How to buy crypto with PayPal

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It’s easier than ever to buy cryptocurrency – all you have to do is pull out your phone and open an app.

PayPal is one of the few popular mobile and online payment platforms now allowing users in the United States to buy, sell and hold cryptocurrencies with as little as $ 1 invested. But if you are looking to add cryptocurrency to your wallet, you need to think carefully about what platform you are using and whether you should invest in crypto.

Even the most common and proven coins – Bitcoin and Ethereum – are still very volatile. That’s why experts recommend investing no more than 5% of your portfolio in crypto, and never let it get in the way of things like saving for emergencies or paying off high interest debt.

If you do decide to invest, where you buy your crypto can have important implications that are worth considering in advance. It can be easy to buy crypto with an app you already use – and trust the security measures – like Paypal, but there are limitations compared to traditional cryptocurrency trading platforms.

Here’s what you need to know before buying crypto on PayPal, and how to determine if it makes sense for you.

What you should know before buying crypto on PayPal

Any PayPal user can buy, sell, and hold crypto. You can also use crypto at the checkout for some purchases, but it’s generally a bad idea to use cryptocurrency as a form of payment. As with other long-term investments, experts recommend buying and holding your crypto for the long term.

Pro tip

PayPal protects qualifying purchases from fraud if you make payment with crypto.

PayPal, along with other apps like Venmo and Robinhood, are making crypto more accessible, which is a big draw for many newbie investors. But increased accessibility can also increase your risk.

“If you have a PayPal balance on your phone and are curious about cryptocurrency, you can open PayPal, click on crypto, and in two seconds own a few hundred dollars worth of cryptocurrency,” explains Julien morris, a certified financial planner with Concierge Wealth Management in Boston. “They make it really, really easy.”

Considering the value of the cryptocurrency market, there is a need to own a small part of it, says David Yermack, a finance professor at the Stern School of Business at New York University, who studies cryptocurrency. But that shouldn’t be your primary focus.

“The proven formula for successful investing always involves diversification – don’t put all your eggs in one basket, but try to own a few of a lot of things,” he says.

How to buy crypto on PayPal

To buy crypto on PayPal, you will need to create an account. If you already have a PayPal account, all it takes to buy crypto is to click on a button that says “crypto” and choose the coins you want to buy.

You can buy four types of crypto on the PayPal app: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. However, experts recommend sticking with Bitcoin and Ethereum if you are a new investor.

To complete your purchase, you will need free funds, a linked debit card, or a linked bank account. You can spend as little as $ 1 or up to $ 100,000 per week. Like many crypto exchanges, there are fees for buying and selling crypto on PayPal, which vary depending on the amount you purchase.

PayPal crypto fees

Amount of purchase or sale PayPal fees
$ 1 to $ 24.99 $ 0.50
$ 25 – $ 100 2.30%
$ 100.01 – $ 200 2.00%
$ 200.01 – $ 1,000 1.80%
$ 1,000.01 and over 1.50%

You must also verify your identity, complete a W-9 form, and agree to PayPal’s terms and conditions. If you decide to make a purchase with crypto, PayPal will automatically convert it to US dollars at no additional cost.

Alternatives to buying crypto on PayPal

Investing in crypto using PayPal is easy, especially if you already use the app for online payments. But he has limits.

The crypto you buy through PayPal is not the same as buying crypto on an exchange like Coinbase or Gemini. When you buy crypto from a traditional exchange, you have the option of transferring it to a wallet for secure storage or to someone else – a key distinction when it comes to full ownership of crypto.

This is not the case with PayPal. You cannot transfer crypto from your account to other accounts on or outside of PayPal, and you must sell your crypto on PayPal to make a withdrawal, which you will also be responsible for reporting on your tax return.

If you want full control over your coins, a cryptocurrency exchange may be a better choice. While they can be more complicated to navigate as a beginner, you’ll have more flexibility with your coins and potentially pay less in fees. You can use these exchanges to exchange one crypto for another (like using Bitcoin to buy Ethereum) or buy crypto using regular currency, like the US dollar.

Still, PayPal may make sense for new investors who want to experiment with a small crypto balance on a familiar platform. Even for those familiar with traditional investment options like stocks and index funds, crypto investing using exchanges can be complicated. For example, personal finance expert Suze Orman recently told NextAdvisor that she bought $ 5,000 in Bitcoin on PayPal instead of a traditional exchange because “it was just easy to do.”

If you’re a new investor with a few bucks to spend, PayPal can be a good place to start. Investing in a small portion of your Bitcoin wallet on a platform that you already trust may make sense for beginners, especially if you don’t plan on adding large amounts that you might want more than control (like your own wallet storage) later.

There is no wrong or right way to invest in crypto – it ultimately depends on your personal preferences. What matters most is taking the time to learn about crypto before investing in it. “Before you hit a ‘Buy’ button, you just want to be ready,” Morris says. “And if you want to be a prepared investor, you definitely need to do a lot of research.”

Final result

Remember that any crypto investment is volatile and you should only invest what you are prepared to lose. “If you want to own it, you only want to own a small portion of it as part of a very diverse portfolio,” says Yermack.

You should also prioritize other important aspects of your finances, like having an emergency fund or paying off high interest debt, before investing in crypto, whether through PayPal or not.

And whichever platform you choose, take the time to educate yourself about smart long-term crypto investing, how safe your coins are, and how to deal with volatile price movements.


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