How To Buy Bitcoin With PayPal in 2024

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Buying Bitcoin With PayPal on Exchanges - Guide

Some of the best crypto exchanges provide advanced trading capabilities, higher liquidity, and support for a wider range of cryptocurrencies beyond just Bitcoin.

Here's a six-step guide on buying Bitcoin with PayPal on exchanges:
 

1. Find a Preferred Exchange

Research and select a reputable and safe cryptocurrency exchange that accepts PayPal as a payment method for buying Bitcoin and other cryptos. 

Read our reviews of the selected exchanges - KuCoin, Uphold, Kraken, Binance, and Coinbase, to see different features and investing tools.

Make sure to check user reviews on Reddit and Trustpilot. 

Note the trading volumes, security protocols, and regulatory compliance when evaluating potential exchanges. 

Prioritize well-established platforms with a solid track record in the crypto industry. 

Remember, some exchanges were launched way back in 2013, but that doesn’t mean you’ll like their services.

Maybe you’d also consider new crypto exchanges. 

If you’re not a fan of identity verification, check out the best decentralized exchanges for more freedom and anonymity.
  

2. Open an Account and Verify ID

Now, go through the exchange's account opening process by providing your personal details and uploading the required identity verification documents like a photo ID. 

You may also need to provide proof of address with a utility bill or a bank statement. 

Regulated exchanges must confirm users' identities to comply with financial regulations.

This is known as a Know Your Customer (KYC) process. It’s a part of the Anti-Money Laundering regulations and makes a centralized exchange compliant.

This process often lasts several minutes and is automatic. You’ll scan a QR code with your phone and follow the instructions on the screen.

Some exchanges manage this manually, and you might wait a few days for verification.

The good news is that a verified ID gives you access to all features and tools and lifts all limitations for withdrawing and depositing.

Still, it means you can’t buy Bitcoin with PayPal anonymously on the exchange.
 

3. Deposit Funds With PayPal

After account activation, link your PayPal account or enable it as a payment option on the exchange. 

Then initiate a deposit transaction, specifying the amount of fiat currency you want to add from PayPal.
 

4. Locate the Instant Buy/Trading Section

Most crypto exchanges have a simple "Buy" or "Instant Buy" section where you can quickly buy crypto after funding your account balance. 

The instant buy option usually works in minutes and you’ll receive Bitcoin quickly. Still, with this feature, you can’t select a price and set an order.

If you’re an advanced trader, you may prefer the exchange's trading view interface.

There, you’ll see various order options where you can set a price and wait for the order to fulfill. 
 

5. Check Details and Confirm Purchase

Review all the key order details like Bitcoin amount, purchase rates, payment method, fees, and total cost. 

Ensure everything looks accurate, then confirm and place your PayPal-funded buy order for Bitcoin.

Note that crypto transfers are usually fast, but if there’s network congestion, your BTC might arrive in about 20 to 30 minutes. 
 
 

How to Store BTC You Bought With PayPal

After purchasing Bitcoin through PayPal, you have various storage options. 

When you buy Bitcoin through PayPal or receive BTC payments to your PayPal account, your Bitcoin holdings will automatically be reflected in the built-in Cryptocurrencies Hub. 

The Hub serves as a hosted crypto wallet under PayPal's custody, meaning the platform stores and secures your private keys.

If you’re new to the crypto market, know that this type of storage means you don’t have control over your holdings. 

PayPal might, for any reason, prohibit you from accessing your Bitcoin and withdrawing it. 

Holding funds on PayPal also means you’ll have limited access to the usual trading tools.

This is why you may want to learn how to send Bitcoin from PayPal to another private wallet. 

However, if you want to withdraw your BTC to your own private wallet, you’ll need to complete additional verification steps, such as:
 

1. Providing a government-issued photo ID like a driver's license or passport to confirm your identity
2. Submitting proof of address documents like a utility bill or bank statement, if not already done during the registration process
3. Answering personal security questions about your PayPal account history
4. Confirming your source of cryptocurrency funds
5. Agreeing to PayPal's crypto terms of service and user policies
6. Setting up two-factor authentication and advanced security checks on your account

The specific requirements can vary based on factors like your account tenure, transaction volumes, and prevailing regulations in your geographic region when requesting a Bitcoin withdrawal from PayPal. 

Once you do this, you can withdraw BTC from PayPal in four steps:
 

1. Have a secure Bitcoin wallet ready with its address to receive the transfer
2. In your PayPal account, go to the Crypto section and select "Withdraw" or "Send" next to your BTC balance
3. Enter the destination wallet address you want to withdraw to
4. Review withdrawal details like network fees, then confirm to initiate the BTC transfer

Your Bitcoin should arrive in the designated external wallet within 30-60 minutes once processed by PayPal and the blockchain network.
 

Pros and Cons of Storing BTC on PayPal 

Keeping your Bitcoin stored in your PayPal wallet is convenient, as you don't have to worry about self-custody and securing private keys and funds yourself. 

You can easily monitor your PayPal Bitcoin balance and transaction history within your PayPal account. 

You also have the flexibility to sell your BTC balance back to fiat currency if needed. Plus, there’s an option to withdraw to an external wallet at any time.

However, storing BTC on PayPal means you don't have full control over your holdings compared to withdrawing to a private wallet you control. 

If you prefer to control your private keys directly, withdraw BTC to your private crypto wallet. 

Keep in mind that in this case, you are fully responsible for securing those private keys properly as well as backing up your personal wallet regularly.
 

Why Withdraw to a Private Wallet?

Besides having complete control and ownership, you may want to withdraw Bitcoin purchased on PayPal to your own cryptocurrency wallet for several reasons:
 

• Access to blockchain features, like lending or borrowing while using Bitcoin as a collateral
• Enhanced security
• More crypto swapping options
• Lower transactions fees

Keep in mind that personal wallets can be hot and cold. 

Hot wallets are those connected to the internet, like Crypto.com or Trust Wallet. Due to their online connection, these wallets are susceptible to cyber attacks and might not be the best storage option. Investors use them if they need to often deal with trades.

On the other hand, you have cold wallets, which are physical hardware. These connect online only when you're about to make a transaction. Ledger is the best example and one of the top cold wallets out there.

 

Pros and Cons of Storing BTC on an Exchange

Pros of keeping your holdings on an exchange are:
 

• Convenience for trading
• Various trading tools
• Security measures (cold storage and insurance)
• Other features (web3, trading bots, etc)

On the other hand, cons include:
 

• You don't fully control the private keys – the exchange does, just like PayPal
• Exchanges can be hacked, putting your funds at risk
• Potential service outages could prevent you from accessing your cryptos

It’s worth noting that major exchanges typically provide insurance protection in case of fund loss. 

However, this coverage is often complex and depends on multiple factors. 

You may not be eligible for it in case of some incidents that are deemed to be directly your fault. For example, clicking on a phishing link. 
 
 

How to Transfer Bitcoin on PayPal

In addition to buying Bitcoin, PayPal allows you to send Bitcoin on PayPal and to external wallets.

To send Bitcoin from PayPal, follow the next steps:
 

1. Go to the Finance tab
2. Click your crypto balance and choose “Transfer”
3. Click Send
4. Sync your contacts if you’re sending to another PayPal account
5. Manually paste an address if you’re sending outside of PayPal or scan a QR code
6. Choose the amount you want to send and click “Send Now”

 

How to Receive Bitcoin on PayPal

PayPal makes it easy to receive Bitcoin payments from others directly into your account. Follow the simple five-step instructions outlined below to receive Bitcoin on PayPal:
 

1. Go to the Finance tab
2. Click your crypto balance and choose “Transfer”
3. Click Receive
4. Choose BTC
5. Copy your wallet address or share its QR code

 

Pros & Cons of Buying Bitcoin on PayPal

Here are some pros and cons to consider when buying BTC With PayPal:
 

Pros and Cons of Buying BTC With PayPal

Pros	Cons
User-friendly crypto purchase experience	Higher fees compared to crypto exchanges
Ability to use PayPal cash balance or linked payment methods	Cannot use PayPal for purchases on decentralized exchanges
Option to withdraw BTC to an external wallet	Lack of advanced trading features
Reputable and regulated platform for crypto transactions
Familiar interface

 

Best Practices When Buying Bitcoin on PayPal

Besides having a basic understanding of the PayPal Bitcoin wallet, pricing, and BTC transfers, you should also be aware of nuances, such as:
 

1. Security - make sure your PayPal account is secured with a strong password and two-factor authentication (2FA) on your device 
2. The right website -  buy Bitcoin on the legitimate PayPal website (paypal.com) or use the official PayPal mobile app to avoid scams
3. Location limits - make sure to check PayPal’s crypto availability in your area. The list of supported countries will likely expand in years to come 
4. Tax implications - understand the tax treatment and reporting requirements for crypto purchases in your area. Check with your local taxation body to be sure how to report taxes

PayPal has weekly limits on how much crypto you can buy. 

Additionally, it supports only major cryptos, like Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH). If you wish to buy altcoins like Ripple (XRP) or Shiba Inu (SHIB), you'll have to use the exchange.

Its weekly purchase limit is $100,000 worth of cryptocurrencies.

You can also set recurring purchases and buy Bitcoin automatically daily, weekly, biweekly, or monthly.
 

Tax Record Keeping From the Get-Go

When buying Bitcoin with PayPal, it's important to keep good records for tax purposes. Here are some tips on saving tax information.

Save records of all your crypto transactions on PayPal, including purchase amounts, dates, fees paid, etc. PayPal provides a transaction history.

Note the USD value of the BTC at the time of each purchase for calculating potential capital gains/losses later.

If you transfer BTC off PayPal to an external wallet, record the amount transferred and fair market value on those dates. Save transaction ID for details.

Download annual tax reports provided by PayPal that summarize your crypto transaction details.

Use crypto tax software or consult an account to properly calculate taxes owed on capital gains when selling.

Keep all records organized for at least seven years in case of any tax agency audit.

Diligently track your cryptocurrency cost basis, sales proceeds, and transaction details from the start on PayPal to make tax filing much easier. Proper record-keeping is crucial for remaining compliant.
 

 

Why Trust Us?

At CryptoManiaks, helping you make sense of crypto is our goal. Our shared interest in the crypto space enables us to test the waters before you, create trustworthy guides, and show you how to buy Bitcoin with PayPal.

We have personally invested time and effort into the process of buying Bitcoin with PayPal to show you firsthand insights and steps to take today.