominent crypto exchanges. The Robinhood platform will now enable trading for seven cryptocurrencies by the year 2021:

• Bitcoin 
• Bitcoin Cash
• Ethereum
• Bitcoin SV
• Dogecoin
• Ethereum Classic. 

On the other hand, Coinbase allows you to trade more than 100 cryptocurrencies. To minimize risks during trading and to offset losses, the exchange offers various order types.

How to Sell Bitcoin

When you want to sell bitcoin, you can do so at the same cryptocurrency exchange or P2P platform you bought it on. This platform typically allows for the sale of bitcoin in a similar way to the process of buying it.

It may be enough to click a button and specify the type of order (for example, whether you want to sell the cryptocurrency instantly at its current price or limit losses) to conduct a sale. There may be fluctuations in the Bitcoin price based on the composition and demand of the market. When bitcoin’s prices soared in 2018, South Korean exchanges traded it at a kimchi premium.

The fees charged by crypto exchanges are based on the amount of cryptocurrency sold. According to Coinbase, this fee is equivalent to 1.49% of the total transaction amount.

The withdrawal limits on exchanges vary from day to day and month to month. A trader may not immediately be able to cash in on a large sale. Bitcoins are not limited in quantity, however.

Conclusion

Cryptocurrency investments are volatile, so you shouldn’t invest more than you can afford to lose.

Before investing in crypto – through PayPal or not – pay off high-interest debt, have an emergency fund, and put money towards an emergency fund. You should also learn how to deal with price fluctuations, keep your coins secure, and invest smartly over the long term, regardless of what platform you choose.