With the world economy feeling the economic effects of the pandemic lockdowns, it seems Bitcoin will continue to be seen as a safe-haven and store of value for the foreseeable future.
Often referred to as ‘digital gold’, Bitcoin has outperformed most asset classes since the start of the year, including the original safe haven itself, gold. Bitcoin increased in value by over 30% since January, while the yellow metal only managed 15%.
The Bitcoin Halvening – an event where the supply of new Bitcoins effectively cut in half – is yet another bullish trade wind, which recently helped drive the Bitcoin price to $10,000.
A number of analysts, including Bloomberg, are predicting that 2020 will be the year that Bitcoin returns to its all-time-high of over $20,000.
In this guide, you will learn everything you need to know to buy Bitcoin with PayPal.
5 Steps to Buy Bitcoin with eToro Now
Buying any cryptocurrency with eToro is easy, simply follow the steps below:
Sign up for free with eToro, entering your details in the required fields.
Fill out the questionnaire, this is both educational for you and eToro.
Click 'Deposit', you'll then be asked how you want to fund your account.
Choose your required payment method, follow the simple steps to link your payment.
Enter the amount you want to deposit and you're good to go!
Compare the Best Broker for Buying Bitcoin With PayPal
When choosing an exchange or broker to buy Bitcoin, it is important to understand that cryptocurrency exchanges rarely if ever, offer PayPal as a payment method.
PayPal is far more prevalent as a payment method on cryptocurrency brokerage platforms than exchanges. This is because leading global authorities often regulate brokers and PayPal itself is a regulated company.
If you decide to purchase Bitcoin through a broker for trading purposes, make sure to choose one that is regulated, fully compliant, and well-respected in the industry.
Buy Bitcoin with eToro
eToro is one of the first cryptocurrency providers that allow you to buy using many payment methods as well as other services. The actual process is very simple as well and one of the reasons we do recommend eToro for both beginners and experts.
Step 1: Registration
To get started, you'll need to register with eToro. It is free to sign up and you don't need to deposit right away, which means you can get used to the platform before going live.
Step 2: Deposit
Once you're happy with the platform and ready to buy for real, it is time to deposit some money into your account. Click the deposit button in the bottom left, then choose your payment method of choice. Enter the amount you want to deposit, we'd recommend starting low before adding extra over time.
Step 3: Start Trading
Now your account is live and ready to go, the process is like any other CFD provider, you will need to search for the coin you want to buy, be it bitcoin, ethereum or whatever your preferred choice is. Hit the 'Buy' button and then 'Trade', make sure you understand your risk parameters before you jump in.
Why Should I Buy Bitcoin With PayPal?
Disclosing your payment information online can be a nerve-racking experience and ensuring the security of your payment method is nearly as important as the security of your trading platform.
PayPal is a trusted payment network worldwide that offers some of the convenience of a credit card with a more reasonable fee structure.
PayPal deploys cutting edge software and encryption to keep users’ accounts safe, with encrypted transactions and buyer protections providing an advantage over bank transfers.
A reason to buy Bitcoin with PayPal would be to utilize its convenience and security, without the expense of a credit card.
While PayPal is a very straightforward payment method, it is not really economical for repeated transactions depending on the platform fees, but generally fine for one-off or bulk transactions.
If you are looking for a more affordable method than PayPal, a wire transfer might be cheaper depending on your bank.
Buying Bitcoin With PayPal Directly
Some people mistakenly believe Bitcoin can be purchased directly with PayPal. This is not the case, as PayPal has to be used in conjunction with an exchange or brokerage platform.
There is no way to buy Bitcoin directly, no Bitcoin website, and no Bitcoin store. The only way to buy actual Bitcoin is in a trade facilitated by an intermediary.
If you buy Bitcoin from another person on an exchange or peer-to-peer marketplace, you will need to find somewhere safe to store your coins.
Leaving Bitcoin on an exchange is generally considered a bad idea, as they have been known to get hacked, go bankrupt, or perform an exit scam with users’ coins.
If you are comfortable with Bitcoin price exposure without the hassle of storing your BTC, a broker or OTC (over the counter) desk is a popular choice.
These platforms enable you to trade the value of Bitcoin via CFDs.
Trading Bitcoin in this way offers advantages over cryptocurrency exchanges, with typically fewer fees and less slippage.
If you decide to buy Bitcoin through a broker, make sure you do your due diligence to ensure they are regulated by a leading global authority and safe to trade on.
Buying Bitcoin Anonymously Using PayPal
Purchasing Bitcoin with PayPal is actually quite an involved process. You will first need to identify a buyer who is happy to sell you Bitcoin without ID verification. Normally, these sellers can be found on unregulated peer-to-peer cryptocurrency markets.
When you make a payment with PayPal, the recipient of the payment will be notified of your email address and name.
Therefore, the only way to send a PayPal payment anonymously would be to create a fake name, a throwaway email address, and a virtual credit card, so you can register an anonymous PayPal account.
Once you have done this, you could potentially send payments that can’t be traced back to you. We don’t recommend this approach, however, as it could be in breach of PayPal terms and conditions. PayPal is a centralized company and able to freeze customer accounts at any time.
Bitcoin ATMs are one of the most popular and convenient ways to buy Bitcoin anonymously, unfortunately, these do not offer PayPal as a payment method.
For most people buying Bitcoin anonymously with PayPal isn’t worth the trouble as there are easier ways.
Global Regulations for Buying Bitcoin With PayPal
KYC or “Know Your Customer” is the identification process most exchanges and brokers deploy to verify a customer is who they say they are.
To satisfy these requirements, customers are typically required to show some photographic ID like a passport or driver’s license and in some cases, they will need to prove their address with a utility bill or similar.
As a global financial services provider, PayPal itself is bound to comply with all laws and regulations regarding Anti-Money Laundering (AML). Exchanges and brokers are also financial services providers and depending on their region, need to comply with the same laws.
When purchasing Bitcoin from an exchange or broker, you will generally be subject to a verification procedure, regardless of the payment method.
The Money Laundering Regulations 2017 is the law that determines KYC requirements in the UK. With oversight from the European Joint Money Laundering Steering Group, financial services providers in the UK are required by law to comply with standard KYC and AML regulations.
In the UK, Bitcoin can be purchased with PayPal at a reputable brokerage platform or OTC desk. PayPal is not available as a payment option for most cryptocurrency exchanges in the UK.
Switzerland has passed some of the most progressive laws in regards to Bitcoin and cryptocurrencies. The European country has long been considered a place to safeguard wealth and store-of-value Bitcoin is seen as a natural fit.
Everyone has heard about Swiss bank accounts, well the banking industry in Switzerland is changing to meet the rising demand for cryptocurrencies. SEBA Bank AG in Zurich for example now offers a suite of services ranging from stable coin savings accounts to crypto trading and custody. The bank even offers a crypto debit card for regular shopping.
Due to their crypto-friendly legislation, Switzerland has several brokers that will allow you to buy Bitcoin with PayPal.
Most of these will still require you to pass KYC regulations, but it’s worth remembering these not only protect financial institutions from money laundering, but they also protect your identity and account.
PayPal is licensed as an authorized deposit-taking institution (ADI) in Australia and subject to Australian banking laws and regulations.
To buy Bitcoin with PayPal in Australia, you will have to abide by these laws and that means you’ll be required to pass KYC verification procedures no matter the exchange of the broker.
In Australia, you will typically have to provide proof of address in addition to photo ID, when registering on a cryptocurrency exchange or through a broker.
Is Buying With PayPal Available in My Country?
PayPal is one of the most widely accepted payment methods in the world. However, some regions still do not accept PayPal as a payment system. This is particularly the case in some developing countries where fraud has been a major problem.
A list of the countries that currently support PayPal can be found at the following link.
What Are the Differences Between Bitcoin and Paypal?
While Bitcoin is technically a blockchain-based payment network, it is not really used for this purpose outside of larger remittances. The Bitcoin network is congested, with transfers taking anywhere from 10 minutes to 24 hours, making them unsuitable for small transactions especially at the point of sale.
Bitcoin blockchain fees are also some of the highest in the cryptocurrency space, making repeated transactions on the Bitcoin blockchain expensive over time.
PayPal is more suitable as a payment network than Bitcoin because users can refund payments, depending on the transaction. With Bitcoin, transactions cannot be reversed.
If someone receives a PayPal payment for Bitcoin and sends the Bitcoin to the buyer, the buyer can reverse his payment, leaving one party with no cash and no Bitcoin.
This is one of the reasons PayPal is not widely accepted as a form of payment on cryptocurrency exchanges. The defrauded party would also have no recourse to recover the Bitcoin losing both the Bitcoin and the cash.
You would also have no course of action because blockchains like Bitcoin don’t have a central authority or customer support.
Bitcoin also obviously differs from PayPal in that it is a decentralized cryptocurrency with a limited supply, while PayPal is a payment network. Bitcoin’s value comes from its limited supply and its immutability, fungibility and censorship resistance.
PayPal is a centralized private company with no such supply limit and no tokens to gain value.
What Limitations Exist for PayPal While Buying Bitcoin?
No matter if you purchase BTC on an exchange of trade CFDs via a broker, you will likely encounter some limits to how much you can buy. These exchange or broker purchase limits are often raised with further identity verification.
Bitcoin itself is limited to a supply of 21 million coins, with only a certain number in circulation at any one time. There are more than enough Bitcoin for the average person to buy however, considering the fact you don’t have to own a whole Bitcoin.
If you are buying Bitcoin on an exchange you will have to contend with Bitcoin blockchain fees, which can add up with repeated transactions. These could economically limit the number of transactions you can make, depending on your budget.
PayPal also has its own transfer limits. With a verified PayPal account, you can currently send up to $60,000 however you may be limited to $10,000 for a single transaction.
The final potential limitation is in locating a cryptocurrency exchange that accepts PayPal. Regulated brokers are much more likely to provide PayPal as a payment method than cryptocurrency exchanges.
What Fees Are Associated With Paypal?
When you use PayPal you will be subject to a range of fees. The good news is there are no PayPal fees when you buy anything including Bitcoin with PayPal.
The broker or exchange may charge a convenience fee, however, for you to use this payment method. It is important to check the fee structure of the broker or exchange before you use them.
Some of the situations you might encounter fees on the PayPal system are when receiving payments, sending or receiving money internationally, or to a credit card.
Transferring money from your PayPal account to your bank account is free unless you are outside the US or the UK.
What Are the Pros and Cons of Buying Bitcoin With Paypal?
All payment methods have advantages and disadvantages. Credit cards are supremely convenient but come with high fees. Bank transfers are the most affordable but can be slow and difficult to set up depending on your bank’s processing.
PayPal is a payment network that offers a nice mix of convenience without the same costs as credit cards. Let’s take a look at the pros and cons of buying Bitcoin with PayPal in more detail.
Convenience – All payment information is stored on your PayPal account for easy repeated payments without entering details
Low cost – While bank transfers are arguably cheaper, PayPal stacks up well when comparing fees to credit cards
Security – Your transaction details are encrypted to prevent theft and fraud
Buyer’s protection - If your payment fails or the product you receive doesn’t match the description you have recourse to reverse the transaction up to $20,000
Claim rewards - Linking your credit card to your PayPal account will enable you to claim rewards for purchases
Easy to use - PayPal features an intuitive interface, good customer support, and the purchase process is fast and familiar
Anonymity is possible - Identity verification isn’t always necessary as you can send payments with a throwaway email address and virtual credit card
Comes with some risk - PayPal is one of the largest payment providers in the world and a target for cybercriminals. PayPal is always updating their software to remain one step ahead of would-be attackers
Need to safeguard device security - If someone gained access to your computer or mobile, they could potentially log in to PayPal through your saved passwords and gain access to your account
Is Buying Bitcoin With PayPal the Best Method?
There is no ‘best way’ to buy Bitcoin. Different buyers have different requirements depending on their priorities.
Credit cards are probably the most convenient way to buy Bitcoin but PayPal offers some of that convenience, without the same expense.
Bank transfers are still one of the most popular methods to buy Bitcoin, being one of the cheapest and convenient in the sense that you can transfer funds back and forth from the exchange to your bank account.
Further Tips for Buying Bitcoin With PayPal
If you have your heart set on buying Bitcoin with PayPal, you will first have to locate a cryptocurrency exchange or trading platform that accepts PayPal as payment.
If you are lucky enough to locate an exchange that accepts PayPal, you will need to ensure you are technically proficient enough to use the trading platform as exchanges are more complex than brokers.
You will also need to transfer your BTC off the exchange and into a digital or hardware wallet as soon as possible. Exchanges have been known to get hacked and go out of business.
If you only want to trade the value of Bitcoin and don’t feel comfortable managing and storing your coins, then purchasing Bitcoin through a broker is an option.
Brokers feature more flexible trading options, generally lower fees, and more often than not, they will accept PayPal.
Just make sure to select a broker that is fully compliant with global regulations, as fraudulent platforms and websites do exist.
Purchasing Bitcoin with PayPal can be a smooth and simple process, but this will really depend on the platform you choose.
PayPal is a good solution for many people to send payments and make purchases worldwide, having some of the convenience of credit cards with a more acceptable level of fees.
Cryptocurrency exchanges tend to have a level of complexity that brokerage platforms do not. Make sure you research the platform to ensure you can navigate the user interface easily.
If going through a broker, make sure they are fully compliant with global regulations. These regulations will provide peace of mind that you are not trading on a scam platform.
You will also need to confirm PayPal is accepted as a payment method and identify the fees associated with PayPal deposits to that specific platform.
Frequently Asked Questions
Bitcoin is notoriously volatile. Some smart traders are capitalizing on this rampant volatility, actively profiting from the peaks and troughs of the Bitcoin price. While many traders begin trading cryptocurrencies on an exchange, they soon learn that blockchain and exchange fees can really eat into trading profits. Brokers offer a solution to this problem generally, offering fewer fees and a platform more suited to active trading.
Yes. Using PayPal to buy Bitcoin for trading purposes on an exchange is a fast and straightforward process. Just be aware, you will be trading CFDs and not the coins themselves. This enables you exposure to the price of a digital asset without actually owning it.
The main difference between brokerage platforms and cryptocurrency exchanges is the former involves trading instruments called CFDs. This can be a positive or a negative depending on your perspective. On the one hand, you don’t have to store your coins with an exchange and risk losing them. You can actively trade at lower costs and profit from Bitcoin price movements quickly and simply. On the other hand, some longer-term investors don’t trust leaving money with third parties and prefer to take ownership and possession of the coins and private keys. You can’t do this with a broker.
Yes. For most countries, it remains legal to buy and use in 2020. Bitcoin is generally considered a "unit of account" and even some banks are allowed to legally store and sell Bitcoin.
PayPal has several fees associated with its financial services but purchase fees are not one of them. This means PayPal will not charge you fees when you buy Bitcoin but you may be charged by the cryptocurrency platform for selecting this payment method. You generally receive charges from PayPal when you carry out international transfers, currency conversions and payments received.
There are several risks you will need to consider when setting out to purchase Bitcoin with PayPal. Perhaps the greatest risk you will encounter is in choosing the exchange or broker to use. If you are buying Bitcoin on an exchange, then there are risks associated with navigating the platform and safely securing your Bitcoin in a wallet. PayPal itself is a platform not without risk, being a target of hackers due to the amount of value transferred globally.
Better than gold. Bitcoin outperformed most assets and commodities since the start of the year, rising over 30% in value since January, while gold only managed 15%.
It’s important to fully understand the macro-environment before making any Bitcoin price predictions. Lockdowns due to the Coronavirus pandemic have led to economic shockwaves and rising unemployment. Many governments have been forced into stimulus measures like widespread quantitative easing to try and kick-start economies. The widespread printing of money has historically always led to inflation and Bitcoin, a deflationary asset is well-positioned to benefit. In this climate, many analysts maintain a bullish outlook for Bitcoin with Bloomberg, in particular, suggesting it will reclaim its all-time high of over $20,000, this year.