Since October 2020, any PayPal user in the U.S. can buy, sell and hold Bitcoin.
You cant transfer your cryptocurrency purchases off the platform unless you cash them out to U.S. dollars first.
That may not seem like a big deal, especially for cryptocurrency newcomers.
Just getting started with crypto? Check out our step-by-step guide onhow to invest in cryptocurrency.
But for some investors, control over their coins is more important than convenience.
So, should you buy Bitcoin or Etherum on PayPal?
It depends on your long-term goals with cryptocurrency.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Ask one of these companies to help…
In this guide, well explain how to invest in cryptocurrency on PayPal.
Well also look at the pros and cons of using this popular payment processor to buy digital currency.
First, create an account.
Once you link a payment method, youre ready to buy and sell cryptocurrency.
You dont need to create a separate account on PayPal to do so.
What Crypto Can You Buy on PayPal?
PayPal and its child company, Venmo offer just four cryptocurrencies.
Its a limited selection considering there are literally thousands of cryptocurrencies on the market.
For newcomers, a small selection might be a good thing, though.
You may find lower fees at more advanced cryptocurrency exchanges like Kraken and BiNance.
PayPal will not separately calculate or disclose the spread it earns on each transaction, according to thecompanys FAQs.
Cryptocurrency Brokers vs. Cryptocurrency Exchanges
PayPal is whats known as a cryptocurrency broker.
In this way, you dont really own cryptocurrency purchased through a broker like PayPal.
You also cant take coins off the platform or transfer them to other users.
Instead, PayPal requires you to sell your coins and transfer the cash to an external account.
You basically own a derivative of Bitcoin when you buy it on PayPal, Blumberg said.
If you want to sell, you have to sell it on PayPal.
You cant move it to a different exchange or put it in a hardware wallet.
Thats why serious crypto investors believe private key access is so important.
you could also trade one cryptocurrency for another.
PayPal acts as an intermediary but that isnt always a bad thing.
You may not want all the responsibility of keeping track of private keys and navigating cryptocurrency exchanges.
If you simply want to buy Bitcoin then sell when the price rises, PayPal works.
Brokers are also user friendly.
Coinbase is also simple but requires a few more steps in the approval process.
Pros and Cons of Using a Cryptocurrency Broker Like PayPal
Where you purchase cryptocurrency is important.
PayPal really shines for new users and people who want to invest small amounts of money into cryptocurrency.
It only takes $1.
PayPal acts as a custodian, so you dont need to worry about keeping track of this information.
If you plan to invest in cryptocurrency long-term, PayPal probably isnt the best platform.
PayPal only offers four types of cryptocurrency.
Exchanges like Coinbase and Gemini, in contrast, offer 100+ different digital coins.
If you want to experiment with other cryptocurrencies, youll need to use an exchange.
PayPal reserves the right to freeze or deactivate any account on its platform.
It can also halt cryptocurrency orders during extreme market conditions and other circumstances.
you gotta exchange your coins for U.S. dollars if you want to get them off the platform.
In March 2022, PayPal increased cryptocurrency transaction fees again.
Buying Crypto on PayPal: Is It Right for You?
Buying cryptocurrency on PayPal isnt necessarily a bad thing, especially if youre new to the crypto game.
The company makes it simple and painless to experiment with a small crypto balance on a familiar platform.
People already have money in their PayPal account, Blumberg said.
It makes it easy to get exposure to crypto.
Orrman also said she doesnt plan to create a private crypto wallet to store her assets long term.
So really, it comes down to personal preference.
Its unlikely, but its the principle behind it.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
