Can I use PayPal to buy Bitcoin? Beginner's guide

It's simple to buy Bitcoin with PayPal. Do PayPal users, on the other hand, genuinely own their Bitcoin? The advantages and disadvantages of buying Bitcoin via PayPal are discussed in this article.

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How to buy Bitcoin with PayPal

PayPal is the most widely used online payment tool. It is used by consumers and merchants to send money to each other. It also allows businesses to accept incoming payments.

Paypal offers a similar service. To make things easier for beginners, they offer a digital wallet that is integrated with your PayPal account and where you can buy bitcoins.

A few words about PayPal: it is a payment processor that connects with your bank account or credit card - it takes a small percentage of each transaction to process and cover the cost of running their service.

A few minutes after you pay for your order using PayPal, you will be redirected to the website of your chosen wallet provider. You will be asked to enter your email address and an account login code

Bitcoin is well-known around the world (BTC). PayPal's cryptocurrency services have exposed cryptocurrencies like Bitcoin to millions of its users. Nearly 350 million Paypal users now have a simple option to invest in the fastest-growing asset class in history.

However, the revelation of PayPal's new offering has elicited various comments from the crypto community, ranging from cautious optimism to outright assaults. This article explains why PayPal's move has aroused such strong reactions, as well as the benefits and drawbacks of buying cryptocurrency via the PayPal network. "Can I buy Bitcoin using PayPal?" people may query. This post will show you how to do it.

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Here's how to use PayPal to buy cryptocurrency.

Users must first log into their PayPal accounts. They'll need to have money on hand once they've logged in. Users' credit or debit cards, as well as their bank accounts, may be linked in this way.

PayPal also needs users to go through Know Your Customer (KYC) authentication because of the stringent laws and regulations around cryptocurrency.

KYC verification entails supplying documents such as a driver's license to prove a user's identification. Verification may entail the submission of a copy of the user's ID card as well as proof of address. Users who are interested must additionally fill out a W-9 tax form.

The prerequisites for purchasing bitcoin via the PayPal network are easy, as readers should be able to tell. Exchanges, on the other hand, need users to go through comparable procedures, such as providing a driver's license for identity verification in order to comply with KYC and Anti-Money Laundering (AML) regulations. As a result, you may be able to increase your maximum daily withdrawal limit.

As a result, potential PayPal customers should do their homework and research the exchange regulations. When investing, it's a good idea to compare exchange rates with PayPal's.

Before people go ahead and start buying cryptocurrencies with their PayPal accounts, it's a good idea to consider both the benefits and drawbacks of doing so.

The upside of selling Bitcoin by PayPal

Introducing cryptocurrency to more than a quarter-billion people has to have some advantages. PayPal is benefiting the crypto ecosystem by introducing a low-risk method to crypto ownership, something the crypto community may be hesitant to admit.

Another perspective is as follows. Assume a PayPal user makes a cryptocurrency purchase on the platform. They should do more study online regarding their new asset and cryptocurrencies in general now that they've invested in it. After all, it's only normal to want to know what you own.

As a result, more inquiry into the crypto rabbit hole is unavoidable. This thirst for information should lead to a desire to take direct control of their digital assets.

In reality, beginner users who are new to cryptocurrency will benefit the most from this opportunity. This benefit is primarily for persons who have a low risk tolerance. These individuals may find that acquiring cryptocurrency through a trusted site such as PayPal is a more user-friendly route to crypto "ownership." PayPal is one of the most well-known names in online payment, and their embrace of cryptocurrency might be seen as a vote of confidence.

When transferring bitcoin over the blockchain, it can take up to 10 minutes for the money to show in a user's wallet. What about Bitcoin to PayPal transfers? Instant.

PayPal also incentivizes users by partnering with interested businesses. This enables PayPal users to make qualified purchases of goods and services with their accounts.

Regardless, many strong crypto supporters see this move as a ruse to defraud individuals of their right to direct ownership. It's preferable if users remember the old crypto adage: "Not your keys, not your coins."

After going over the good elements, the article goes over some common arguments for why people shouldn't utilize PayPal to buy Bitcoin and other cryptocurrencies.

Why you shouldn't buy Bitcoin with PayPal

When it comes to purchasing cryptocurrencies, customers can use a centralized exchange (CEX), a decentralized exchange (DEX), or a cryptocurrency wallet. However, because they don't comprehend the technology behind cryptocurrencies, ordinary retail customers may have a higher risk aversion.

Buying digital currency is simple with PayPal. For most PayPal users in qualified countries, purchasing Bitcoin with PayPal is a simple. However, there are a few important caveats that consumers should be aware of before using the site to make crypto purchases.

Users have to undergo a similar approval process with crypto exchanges

Users who want to buy cryptocurrency through PayPal must first authenticate their identification. Verification entails supplying essential documents, such as passports, in order for consumers to be able to purchase cryptocurrency.

However, when users first sign up for a cryptocurrency exchange, they must go through a similar clearance process. As a result, individuals may be better off purchasing cryptocurrency directly from an exchange rather than through the PayPal network.

Users hold their fiat equivalent, not cryptocurrencies

PayPal users never have direct access to their cryptocurrency. The business has Bitcoin — as well as the other crypto coins on offer — in its custody. As a result, PayPal users can only "own" their cryptocurrency in an indirect manner. However, because users are unable to transfer their crypto assets off the platform, they do not officially possess any digital currency.

More advanced users will quickly discover that they can't send any of their Bitcoin to PayPal, nor can they exchange currencies from within the app. PayPal also does not offer a digital wallet or even a wallet address to its users.

Due to the lack of private keys, PayPal account holders who have cryptocurrencies on the site are still technically holding fiat. The sole sort of liquidity available when consumers cash out their crypto is fiat dollars. Furthermore, users will be unable to send Bitcoin to PayPal as a result of this.

Why would PayPal include cryptocurrency in its services? PayPal appears to be using this method to obtain exposure to cryptocurrencies for its own benefit. PayPal achieves this goal by using funds from its own clients. Furthermore, they get exposure by pushing their crypto acceptability while minimizing their own risk.

Another point of contention is the restrictions on what PayPal users may do with their cryptocurrency. Users, for example, cannot not only move the cryptocurrencies on their PayPal balance to their own wallets, but they also cannot switch between cryptocurrencies within the app. PayPal users aren't technically holding any of the coins; PayPal is.

Users can't lend their crypto

Smart contracts, which are self-executing algorithms that trigger once predefined criteria are met, are used in Decentralized Finance. As a result, smart contracts eliminate the need for third parties in financial transactions.

The potential to generate high yields is one of DeFi's key attractions. Because interest rates are not regulated, they are left to the market to establish. It's not uncommon to hear of double-digit returns on specific coins when they're lent out.

Even Bitcoin can offer lenders enormous returns that put banks to shame. PayPal does not allow users to earn passive revenue from their cryptocurrency holdings. This incapacity is a huge disadvantage for cryptocurrency investors who want to maximize their profits.

Users might incur less fees with crypto exchanges

PayPal has a reputation for demanding exorbitant fees. The Bitcoin fees charged by PayPal are no exception. Cryptocurrency exchanges, on the other hand, are notorious for charging excessive spreads. The difference between the bid and ask prices for a currency pair is known as the spread.

Users who live in a country where fiat may be instantly deposited into an exchange wallet should consider themselves fortunate. Regulations permit them to purchase cryptocurrencies and store them in their own wallets.

Purchasing cryptocurrencies on a cryptocurrency exchange and creating digital wallets can be time-consuming. Obviously, there is more effort to be done and more education to be obtained. However, with knowledge comes the conclusion that holding crypto assets directly is the greatest option for customers.

Users will see that they have complete and total control over all of their assets. This honor comes with the possibility of maximizing profits. This is owing to the multiple passive-income options that DeFi provides, such as staking to sustain a blockchain network and giving liquidity, or yield farming, to decentralized exchanges to help them run smoothly. 

Selection is limited

There are thousands of cryptocurrencies on the market. The majority of them are microcaps or small-cap coins; readers interested in learning more about market capitalization can do so here. Because the upside potential for small market size jewels is huge, microcaps provide the best returns for investors. However, greater upside potential comes with greater risk, and microcaps are the riskiest of them.

PayPal only supports four of the most popular cryptocurrencies: Bitcoin, Ether (ETH), Bitcoin Cash (BCH), and Litecoin (LTC) (LTE). These coins are among the first cryptocurrencies, with Bitcoin and Ethereum at the top of the list.

These coins have matured because they've been around for a while. As a result, these four coins are less subject to price fluctuations.

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