How to buy Bitcoin with PayPal
Many people around the world are familiar with Bitcoin (BTC). The recent introduction of PayPal's cryptocurrency services has exposed millions of its users, including nearly 350 million account holders, to cryptocurrencies such as Bitcoin, making it easier for them to access the fastest growing asset class.
However, the crypto community has responded to PayPal's new service with a mixture of reactions, from guarded optimism to criticism. This article will delve into why PayPal's move has sparked such reactions and weigh the pros and cons of using PayPal to purchase cryptocurrencies. It will also answer the question "Can I buy Bitcoin with PayPal?" by showing how to do so.
How to buy Bitcoin with PayPal directly
Here's how to buy cryptocurrency using PayPal: First, log in to your PayPal account and make sure you have sufficient funds. This can be done by linking your credit/debit card or bank account.
PayPal also requires its users to complete Know Your Customer (KYC) verification, which involves submitting identity verification documents such as a driver's license, ID card, and proof of address, as well as a W-9 tax form. This is due to the strict regulations surrounding cryptocurrency.
The steps to purchase cryptocurrency on the PayPal platform are straightforward, but it's important to note that other exchanges may have similar requirements, such as identity verification through a driver's license to comply with KYC and Anti-Money Laundering (AML) regulations. Completing these steps may also come with additional benefits, such as increased daily withdrawal limits.
Before buying cryptocurrency through PayPal, it's recommended to research and compare the requirements of different exchanges. This will give you a better understanding of the pros and cons of using PayPal for your investment.
How to buy Bitcoin on crypto exchanges using PayPal
Centralized exchanges such as Coinbase and Crypto.com enable users to deposit funds via PayPal, once they have completed the required Know Your Customer (KYC) verification and been accepted through the onboarding process.
To utilize PayPal as a deposit method on these platforms, simply connect your PayPal account to the exchange of your choice. This will also give you access to the latest cryptocurrency news published by Coinbase and other features offered by the exchange.
The upside of selling Bitcoin by PayPal
The introduction of cryptocurrencies to over 250 million users through PayPal brings both advantages and drawbacks. While some in the crypto community may resist, PayPal is providing a low-risk option for owning cryptocurrencies.
When a PayPal user invests in crypto on the platform, it's natural for them to seek more information and knowledge about their new asset and the crypto world in general. This, in turn, may lead to a desire for direct control over their digital assets.
Novice users, especially those with a low-risk tolerance, will benefit greatly from PayPal's offering. PayPal's reputation as a well-known and trusted online payment platform, and their adoption of crypto, can be seen as a vote of confidence.
Additionally, the transfer of Bitcoin to PayPal is instant, compared to the 10 minutes or more it may take for Bitcoin to appear in a user's wallet through blockchain transfer. PayPal also offers incentives to users by partnering with participating stores, allowing users to make purchases with their crypto holdings.
However, some in the crypto community view PayPal's move as a ploy to steer users away from direct control over their coins. This viewpoint aligns with the old crypto saying, "Not your keys, not your coins."
This article highlights both the positive and negative aspects of using PayPal to buy Bitcoin and other cryptocurrencies.
Why you shouldn't buy Bitcoin with PayPal
When it comes to buying cryptocurrencies, users have several choices like a centralized exchange, a decentralized exchange, or a crypto wallet. However, retail consumers who are not familiar with the technology behind cryptocurrencies may have a higher risk aversion.
PayPal makes buying digital currencies convenient. If you're located in an eligible country, buying Bitcoin with PayPal is effortless. However, there are several important limitations that users need to be aware of before they opt to use PayPal for their crypto purchases.
PayPal crypto fees
Purchasing cryptocurrencies through PayPal can be easy, but comes with high fees. On the other hand, cryptocurrency exchanges may also have high spreads for currency pairs.
For those in countries where fiat can be deposited directly into an exchange, it is recommended to buy crypto through an exchange to have full control over assets and maximize returns through DeFi opportunities like staking and yield farming. While setting up an exchange account and digital wallet may be more work, the education and control gained is worth it.
Users have to undergo a similar approval process with crypto exchanges
PayPal requires users to verify their identity before purchasing cryptocurrencies on its platform. This includes submitting necessary documents such as passports. However, this process is similar to the one implemented by major cryptocurrency exchanges. As a result, it may be more advantageous for users to purchase crypto directly from exchanges, rather than through PayPal.
Users hold their fiat equivalent, not cryptocurrencies
PayPal users do not have direct control over their cryptocurrency holdings on the platform as the coins are held in custody by the company. This means that users only have indirect ownership and are unable to transfer their crypto assets off the platform. This also means that they do not technically own any digital currencies.
The lack of a digital wallet and wallet address, as well as the inability to send Bitcoin to PayPal or swap currencies within the app, limits the functionality for more experienced users. Additionally, users only have access to fiat currency liquidity when cashing out their crypto, as private keys are not provided.
PayPal's offering of cryptocurrency appears to serve as a way for the company to gain exposure to cryptocurrencies, using its customers' funds and promoting their acceptance of crypto while minimizing their own risk. The limitations for users, such as the inability to move cryptocurrencies to their own wallets or swap between coins within the app, also raise concerns and criticisms. Ultimately, PayPal users are not technically holding any cryptocurrencies, as the coins are held in custody by PayPal.
Users can't lend their crypto
Decentralized Finance leverages smart contracts, which are self-executing algorithms that activate once specific conditions are met. This allows for the elimination of intermediaries in financial transactions.
One of the key benefits of DeFi is the potential for high yield generation. Interest rates are set by the market rather than being controlled, leading to the possibility of double-digit returns for lending certain coins. Bitcoin and other cryptocurrencies can also offer substantial yields that surpass traditional banking returns.
However, PayPal does not allow its users to earn passive income from their cryptocurrency holdings, which is a disadvantage for those seeking to maximize their returns. This lack of income generation capability is a major limitation for PayPal users compared to those in the DeFi space.
Selection is limited
of the most popular and well-established cryptocurrencies: Bitcoin, Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTE). These coins have a longer history and are considered to be more mature than many other cryptocurrencies, leading to a lower level of volatility and price movement. This is due to PayPal's preference for risk aversion, as these four coins are seen as having a lower level of risk compared to the majority of microcap or small-cap coins in the market.
. The recent introduction of PayPal's crypto…){kind=link}
Comments
Post a Comment