You may have stumbled upon this article without being fully aware of what cryptocurrencies really are, given that their relevance to global online trading is still quite recent. If you already know the basics, then skip to point 3.
So before we really get into explaining how Bitcoin can be acquired into your PayPal account, we will take it in turns to describe them both in full.
1) What is a Cryptocurrency?
Cryptocurrencies (Bitcoin, Ethereum, NEO) work, for all intents and purposes, like the paper money that we are familiar with except for one very noticeable distinction: their intangibility.
- A cryptocurrency or digital currency is a means of exchange used for trading purely information, in a process based on specific cryptographic principles.
- Cryptography itself is what secures transaction and controls the production of new coins.
- You may have already heard about bitcoin, the first cryptocurrency created back in 2009.
- Now there are several hundred other cryptocurrencies that have popped up, which are collectively known as Altcoins. However,bitcoin remains to this day the most popular cryptocurrency in existence.
There are some other key differences to be mindful of when comparing cryptocurrencies to fiat currencies. They are not under any regulation by a centralized banking system. Rather, they are entirely decentralized.
Many have been configured to gradually lower their production to generate a market cap.
Bitcoin, for instance, will never exist in excess of 21 million coins. In the case of fiat currencies, there is always the possibility of creating more, which explains inflation for the most part.
The actual system by which all cryptocurrencies operate was developed by one Satoshi Nakamoto.
2) What is PayPal?
Unlike cryptocurrencies, there is a lot less orientation required for you to understand PayPal. It is basically a financial service that offers you a safe and secure online account through which you can make your purchases.
You just need to provide details of your bank account, credit and debit cards, and you are good to go.
With PayPal, you can conduct transactions with a wide variety of places including petrol stations, retail traders, and restaurants. But you can also be paid in addition to paying.
Whatever funds you receive via PayPal will remain in your PayPal account until you use them to pay for something or have them transferred to your bank accounts/cards.
There is also the possibility of a fee being charged whenever funds are deposited into your PayPal account, for instance, when you make a sale on eBay. However, most of its functions are on hand free of any commissions.
You can even freely transfer funds to your friends and family members,as long as it uses the same currency.
3) Buying Bitcoin with PayPal
As we mentioned earlier in our description of cryptocurrencies, they are a rather recent addition to the online trading community. In fact, not even a decade has passed since the arrival of bitcoin, the oldest and most widespread cryptocurrency around.
Ever since its arrival, our methods of acquiring it have been steadily increasing and improving. Now there are several ways of consolidating cryptocurrencies that have been proven to carry immense profit potential.
Even so, it is understandable that traders would prefer to purchase cryptocurrencies without being burdened with the task of using mining equipment, creating accounts with exchanges, and having to endure processes of verification.
The more liberal investors prefer to rely on payment mechanisms they are already comfortable with, like PayPal. However, make no mistake, purchasing cryptocurrencies with PayPal is easier said than done. But it is not entirely impossible and that is what you should be counting on.
4) How hard can it be?
Unfortunately, there is no direct way of acquiring cryptocurrencies using PayPal. The solution to that is yet to be found. However, thereare other, albeit less elegant but still effective ways of doing it.
To make things easier, let us focus momentarily on the most lucrative cryptocurrency there is right now, bitcoin, and use it as an example to shed some light on the general state of trading that involves the purchase of cryptocurrencies using the services of PayPal.
In the case of bitcoin, it actually happens to be in direct competition with PayPal. Also, part of trading in cryptocurrencies like bitcoin is accepting the reality of no chargebacks, and falling victim to fraudulent commissions since your account could make an attractive target for online hackers.
5) Hard or soft?
The level difficulty with which you buy cryptocurrencies using PayPal has a lot to do with whether or not your choice of cryptocurrency is hard or soft. The defining feature with hard cryptocurrencies is that they do not facilitate the reversal of a transaction. Bitcoin, for instance, is a hard cryptocurrency. Besides, PayPal is not exactly fond of having its platform used to purchase bitcoins which could land you in a spot of bother.
If your cryptocurrency of choice falls into the soft category- that means it does allow for the reversal of payments- and for that, you can use methods like PayPal and credit cards.
Are there ways to soften hard cryptocurrencies? Yes, there are, by use of a reliable intermediary or an escrow service.
6) Alternatives To Buying Bitcoin With Paypal – VirWox
It is important to note that PayPal does allow the use of Second Life Lindens (SLLs) to make purchases with hard cryptocurrencies such as bitcoin. The demand for SLLs has seen several exchanges include it among their services and the best of them all so far has turned out to be VirWox. Although it is, in fact, the best exchange, it does not exactly operate like a full-on exchange. Rather, it offers the well-known Second Life game as a way of purchasing in-game collectibles. The game actually creates enough of a gray area where you can use in-game funds to purchase virtual funds.
7) Other considerations
If you are a forex trader, consider opening an account with something like Plus500 that is compatible with both PayPal and cryptocurrencies.
Paxful is another independent service that allows you to open an account, seek traders, and make transactions between PayPal accounts for hard cryptocurrencies like Bitcoin. There is even an escrow service here that increases security for traders.
If you are looking for other alternatives, you could deposit with paypal to cryptocurrency brokers and start trading Bitcoin and other coins.
Conclusion
Yet for all this, there is still some way to go before the purchasing of cryptocurrencies like Bitcoin with PayPal becomes a no-brainer. The existing methods will continue to improve as demand increases.