How to Buy Bitcoin With PayPal: Complete Beginner’s Guide

The act of purchasing bitcoin has become more and more convenient over the course of recent years, with a plethora of payment options popping up here and there. There is no surprise there; after all, investing in bitcoins has shown to be a very appealing and profitable endeavor.

A lot of users would like to get their hands on some cryptocurrencies without going through the tedious process of setting up mining equipment, accounts on exchanges, and going through the verification processes.

Casual investors would simply like to acquire bitcoins by using payment methods that they are comfortable with, such as PayPal. However, acquiring bitcoins with PayPal can be deceptively complicated. Luckily, this post will clear up the confusion and put you on your way toward acquiring digital assets with PayPal.

It’s Not that Easy – But Possible

There are no ways through which you can buy bitcoin using PayPal directly; there simply isn’t any support for that action currently. PayPal has taken a strong stance against cryptos, which may end up being a bad position as time goes on.

Thankfully, though, there are some ways to work around that and there are marketplaces online that allow bitcoins to be purchased with PayPal. Sure, it’s frustrating, and many people don’t understand why this is overly complicated.

However, there are a few good reasons why bitcoin can’t be purchased directly through PayPal. One major explanation is the fact that bitcoins are a direct competition to PayPal. Bitcoins also don’t allow chargebacks, and fake or even fraudulent charges are frequent due to bitcoin accounts being constantly targeted by hackers and scammers.

The Simple Reason why it’s hard to buy Bitcoin with PayPal is:
A PayPal payment is reversible; Bitcoin is not.

PayPal also may not like the fact that cryptos have the potential to do what it does, but without a central clearing authority that controls the flow and ownership of capital.

Top Options Compared

We go into the various options in more detail bellow, but if you are in a hurry – here are the top options for purchasing Bitcoin or other Cryptocurrency using your PayPal account.

	Virwox	LocalBitcoins	Paxful	xCoins
Countries	Worldwide	Worldwide	Worldwide	Worldwide
Fees	High	Low	Low	Low
Reputation	Good	Depends on Seller	Good	Good
Ease of Use	Medium	Easy	Easy	Easy
Limits	Medium	Depends on Seller	Depends on Seller	Medium
Review	Read	Read	Read	N/A
	Visit	Visit	Visit	Visit

PayPal Might Not Like the Competition

Make no mistake, PayPal is a massive company that has a lot to lose. When it began operating around the time of the internet bubble, it had the consumer digital payments marketplace to itself. Some of the early investors made loads of money from backing PayPal, and today the company is worth more than 100 billion dollars.

Unfortunately for PayPal, cryptos are a much better platform that is gaining in popularity. For the moment, cryptos don’t have the market reach that PayPal does. Cryptos also have a harder time interfacing with the global banking infrastructure, but that is changing as well.

PayPal has cemented its position in the global payment game with innovation, so it is easy to understand why they may be worried about a truly innovative payment system like cryptocurrency. In addition to being potentially free to use, cryptos offer their users a new level of control over their money.

If and when cryptocurrency is on par with PayPal as a settlement system, the prices of the major cryptos are likely to be much higher. It is worth learning how to move money from PayPal to cryptos, especially if you are using PayPal as a merchant account or to facilitate international money transfers.

Some banks have even been looking at using bitcoin to replace the SWIFT system, which only reinforces the disruptive power of cryptos. PayPal might be trying to delay the inevitable, which is creating headaches for their customers in the meantime.

Getting Around the Restrictions

You simply need to take a few extra steps to successfully acquire bitcoins with PayPal. Some solutions will be cheaper than others, and there is no set transaction time. Be sure to read about each individual platform, so you understand the pros and cons of each one.

There are exchanges out there that allow you to make such purchases; however, many of these exchanges place holds onto a user account until certain verifications are passed. It should be noted that PayPal doesn’t exactly appreciate users buying bitcoin through the platform, and it might occasionally scold users who try to do so.

Keep in mind that PayPal holds your money, much like a bank does. As long as PayPal is in possession of your funds, they aren’t really yours at all. If you want to jump into cryptos, there is every reason to do so. Prices have fallen a lot over the last year and a half, and many commentators think that the crypto market is ripe for a partial recovery.

PayPal still doesn’t want you playing in the crypto universe, but thankfully, there are a few workarounds so you do not get into trouble when you go crypto.

Top 4 Options for Buying Crypto With PayPal

There are three ways that you can circumvent PayPal’s restrictions on buying cryptos directly, and one that will require a little more work. Any of these methods should allow you to turn your PayPal balance into cryptos.

While all of these options will get the job done, none are going to be as fast or efficient as using a cryptocurrency exchange. The first three options will almost certainly have lower liquidity than an crypto exchange, and the prices paid for cryptos are probably also going to be higher.

1. Peer-to-Peer (P2P) Marketplaces – A P2P market place is a lot like an exchange, but there is no intermediary between the buyer and seller. Instead of buying your cryptos from the exchange, you would buy them from another user. Sellers can choose what kind of payment they accept, and PayPal is an option. The upside to using a P2P marketplace is that you don’t have to jump through a bunch of hoops to prove your identity. The anonymous nature of bitcoin has been a pain for the established financial system, though many crypto purists feel that their digital privacy is being eroded. Most cryptocurrency exchanges have adopted varying levels of Know-Your-Customer (KYC) regulations, but P2P marketplaces are more relaxed in this regard. The downside is that there will probably be less liquidity on a P2P marketplace, so the prices may not be as competitive.
2. Cryptocurrency Exchanges – While cryptocurrency exchanges are almost universally barred from doing business via PayPal, there is one that will allow you to trade money in a PayPal account for cryptos. VirWox wasn’t designed as a crypto exchange, but it does allow you to buy Bitcoins with PayPal.
3. P2P Lending Platforms – It might seem strange to borrow Bitcoins if you want to buy them. There are P2P lending platforms that will allow you to borrow cryptos, and then pay off the loan immediately using a PayPal account. xCoins is one of the most popular options, and it is a way to turn your PayPal balance in to Bitcoin. Crypto lending might not sound like a great way to get bitcoin, but xCoins has a very innovative platform. The company has found a way to ‘sell’ bitcoins to people who use PayPal, and it has been getting good reviews. Unlike other P2P platforms, xCoins acts as a matchmaker, so both sides get optimal pricing.
4. Use The Bank – During Bitcoin’s peak in late 2017 major banks banned the use of their services with many crypto exchanges. The bans seem to have been a result of fuzzy KYC policies at crypto exchanges, and not a fundamental problem between established banks and the crypto world. As crypto exchanges have embraced international KYC standards, the major banks seem to be more willing to let their clients interact with them directly. This makes buying cryptos on an exchange like Coinbase with your debit card easy, instead of dealing with PayPal.

Purchasing Bitcoin with PayPal

There are a few ways to convert your PayPal cash into bitcoins without getting nailed by the PayPal police. Before you decide to go a direct route, check out the fourth option listed below. It is worth working out the cost savings between platforms, and seeing which way will make the best use of your cash.

P2P crypto trading or lending is a great idea, but at the moment, it isn’t as popular as crypto exchanges. That may mean higher prices, longer wait times to do a deal, and less security in the transaction. Regardless, all of these platforms are worth researching, as they all offer unique features.

VirWox

You should know that the PayPal terms of service allows for the use of Second Life Lindens, or SLLs, to make bitcoin purchases. Thanks to this, several exchanges have sprung up that provide SLL services, and the best of these exchanges is VirWox.

Despite this designation, it doesn’t function quite like a full-blown exchange. Instead, it’s a platform that serves the famous Second Life game as a means to purchase in-game collectibles.

The game is actually big enough to be fully accepted by PayPal, and that creates a gray area for using in-game money to purchase bitcoins.

To start purchasing bitcoins through VirWox and PayPal, you first need to establish a budget for yourself, do some research pertaining to cryptocurrencies, study up on some exchanges and platforms, and set up a bitcoin wallet.

Following this, you should visit VirWox and open up an account there, fill in the appropriate information boxes, and confirm your account via email. Then, you can deposit money into your VirWox account through PayPal.

After this, you will have the option of exchanging your balances for SLL, after which an option to convert SLL to bitcoins will be presented to you. Generally, VirWox will place a 10 percent transaction fee on users due to PayPal; unfortunately, the fee is inevitable. After purchasing bitcoins through VirWox, it is recommended that you transfer your bitcoins to your personal wallet. Transfers to wallets can usually take up to two days.

Many other platforms and services besides VirWox have been popping up on the web, providing users with the option to purchase bitcoins through PayPal. They might not be as popular and frequently used as VirWox; yet, they are still worthwhile and great alternatives.

If you want to know more, check out our complete Virwox Review here.

Visit VirWox

LocalBitcoins

LocalBitcoins is a highly reputable bitcoin exchange platform used all over the world. It provides a virtual setting through which buyers can connect with sellers and conduct their exchanges through a variety of payment platforms, including PayPal.

In the beginning, LocalBitcoins was just a simple way for people to meet-up, and trade something for bitcoins. Remember, the first bitcoins were traded for two pizzas a few years before LocalBitcoins went live.

If you decide to utilize LocalBitcoins, you would have to find and connect with an individual who is willing to accept PayPal as a form of payment for bitcoins. LocalBitcoin users are responsible for conducting their own due diligence pertaining to the sellers that they communicate with.

Generally, the platform is quite safe and reputable. If you want to take a deep dive into the platform, have a look at our full review of LocalBitcoins here. Basically, all you have to do is find a local seller, and decide on a price for their bitcoins.

Here are a few tips for choosing a seller on LocalBitcoins:

4. Take a look at the seller’s feedback. The closer to 100%, the better.
5. Trade limits matter. Make sure that the seller you are dealing with can fill your order.
6. Has the seller done a lot of deals? It is better to do business with an experienced seller.
7. How long is the seller willing to wait for payment? Make sure you know up-front.

While many sellers on LocalBitcoins will accept PayPal as a payment option, they may charge a premium due to the risk of chargebacks. If you are able to transfer your PayPal balance to your bank account, and pay cash for bitcoins via LocalBitcoins, it may end up being cheaper overall.

It is important to remember that once you decide to buy bitcoins on LocalBitcoins, any further communication must be made via the site. If you have any problems later on, that communication record is the only way you will be able to show the site owners what happened.

Take a look at our full review of LocalBitcoins here.

Visit LocalBitcoins

Paxful

Paxful is a service that allows users to create accounts, find sellers, and exchange funds in PayPal accounts for bitcoins. What’s great about Paxful is that it uses an escrow service to provide additional security for buyers. Overall, Paxful is nice; however, it has yet to have reached optimal public acceptance.

One of the biggest issues with platforms like Paxful is that the price you pay is likely to be much higher than on an exchange. The sellers aren’t likely to offer their bitcoins at any sort of discount to market prices, and they have to account for the risk of chargebacks.

Paxful is a good platform, and it is nice that it exists. Unfortunately for P2P crypto trading, the exchanges offer much more competitive rates for cryptos. This may change in the future, if P2P trading increases in popularity. For now, they may not be the best way to turn your PayPal balance into BTC.

Read our complete guide to Paxful here.

Visit Paxful

xCoins

xCoins has an interesting business model. Instead of selling bitcoins outright, it facilitates the lending of bitcoins with the option to buy. In order to use xCoins, you will need to open an account. The platform is also limited in terms of what nations can use it, which is something to keep in mind.

The account opening process at xCoins is straightforward. Once your account it open, you can tender an offer to borrow (buy)buy bitcoins, and xCoins will automatically match you with a seller that fits your needs. Unlike other P2P bitcoin trading platforms, xCoins acts as the intermediary.

With xCoins, you won’t be able to choose a specific seller, but you can decide if the deal offered fits your needs or not. Once you agree to the offer, you will have to pay the lender (seller). The seller will be paid a given amount of money for their bitcoins, plus an agreed upon fee. After that, the bitcoins will be sent to the borrower (buyer).

The system that xCoins created is a nifty way to get past PayPal’s crypto ban, but it isn’t a perfect solution. The delivery of the bitcoins can take more than half an hour, and the prices are likely to be higher than an exchange. Most places outside of North America and Europe aren’t supported either, which will act as a major drain on market liquidity.

Overall xCoins is a very innovative new platform, and does allow people to trade their PayPal balance for bitcoins. The platform also has a high level of security, and allows uses to pay with credit cards via PayPal as well. Keep in mind that xCoins only deals with bitcoin, but you can swap your bitcoins for just about any other token once you have them.

Visit xCoins

Another Way to Blow Through PayPal’s Crypto Blockade

Depending on the country you live in, using your credit or debit card might be the easiest way to turn your PayPal balance into cryptos. If the country you live in allows you to buy cryptos with your bank account, just send your PayPal balance to your bank account, and buy whatever cryptos you want on an exchange like Coinbase.

There are also software wallets like Atomic Wallet that have an exchange connection built in, so making a purchase is very simple. Of course, you will want to transfer your cryptos to whatever wallet you use, and not leave them on the exchange, unless you plan to trade with them.

The fees connected with using your bank account to buy cryptos may also be lower than using one of the other methods described above. The major upside to transferring your PayPal balance to your bank, and using a credit or debit card will be that there is no way for PayPal to intervene in the transaction.

On the downside, transferring your PayPal balance to a bank account, and then buying cryptos is a much slower process.

You may have to wait as much as a week to use your funds, though it could be much faster depending on your bank. While not a perfect solution, dealing directly with a crypto exchange will give you access to the best prices possible, as the exchanges have the highest liquidity in the marketplace.

Conclusion

It is a pity that PayPal has taken such a harsh view of cryptocurrency, as it would make a great addition to their platform. Instead of leveraging a new technology to grow, PayPal may be creating a situation that limits their competitiveness over the next decade.

Despite PayPal being quite safe and trusted, as well as there being exchanges that accept payments through PayPal, it is very important that you keep your bitcoin wallet as safe as possible.

Whether you store it on your personal computer, use online wallet services, or employ some kind of cold storage method, remember to never give out your private key to anybody. Nobody needs to know any information pertaining to your recovery seed or private key. After all, you don’t want anybody stealing your efforts, time, and assets!

Out of the various ways through which you can buy bitcoins using your PayPal account, it’s up to you to decide which exchange method best suits your needs and preferences. Keep in mind that in order to use PayPal for bitcoin purchases, your account must first be fully verified, meaning that you must link your bank, link your debit cards, and go through some identity verification controls.

Bitcoin is a highly volatile cryptocurrency, which can bring about great destabilization to the financial world, as well as awesome returns for investors. You now should better understand some of the ways in which you can get on the path to purchasing bitcoins with your PayPal account. None of them will be as easy a buying cryptos on an exchange, but at least you have some options!