Where to Find and How to Use the PayPal Bitcoin Wallet

Published: 18th June, 2024 | Last Updated: 19th June, 2024

Markos Koemtzopoulos

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

Are you looking to use PayPal as a Bitcoin wallet? This guide will walk you through setting up, buying, storing, and securely managing your Bitcoin with PayPal. Discover how to handle your cryptocurrency efficiently on this popular platform.

Key Takeaways

  • Setting up a PayPal Bitcoin wallet involves creating a PayPal account and verifying your identity. It enables you to buy, sell, and hold cryptocurrency directly through PayPal’s platform. Also see how to buy crypto.
  • Buying Bitcoin through PayPal is user-friendly. You can conduct the transaction via the web interface or mobile app using your PayPal balance, debit card, or bank account, and you can choose between one-time or recurring purchases.
  • PayPal charges specific fees for cryptocurrency transactions, including a market spread and per-transaction fees, while receiving cryptocurrency transfers incurs no fees; transferring Bitcoin to an external wallet involves transaction and network fees.

1 Setting Up a PayPal Bitcoin Wallet

Person creating a PayPal account with a smartphone

The first step is to set up a PayPal Bitcoin wallet. If you don’t already have a PayPal account, you must create one.

Only PayPal Personal account holders currently have access to PayPal’s cryptocurrency services.

Once you’ve set up your PayPal account, you must verify your identity. This involves confirming your name, email address, phone number, physical address, date of birth, and taxpayer identification number.

After verifying your PayPal Balance account, you’ll gain access to the crypto service within PayPal. This service allows you to buy, sell crypto, and hold digital currency directly within your PayPal account. You can also send crypto to other users, making it convenient to manage your crypto assets anytime, anywhere, using the PayPal web interface or app.

About the PayPal Bitcoin Wallet

PayPal’s digital wallet is custodial, meaning they have access to the private key of the public key where your crypto assets are stored.

In crypto, every blockchain is a digital ledger. You can think of this like a massive Excel spreadsheet. The spreadsheet contains two columns—the first lists public addresses just like your bank lists bank account numbers. The second column indicates how much bitcoin the respective address has. To move the crypto on the blockchain ledger, you need a secret password called a private key.

When you store your Bitcoin on PayPal, PayPal takes care of the private keys on your behalf. If they get hacked, you can wave goodbye to your Bitcoin.

Why is storing your crypto in the PayPal Bitcoin wallet best avoided?

If you have a large amount of Bitcoin, you are better off storing it in a cold storage wallet. Hardware wallets such as Trezor and Ledger are the most popular. Alternatively, you could use a digital wallet in the form of a mobile app or browser extension. These are considered less secure as they are connected online.

Buying Bitcoin with PayPal

Illustration of a person purchasing Bitcoin with PayPal

Buying Bitcoin with PayPal is a straightforward process designed to be user-friendly whether you’re using the web interface or the PayPal app. On the web, navigate to the Finances tab, click the buy button, and select the cryptocurrency you wish to purchase.

Once you’ve selected Bitcoin, you’ll need to decide on the amount and frequency of your purchase. Depending on your investment strategy, you can make a one-time purchase or set up recurring buys.

After selecting your payment method, confirm the transaction by clicking on ‘Buy now.’

This ease of use makes buying Bitcoin on PayPal accessible for beginners and seasoned investors. With just a few clicks, you can add Bitcoin to your digital portfolio and begin exploring the exciting world of cryptocurrency.

Storing Bitcoin in Your PayPal Wallet

Once you’ve purchased Bitcoin, storing it in your PayPal wallet is simple and convenient. You can easily view the amount of Bitcoin you hold in the same tab where you made your purchase. One of the benefits of using PayPal is that there are no fees for holding Bitcoin in your wallet.

However, if you plan to hold a significant amount of Bitcoin, it might be wise to consider more secure storage options. While PayPal provides a convenient way to manage smaller amounts of cryptocurrency, using an external wallet for your external crypto can offer additional security features crucial for more significant investments. This ensures that your digital assets remain safe and secure.

Sending Bitcoin from Your PayPal Wallet

Sending Bitcoin from your PayPal wallet is just as straightforward as buying. Here’s how:

  1. Go to the Finances tab.
  2. Tap on your crypto balance.
  3. Use the transfer arrows to begin the process.
  4. Select ‘Send’.
  5. Choose the recipient from your PayPal contacts.
  6. PayPal allows you to sync your contacts to make this process even smoother.

You’ll need to enter the wallet address to send Bitcoin to an external wallet. You can copy and paste the address, manually enter it, or use a QR code. You can choose to send a specific amount of Bitcoin or a dollar amount. PayPal will handle the conversation. It’s crucial to double-check the wallet address to ensure accuracy, as transfers can fail due to issues like incorrect addresses, network problems, or system downtime.

Receiving Bitcoin in Your PayPal Wallet

Illustration of a person scanning a QR code with a smartphone

Receiving Bitcoin into your PayPal wallet involves the following steps:

  1. Go to the Crypto tab and choose the coin you want to transfer.
  2. Use the transfer button to move your coins from an external source into PayPal.
  3. After verifying your account, select Receive in the cryptocurrencies hub.
  4. Choose Bitcoin to generate a unique crypto address.

This address will be used for the incoming transfer, and PayPal generates a new address for every transfer to ensure security. It’s essential to use the correct address type, as sending it to the wrong address can result in a loss of funds. When Bitcoin is sent to you, PayPal requires several confirmations on the blockchain before accepting the incoming transfer. The number of confirmations needed depends on the type of cryptocurrency being received.

This multi-step process ensures that your Bitcoin is securely received into your PayPal wallet, as PayPal supports such transactions.

PayPal Cryptocurrency Fees

Using PayPal for cryptocurrency transactions involves specific fees. When buying or selling Bitcoin, PayPal charges a per-transaction fee that includes a market spread of 0.5%. Transactions between $1.00 and USD 4.99 incur a cost of $0.49; for amounts over USD 1000.01, the fee is 1.50% of the transaction amount.

Converting small amounts of cryptocurrency, specifically between $1.00 and USD 9.99, also incurs a USD 0.49 fee. However, receiving cryptocurrency transfers on PayPal does not incur any costs. If you transfer Bitcoin to an external wallet, you’ll need to pay a blockchain network fee, which varies depending on the cryptocurrency network and is paid in the transferred cryptocurrency. Using PayPal to buy and transfer cryptocurrency in one step to an external wallet incurs both a transaction fee and a network fee.

Transferring Bitcoin to an External Wallet

crypto transfer

To transfer Bitcoin to an external wallet from your PayPal account, follow these steps:

  1. Go to the Finances tab.
  2. Select your crypto balance.
  3. Use the transfer arrows to begin the transfer crypto process.
  4. Select the chosen coin in the Crypto tab.
  5. Use the transfer button to send Bitcoin out of PayPal into an external wallet.

When entering the external crypto address, also known as the external wallet address, you can manually input it, paste it, or scan a QR code. Always ensure the address is correct and corresponds to your address when transferring cryptocurrency. The weekly transfer limit for cryptocurrency on PayPal is $25,000, including internal and external transfers. The minimum transfer amount to an external wallet is 0.001 BTC.

Transferring Bitcoin to an external wallet involves generating a transaction hash (txHash), which is displayed within the activity details after the transfer is completed. This hash provides proof of the transaction on the blockchain.

Security Tips for Using PayPal as a Bitcoin Wallet

hacker, hacking, cyber security

Security is paramount when dealing with cryptocurrencies. To enhance the security of your PayPal Bitcoin wallet, enable two-factor authentication (2FA) on your ProtectionyPal account. This adds an extra layer of protection beyond just your password. Additionally, regularly updating your PayPal account password can help minimize security risks.

Monitoring your account activity frequently allows PayPal users to:

  • Spot any unauthorized transactions early
  • Be vigilant against phishing attempts by verifying the sender’s email and avoiding suspicious links
  • UPayPal’s secure message centre for communication to help you avoid scams.

In the event of unauthorized crypto transfers, PayPal offers reimbursement of up to $50,000 in PayPal USD for eligible unauthorized transfers. This provides an additional layer of protection for your digital assets.

Summary

In conclusion, PayPal offers a convenient and secure platform for storing, sending, and receiving Bitcoin. Following the steps outlined in this guide, you can confidently manage your cryptocurrency transactions using PayPal. As the world of digital currencies continues to evolve, PayPal stands as a reliable partner in your crypto journey.

Frequently Asked Questions

Do I need a particular type of PayPal account to use the Bitcoin wallet?

Yes, you need a PayPal Personal account and a verified PayPal Balance account to access and buy Bitcoin.

Is there a storagePal wallet?

No, storing Bitcoin in your PayPal wallet does not cost anything.

How do I send Bitcoin to an external crypto wallet using PayPal?

To send Bitcoin to an external wallet using PayPal, navigate to the Finances tab, select your crypto balance, and accurately enter the external wallet address.

What fees are involved in buying and selling Bitcoin on PayPal?

When buying and selling Bitcoin on PayPayou, you’ll encounter fees such as a 0.5% market spread, a transaction fee of USD 0.49 for amounts between $1.00 and USD 4.99, and a 1.50% fee for transactions exceeding USD 1000.01.

How can I ensure the security of my PayPal Bitcoin wallet?

To ensure the security of your PayPal Bitcoin wallet, enable two-factor authentication, regularly update your password, monitor account activity, and be cautious of phishing attempts.

Where is the PayPal Bitcoin wallet allowed?

At the time of writing, you can only buy and store crypto on PayPal in the United States. Transactions in the United Kingdom are on pause as the app seeks to comply with new regulations against money laundering.

Why can’t I use my PayPal wallet?

Common reasons are that you are using a business account instead of a personal PayPal account or that you are trying to use a crypto that is not available on PayPal. PayPal only supports Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and PYUSD, a stablecoin issued by Paxos trust company.

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

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