Buying Bitcoin with PayPal has always been a very touchy issue, to say the least.
While there are ways out there to marry the popular payment service off with the world’s most popular cryptocurrency, none of these ways are particularly practical at this point.
That much you should know before you even get into this article.
With that in mind, it is clear that we’re not really talking about the “3 best ways to buy Bitcoin with PayPal in 2018” here, but rather, the 3 “least bad” ways to accomplish the deed.
PayPal’s relationship with BTC has always been a troubled and contradictory one.
Peter Thiel, PayPal’s co-founder, is one of the biggest supporters of the cryptocurrency phenomenon in general, and bitcoin in particular.
He is heavily invested in the new “digital gold” and he is a great advocate of Bitcoin’s still untapped potential.
Even on a company level, PayPal have been promoting cryptocurrency use, though they have never accepted any buying/selling of Bitcoin through their own service.
Indeed, PayPal’s policies strictly prohibit the use of the service as a currency exchange, and therefore the trading of BTC as well.
Why is that the case though?
Between PayPal and Bitcoin, there is a fundamental – and at the end of the day: irreconcilable – conflict of technology, which gives rise to friction that just cannot be managed.
PayPal – as a method of payment – is a very reversible one.
Focused on consumer protection, PayPal allows users to reclaim spent funds for up to 60 days.
Bitcoin on the other hand is not reversible at all.
Once sent, the coins are gone for good.
The problem – from the perspective of the above said technology conflict – is that this lack of reversibility is hailed as one of BTC’s advantages, while PayPal’s ridiculously generous reversibility is indeed one of its top advantages.
To make a short story even shorter: scammers can frolic around unfettered in a setup which leaves this conflict unaddressed.
Just picture this: a crooked operator offers to buy your BTCs.
He makes the payment, and you send him the coins. He then does a chargeback and reclaims the money he sent you, while keeping your coins. There is nothing you can do at this point to reclaim your bitcoins; they are gone for good.
The potential for scams here is obviously too great.
That said, let us cut to the chase and see how you can turn your PayPal USDs/EURs into BTCs.
Just one more tiny detour though: some websites out there try to bring CFD trading into the picture.
We’ve seen eToro mentioned as a way to “buy” and “sell” Bitcoin with PayPal.
This is just a cheap attempt to set an affiliate client-acquisition into motion though.
eToro is an online trading platform which offers Contracts for Difference on various crypto (among them Bitcoin) pairs. Through these financial derivatives, traders essentially bet on the price evolution of these pairs.
Actual bitcoin purchasing and ownership has NOTHING to do with this setup, so this “method” has no place whatsoever on this list.
Virwox – the best (or rather: the “least bad”) way of buying Bitcoin with PayPal leads through Second Life’s virtual exchange.
This method has been around for a while, and it is in essence nothing more than an opportunistic work-around.
Still, despite the high fees it entails, it remains a viable option for potential PayPal-to-Bitcoin buyers all over the world.
The Virwox path takes advantage of the fact that the exchange accepts PayPal deposits, and it allows its users to buy SLLs (Second Life Linden dollars – a kind of in-game currency) with them.
With these SLLs, one can then buy BTC, which can be withdrawn to a wallet.
Even though the workaround is fairly straightforward, it has scores of limitations.
The fees involved are massive.
One is charged for every conversion and in the end, for the BTC-to-wallet withdrawal as well.
These fees vary and change all the time, but they do round out to be rather hefty.
In addition to that, due to the chargeback risks assumed, Virwox feature a set of limitations on PayPal deposits.
Newly signed-up users can deposit a maximum of only $90 per day, up to a maximum of $270 per month.
Level 4 users – which is the maximum level – can deposit $1,000 per 24 hours, up to a maximum of $15,000 per month though, so that is a lot more practical.
Following a SLL-to-BTC transaction, the cryptocoins land in the buyer’s account in about 48 hours.
Why are Virwox allowed to sell you SLL for PayPal money?
Probably because unlike bitcoin, SLL is not anonymous, and proof of its transfer can be produced.
How do you go about making a BTC purchase through Virwox?
Virwox GmbH is an Austrian company, with its website located at www.virwox.com.
Users from most European countries are welcome and indeed – at least in theory – everyone with a PayPal account can make a deposit at the exchange (that includes the US).
Other deposit methods are of course also available.
Just head on to the site, create a free account there, activate it through email, switch your default password and click on “Deposit.”
Use the PayPal Express Checkout feature to make your deposit.
Go to the exchange and click on the USD/SLL pair. Make your purchase.
Head on to the SLL/BTC pair then and use your freshly bought SLLs to purchase BTC.
The first time you acquire BTCs this way, a manual review may be required for your transaction. This can take anything from 6hrs to 48hrs.
When the BTC is in your account, just click “Withdraw” and have the coins sent to your wallet’s address.
While most of the time, this method works fine, there have been cases when the Bitcoin-side of the transaction failed. Users got their monies back in every one of these cases though.
We have already covered fees above, but as stated, their rate changes all the time. Caktux.ca/virwox is a tool you can use to calculate the likely amount it will cost you to grab your much-desired BTCs.
Another method to consider for Bitcoin buying with PayPal, is LocalBitcoins.
We’ve already reviewed this service and indeed, if it weren’t for Virwox’s longevity and relative reliability, this method would be at the top of this countdown.
Local Bitcoins is a peer-to-peer service, which allows you to contact geographically close people who are willing to sell you their BTCs.
Though theoretically outstanding, the Local Bitcoins setup is obviously vulnerable to scamming as well.
The fees are high in this instance as too and many sellers do not accept PayPal as a payment method due to the vulnerabilities already discussed at the beginning of this article.
If they do take PayPal, they will always try to make up for the extra risk they take, through a steeper-than-usual sale price.
At the Local Bitcoins site, simply enter your country, amount of money you’re willing to spend and your payment method, and run a search on the sellers who fit your criteria.
If you find any, make sure the seller on whom you decide, has a high feedback score.
It takes many successful transactions to build up this score, and those with good feedback scores are always more trustworthy than those without.
Sellers also have limits set on the amount of BTC they will sell, as well as a payment window (the amount of time you have at your disposal to make the payment). Make sure these variables suit your needs too. Additional terms of trade set by the seller may also apply.
Sellers may require that the buyer have some kind of an initial reputation too.
When every detail about the trade is to your (and your seller’s) liking complete the trade.
This method may be quicker than Virwox, but it may indeed even be costlier.
It is also quite global in reach.
The Wirex card may offer yet another avenue for people interested in buying bitcoins with PayPal.
Wirex is a crypto-friendly, currency account provider, that also offers debit cards.
If you know the way PayPal operates, by now, you’ve probably already pieced together how this setup works.
All you really need to do is to create a free Wirex account, request a debit card from them (a Virtual card will do great and it only costs some small change) and then register the card with your PayPal account.
You will need to have some funds on it ($3 will work), so you can do the verification procedure required by PayPal.
As part of this procedure, PayPal will charge you a minute amount (then send it right back) giving you a 4-digit code in the transaction information. You will use that code for the confirmation of your debit card.
Once you’re done with the verification, you’ll be able to withdraw funds from your PayPal account to your Wirex debit card. With that money, you will then be able to purchase bitcoins.
Though rather lengthy, the card-verification procedure is a one-time affair.
Withdrawing funds from your PayPal to your Wirex card can take up as many as 7 days though, and that’s a reoccurring issue there.
The fees associated with this method are not particularly steep (though PayPal will take every opportunity to nibble away at your funds as you move them around), but it can take as many as 10 days to get the money “into position” for the purchasing of your bitcoins.
Assuming that you do not receive funds into your PayPal account from elsewhere, you will have to fund your account too.
This is the most straightforward part of the money-moving acrobatics required by this PayPal-to-Bitcoin setup though.
Wirex’s services are available in most countries, though their virtual card feature is most definitely not.
In most of the EU countries it is available, though NOT in the US.
Check at Wirex’s site whether your country is supported.
There are some other ways to purchase BTC through PayPal, but most of them are shady, sketchy and generally: not exactly trust-inspiring.
We have decided not to feature any of the “solutions” in connection with which we received negative user feedback.
Paxful may indeed be seen as another legitimate method, though it is essentially the same as the LocalBitcoins method described above.
The costs involved in a Paxful purchase are pretty steep, due to the exchange rates pushed by sellers, who are obviously keen on shielding their end of the bargain from risk, as much as possible.
The possibility of scamming exists too, of course.
The bottom line
We are not claiming that any of the above-presented ways of buying bitcoin with PayPal are optimal.
In fact, they are far from it.
There is just no better alternative out there for the time being.
Consider these last-resort solutions only if – for one reason or another – you REALLY need to buy BTC with PayPal.
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