Coinbase is adding PayPal support. The web wallet and payment processor will allow customers to sell Bitcoin and have it deposited into their PayPal account. They also announced their intentions to add PayPal buying support soon. The program is only available for US users and is limited as is technically in a “beta” phase.
This is big news because many people still perceive PayPal to be the embodiment of “web money” and often assume that buying or selling Bitcoin with PayPal will be the easiest way. That has not been the case in reality.
“Thousands of Coinbase users use PayPal for their fiat currency transactions around the world. Through this integration, Coinbase users are now able to sell BTC and have their USD funds deposited to a PayPal wallet. To start, we’re offering PayPal cash-out for US users only. In the future, we hope to add support for other countries, and to support buys through PayPal as well.”
Previously, PayPal was one of the riskiest ways to buy or sell Bitcoin. The problem originated with fraud. Hackers often used PayPal to buy bitcoin from someone, usually at a price higher than market value, and then when the legitimate owner of that PayPal account noticed and reported the fraud, Paypal would reverse the transaction. Unfortunately, bitcoin transactions cannot be reversed, the hacker would walk away with free bitcoins.
A company like Coinbase is in a unique position to deal with this problem. Coinbase knows their customers. It requires them to prove their identity before buying significant amounts of bitcoin. Primarily, this is to keep the company on the right side of Know Your Customer and Anti-Money laundering laws, but in this case, it has the side benefit of enabling them to be reasonably confident the person behind the PayPal account is who they say they are.
As mentioned, the service is only for selling bitcoin, so that particular method of fraud won’t be a concern for Coinbase. That said, with PayPal buying support potentially coming soon, it may be a small challenge in the future.
As is typical in the technology world, the feature is being rolled out to customers slowly. If you don’t see the option yet, it will appear eventually. Coinbase is also adding support for credit cards, although Coinbase’s competitor Circle has offered that payment option for a while now.
*Note: header image above is an artist re-creation, Coinbase’s logo is not currently found in Paypal’s payment methods*