What you need to buy bitcoin with PayPal
PayPal and the bitcoin network don’t work well together, so it can be a bit tricky to buy bitcoin or other cryptocurrencies with PayPal if you don’t know the best way to go about it. Fortunately it’s fairly easy once you know where to go, so we have some information to help you.
Quick guide: How can I buy bitcoins in Australia?
- Register for an account with CoinSpot.
- Enable 2-factor authentication.
- Verify your account.
- Click “Deposit AUD”.
- Transfer funds into your account.
- Click “Buy/Sell” at top of screen.
- Search for bitcoin and click on “Buy BTC”.
- Enter the amount of BTC you want to buy or the amount of AUD you want to spend.
- Review transaction details.
- Click “Buy BTC”.
Why is it so hard to buy bitcoin with PayPal?
Bitcoin transactions are irreversible, while PayPal supports chargebacks. This makes it relatively easy for someone to buy bitcoin with PayPal, complain that they never received the goods and ask for a chargeback.
Unlike physical goods, it would be almost impossible to work out whether or not chargeback requests for bitcoin are legitimate.
Where and how to buy Bitcoin with PayPal
There are several services that can facilitate PayPal-to-bitcoin transactions. The advantage is that you can quickly and easily make a payment with PayPal.
The downsides are that your options are limited, and that you’ll often have to take extra steps which can be inconvenient and might mean slightly less value for money than other payment methods.
Four well-known options, roughly arranged from least to most complicated, are:
- LocalBitcoins and Paxful. Buy bitcoin peer-to-peer with PayPal. There are no limits other than those set by the seller.
- xCoins. Use PayPal to buy up to US$1,000 in bitcoin per transaction.
- VirWox. Use PayPal to buy up to €1,000 in bitcoin per 24 hours, up to €10,000 per month.
How to buy bitcoin with PayPal on LocalBitcoins
LocalBitcoins is a peer-to-peer exchange service. It simply lets you find bitcoin buyers and sellers in your local area, and make the transfer in a way that suits you both.
Once a buyer and seller have connected, they both transfer the funds and bitcoin to a LocalBitcoins account. As soon as the funds from both parties are accounted for, the bitcoin and currency are sent onwards to each party.
LocalBitcoins lets you use PayPal for these transfers. Simply use PayPal to send money to the LocalBitcoins account in the normal way.
Pros and cons of using LocalBitcoins
Pros
- Simple, quick and easy.
- Potentially one of the most cost-effective ways to buy bitcoin with PayPal.
- No set transfer limits.
Cons
- You’ll need to find a seller/buyer.
- The rates you get are determined by the kind of deal you find.
- Sellers might choose not to accept PayPal.
Learn more about LocalBitcoins and see how it works here.
How to buy bitcoin with PayPal on Paxful
Much like LocalBitcoins, Paxful is a peer-to-peer bitcoin exchange. You create an account and browse the buyer and seller offers.
Once you’ve agreed to a trade with another user, the seller sends their bitcoin, and the buyer sends their dollars (or other currency) to escrow. After the trade has been confirmed, the funds are released to each party.
Pros and cons of using Paxful
Pros
- Simple, quick and easy.
- Potentially one of the most cost-effective ways to buy bitcoin with PayPal.
- No set transfer limits.
Cons
- You’ll need to find a seller/buyer.
- The rates you get are determined by the kind of deal you find.
- Sellers might choose not to accept PayPal.
Learn more about Paxful and see how it works here.
How to buy bitcoin with PayPal on xCoins
xCoins is a combination peer-to-peer lending platform and bitcoin exchange. Instead of buying or selling bitcoin, users offer loans to each other and set an “interest rate”.
These “loans” are repaid in one payment, making it functionally almost exactly like buying or selling bitcoin.
Sellers “lend” bitcoin, and buyers take this “bitcoin loan” to repay in a single payment later on.
This means it functions a lot like a bitcoin exchange, but can do things a typical exchange can’t, such as accept PayPal or credit card payments.
Pros and cons of xCoins
Pros
- A potentially useful system for buying bitcoin with PayPal.
- Relatively simple.
Cons
- It’s more convoluted than some other options.
- The “interest rates” mean you might not find value for money when buying on xCoins.
- US$1,000 transfer limit applies.
- xCoins does not accept AUD so you might need to use the PayPal exchange rates.
Learn more about xCoins and see how it works here.
How to buy bitcoin with PayPal on VirWox
VirWox is a unique cryptocurrency exchange. It was originally founded in 2007 to facilitate the trade of Linden Dollars (SLL), the currency used in the Second Life video game. Since then it’s adapted its systems to bitcoin and other cryptocurrencies.
You can buy bitcoin with PayPal on VirWox by purchasing SLL, and then trading your SLL for bitcoin. Here are the steps to do that:
- Create and verify an account on VirWox
- Deposit money into the account with PayPal
- Buy SLL with the deposited money
- Trade SLL for bitcoin
- Withdraw your bitcoin
Pros and cons of VirWox
Pros
- One of the only ways to take advantage of advanced trading systems like limit orders with PayPal deposits.
- Potentially one of the safest and most reliable ways of buying bitcoin via PayPal.
- One of the oldest digital currency exchanges in the world with many users.
- One of the only ways to make deposits into a full service bitcoin exchange with PayPal.
Cons
- More convoluted than other payment methods
- You’ll need to pay a fee when converting your deposit to SLL, and again when converting it to bitcoin
- VirWox does not accept AUD so you might incur even more fees for converting from AUD to USD, euros or other accepted currencies
Learn more about VirWox and see how it works here.
Images: Shutterstock, LocalBitcoins, Paxful, xCoins, VirWox
