How to buy Bitcoin with PayPal UK

In recent years, there has been an explosion of interest in how to buy and sell bitcoin as the cryptocurrency saw strong growth. This bitcoin cash made many investors very rich and so garnered a significant amount of attention from the mainstream media.

Of course, while buying and selling digital currencies on crypto exchanges can be potentially very lucrative, many people have anxieties over how safe it really is. As you may know, there has been a significant rise in the number of bitcoin scams in recent months.

Thankfully, in August 2021, PayPal announced that they are now allowing UK users to buy Bitcoin and other cryptocurrencies, as they partner with the Paxos Crypto Brokerage.

If you’re interested in trading digital currencies, you might now be wondering how to buy bitcoin with PayPal. UK investors now have a valuable opportunity to decrease their risk exposure using this payment platform and you could benefit from this.

To find out more about how to buy bitcoin with PayPal, read this comprehensive guide for everything you may need to know.

Why is cryptocurrency so popular?

If you’ve seen any headlines in recent years, you can hardly have missed the rise of digital currencies such as bitcoin, ethereum, and litecoin. With many people losing faith in global finance, some have turned to alternative ways to invest and transfer money.

However, it was only really in 2017 that many people became aware of the role digital currencies could play in the modern economy when an investing boom caused the price of a bitcoin to surge to more than £12,000 each.

Since then, there has been a large rise in its value as many investors have seen its potential for significant gains. According to the Guardian, bitcoin is now the world’s largest digital currency, with a market value of more than $1.1 trillion.

Anyone with a credit or debit card can explore cryptocurrency investment options and potentially make large profits.

Why should I buy cryptocurrency?

One of the most obvious reasons why people buy, hold, and sell bitcoin is that there is the potential to make a lot of money.

If you manage to time the market right, you could make a significant profit by buying and selling bitcoin. Of course, the reverse is also true as a market downturn could cost you a large amount of money if you aren’t careful.

Of course, if you want to get involved then it’s important to ensure that you’re using the best cryptocurrency platform for your needs.

What are the risks of buying cryptocurrency?

Of course, while there can be major opportunities when buying and selling cryptocurrency, there can also be significant downsides too. Two of the biggest ones are:

Price fluctuations

The price fluctuations that make crypto attractive can also be a bit of a double-edged sword. While there is the potential for the value of your investment to rise significantly, there is also the chance for it to fall.

If you are unlucky, a market downturn could wipe out a large portion of your investments and this loss of wealth could impact your progress towards your life goals.

The threat of scams

As I mentioned in my guide about how to buy cryptocurrency, one of the biggest problems with the lack of central control is that if you fall victim to a crypto scam, there’s very little you can do to get your money back.

With the large amounts of money being traded in bitcoin, the anonymity of accounts, and cryptocurrency’s decentralised nature, these markets can be a haven for scammers. That’s why many investors are concerned about trading in crypto.

Why is PayPal getting involved in cryptocurrency trading?

As you may have seen, PayPal recently announced in August 2021 that it will offer UK users the ability to buy, hold and sell four cryptocurrencies: bitcoin, ethereum, litecoin, and bitcoin cash. They have partnered with the Paxos Crypto Brokerage to offer these services.

For people who are familiar with PayPal and the secure payment service they offer, crypto traders will be pleased to see that this company wants to meaningfully contribute to this innovative new sector.

It is likely that, with the support PayPal is offering to the crypto market, there may be further interest in cryptocurrency trading. There are an estimated 2 million regular monthly PayPal users in the UK, which means that the change could cause more people to start investing in crypto.

According to Jose Fernandez da Ponte, vice president and general manager of blockchain, crypto, and digital currencies at PayPal, this was because:

“The pandemic has accelerated digital change and innovation across all aspects of our lives— including the digitisation of money and greater consumer adoption of digital financial services.

“Our global reach, digital payments expertise, and knowledge of consumers and businesses, combined with rigorous security and compliance controls, provides us the unique opportunity, and the responsibility, to help people in the UK to explore cryptocurrency.”

How can using PayPal help me to buy bitcoin?

If you’ve ever made an online purchase with PayPal, you’re probably aware of how useful it can be. Instead of directly transferring your money to a seller, PayPal deposits it in their account on your behalf. This means that if you fall victim to a scam, you can get your money back in your bank account more easily.

The move also makes it much easier to buy and sell cryptocurrency, as you can do so through a trusted outlet. All you need is a PayPal account and you can get started.

Can you buy bitcoin with the Paypal app?

As previously mentioned, PayPal will soon offer users the opportunity to buy, hold, and sell cryptocurrencies through the PayPal app. This includes bitcoin, ethereum, litecoin, and bitcoin cash.

When the feature launches, you will be able to use the new ‘Cryptocurrency tab’ to trade them to your heart’s content, with a minimum purchase and deposit of only £1.

This crypto tab in the app will also feature live price charts, which can enable you to follow the market movements of your chosen digital currencies. If you’re interested in investing in them, but want to make a properly informed decision first, the PayPal app’s crypto tab also offers introductory and educational content to bring you up to speed.

Furthermore, they are also working in collaboration with the strictly-regulated Paxos platform, so you can have greater peace of mind when buying cryptocurrency.

This new feature of their app, as well as their work in collaboration with its Crypto Checkout Service, is an important step in making cryptocurrency a more viable payment method.

Are there transaction fees when I’m buying crypto with PayPal?

While PayPal can give you invaluable peace of mind when you buy, sell, and hold bitcoin, since you don’t have to worry about the prospect of being scammed, it does come with a charge. Whenever you buy bitcoin with PayPal, you will have to pay a small fee in order to use the service.

When PayPal’s cryptocurrency service launches, the fee structure should look like this:

• If you are buying £1-£24.99 of crypto, you will have to pay a flat £0.50 charge
• If you are buying £25-£100 of crypto, you will pay a 2.3% fee on your purchase
• If you are buying £100.01-£200 of crypto, you will have to pay a 2% fee
• If you are buying £200.01-£1,000 of crypto, you will have to pay a 1.8% fee
• If you are buying more than £1,000 of crypto, you will have to pay a 1.5% fee

Of course, no matter how large or small the charge is, these fees will eat into your profits, so it’s important to bear this in mind when you are trading, as it could impact your strategy.

What are some ways that I can use PayPal to buy bitcoin?

If you want to use your PayPal account to buy, sell, or hold cryptocurrency then there are several ways in which you can do so:

Crypto exchange platforms

One of the most obvious places to buy and sell cryptocurrency is through a crypto exchange. While many of the major ones, unfortunately, don’t accept PayPal for purchasing cryptocurrency, there are some exceptions.

Peer-to-peer marketplaces

Another of your main options to buy and sell cryptocurrency with PayPal is through a peer-to-peer marketplace, such as with a LocalBitcoins account. As you may know, these exchanges allow buyers and sellers to link up and trade directly.

The benefit of this system is that it allows sellers to set up their own exchange rate and choose their preferred supported payment methods. Many sellers do accept PayPal payments and the site allows you to filter your search to find the ones who do, making it faster and easier to buy and sell.

Why don’t all exchanges accept PayPal?

With PayPal’s secure method of payment, which helps to protect your bank account from scammers, you might be wondering why more platforms don’t offer their services when letting you buy bitcoin.

Ironically, the answer to this is that it is to protect you from scammers. As you may know, Paypal supports chargebacks while cryptocurrency transactions are irreversible.

This means that it can be easy for a criminal to buy bitcoin with Paypal, complain that they never received their cryptocurrency, and then ask for a refund from PayPal.

This way, they could keep their money and essentially get their hands on cryptocurrency free of charge. To protect their users from this risk, only a few of the major cryptocurrency platforms accept PayPal deposits from buyers.

What are the pros and cons of buying bitcoin in this way?

As you can see, while there are many benefits to using PayPal if you want to buy bitcoin, there can also be some drawbacks. On balance, here are the pros and cons of using it:

Pros

Security

PayPal users can take advantage of their Buyer’s Protection, meaning that you can buy bitcoin without fear of being scammed, as you can be refunded if you use your PayPal account for a purchase but never receive what you bought. This can be a significant weight off your mind.

Speed of purchase

One of the main benefits is that, as long as you already have a PayPal account, it enables you to buy Bitcoin in a fast and convenient way. This is particularly true if you already have a linked bank account or funds in your PayPal balance.

As you might imagine, this means that you can buy Bitcoin very quickly, such as if you want to take advantage of an anticipated market spike.

Quick withdrawals

While PayPal is obviously useful when you want to buy bitcoin, it can also be handy for when you want to make a withdrawal. At some point, after you’ve made money through your investments, you will want to convert your bitcoin back into cash.

When this time comes, PayPal can help to ensure that you receive your money quickly. Typically, once your crypto broker has processed your request, the funds will arrive in your Paypal account in the same hour.

Cons

Transaction fees

One of the biggest drawbacks of using PayPal to buy bitcoin is that the fees can potentially eat into the cost of your purchases by a significant amount. This can reduce the overall profit that you make through your crypto trades.

Potential currency conversion fees

Another issue that you may run into is that if you want to buy bitcoin through a platform that doesn’t accept GBP then you may have to face currency conversion fees in the transaction.

How to buy Bitcoin with PayPal: FAQs

A note about crypto asset regulations

Crypto assets are not regulated financial products so please be aware that trading them carries a considerable amount of risk for your capital. Cryptocurrencies and other digital financial services are also not covered by existing consumer protection laws.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

This article is for informational purposes only and does not constitute financial investment advice. All contents are based on my understanding of HMRC legislation, which is subject to change.