Bitcoin trade (buying and selling) has brought about numerous financial innovations to ease the ways how transactions are performed. This is why Bitcoin and other cryptocurrencies have been touted as the new age of the financial drive, through their decentralized financial structure.
In many countries, including the United States, PayPal customers can now buy, sell, and keep Bitcoin for as little as $1. PayPal is one of a few widely used mobile and online payment platforms. While there are several platforms for investing in cryptocurrencies, it is important to weigh the pros and cons of each before making a final decision.
Even the most widely used and well-established cryptocurrencies, such as Bitcoin and Ethereum, are subject to extreme price swings. Therefore, that is why experts recommend putting no more than 5% of your portfolio into crypto and never allowing it to interfere with things like saving for emergencies or paying off high-interest debt.
How To Buy Bitcoin With PayPal
To get started, customers must first sign in to their PayPal accounts. Once a user has logged in, they are required to have sufficient funds to proceed with the transaction. Users’ credit or debit cards or bank accounts can be linked in this way.
PayPal also needs users to pass Know Your Customer (KYC) authentication because of the stringent standards and laws around cryptocurrency.
A driver’s license, for instance, can be used to verify a user’s identification in a KYC process. Sending a copy of the user’s ID and proof of address may be required for verification. A W-9 tax form is also required for those who want to use the service.
Nonetheless, it is noteworthy that using PayPal to buy Bitcoin is considerably simple if the conditions are met. Users must still produce a driver’s license for identity verification to comply with KYC and AML standards when trading. Additional advantages may include an increase in the daily withdrawal cap.
As a result, everyone considering using PayPal should do their homework and learn about the currency exchange requirements. When investing, it is often a good idea to compare the fees and exchange rates with those of PayPal.
Also, It is important to weigh the benefits and pitfalls of buying Bitcoin with PayPal before making the plunge.
The Benefit Of Selling Bitcoin Via PayPal
A quarter-billion new cryptocurrency is undoubtedly a good thing. PayPal’s low-risk approach to Bitcoin ownership is a windfall to the crypto community, which may be loath to admit it.
In this case, we will see things from another angle. If a PayPal user supposedly buys cryptocurrency over the platform, investing in cryptocurrency should motivate people to undertake additional research regarding their new assets and cryptocurrencies in general. Hence, it is only reasonable that you would want to know exactly what you’ve got.
As a result, further exploration into the cryptographic black hole is unavoidable. A desire for control over one’s digital assets must accompany this insatiable curiosity.
First-time cryptocurrency users are the most likely to benefit from this promotion.
Those that have a poor tolerance for risk will benefit the most from this. Buying Bitcoin through a trusted channel like PayPal may be more convenient for these customers.
Bitcoin and other cryptocurrencies are seen as a vote of confidence in PayPal, which is one of the most well-known companies for online payments.
When a user’s Bitcoin is sent through the blockchain, it can take up to 10 minutes for the currency to appear in their wallet. There is also the possibility of transferring Bitcoins to PayPal via this method.
In addition, PayPal partners with stores that are interested in promoting their customers. PayPal users can now use their cryptocurrency holdings to make qualified purchases of products and services.
In any case, this action is viewed as a prank by many staunch Bitcoin supporters as a ruse to defraud investors of their funds.
The classic cryptographic proverb that says “not your keys, not your coins” is a good reminder for users.
After discussing the advantages, the article moves on to discuss common objections to using PayPal to purchase Bitcoin and other cryptocurrencies.
Why You Shouldn’t Buy Bitcoin With PayPal
The purchase of cryptocurrencies is anchored on the tripod stand of a cryptocurrency wallet, centralized exchange (CEX), or a decentralized exchange (DEX) for customers’ preferences. But ordinary retail shoppers may have increased risk aversion since they don’t comprehend the technology behind cryptocurrencies.
PayPal makes it easy to buy digital currencies. Buying Bitcoin with PayPal is fairly easy for most individuals living in qualified countries. However, there are certain significant problems that consumers should be aware of before opting to use the platform for their cryptocurrency purchases:
1. Users Hold Fiat Equivalent And Not Crypto
PayPal never stores any of the cryptocurrencies that its users own. The company has custody of Bitcoin and the other cryptocurrencies it sells. Bitcoin and other cryptocurrencies cannot be directly owned by PayPal users.
But since users are not able to move their crypto assets outside of the platform, they technically do not possess any digital money at all.
Those with more experience will immediately discover that the program does not allow them to transfer their Bitcoin to PayPal or exchange them for other currencies. There are no digital wallets or wallet addresses provided by PayPal for its customers.
This means that PayPal account holders who own cryptocurrency on the site are still technically holding fiat. Fiat money is the sole kind of liquidity available to users when they withdraw their cryptocurrencies. Bitcoin cannot be transferred to PayPal as a result of this change.
What is the point of PayPal’s cryptocurrency service? Access to cryptocurrencies appears to be PayPal’s self-service strategy. PayPal can accomplish this by using money from its users. As a result, they have gained a reputation for publicizing their acceptance of cryptocurrencies while minimizing their own risk of exposure.
2. Users Can Experience High Transaction Fees
PayPal is well-known for its exorbitant fees. PayPal’s Bitcoin transaction costs are no different. A second problem with Bitcoin exchanges is that the fees they charge might be extremely high. There is a fee when buying or selling a currency pair, which is the difference between the asking and bid prices.
In countries where fiat currency may be deposited immediately into a crypto exchange, users are fortunate. The rules allow them to buy Bitcoin and store their assets in their digital wallets, which they can access at any time.
A Bitcoin exchange and digital wallet setup might be time-consuming.
More effort and training are needed. While this may seem counterintuitive, the more you learn, the more you realize that you should own your cryptocurrency.
3. PayPal Users Can Not Lend Their Cryptocurrencies
If certain circumstances are met in a smart contract, an algorithm is automatically activated to carry out the transaction. Because of this, smart contracts allow financial transactions to be conducted entirely between two parties.
DeFi’s capacity to create significant returns is a major selling point. In the absence of a central bank, interest rates can rise or fall as the market dictates. Double-digit gains on currency borrowing are not uncommon.
Banks would be embarrassed if they could compete with the substantial returns that Bitcoin may provide. PayPal does not allow its customers to make money from their cryptocurrency holdings without having to do anything else. These limitations are a big problem for cryptocurrency investors hoping to get the most out of their investments.
Even though PayPal users can buy Bitcoin directly through their platform, the features are still quite limited. Plans are in the works to add the ability to withdraw to third-party wallets in the future. In the meantime, several services enable you to buy Bitcoin with PayPal.