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How to buy Bitcoin with PayPal

Jon Martindale
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JackGuez/GettyImages

Buying Bitcoin is much easier today than it was in the past, but what if you want to purchase it using money you’ve already dumped into a PayPal account? It turns out if you want to do that, it’s a bit more tricky — and much more expensive.

One of the main reasons why it’s difficult is the potential for chargebacks. Major exchanges won’t allow PayPal transactions because it would be too easy for people to buy the Bitcoins, then use PayPal’s support system to chargeback their purchase and receive their original purchase fee back. That would be an unscrupulous and fraudulent way to buy Bitcoin — even when using the services below — so is not encouraged in any manner.

However, it is possible. Before you can receive any Bitcoin, regardless of payment method, you need to have a Bitcoin wallet set up, as well as a PayPal account. Once you do that, you’ll be ready to move ahead and start buying Bitcoin with PayPal.

Method 1: Direct trade

Due to the fact that cryptocurrency exchanges don’t allow you to buy Bitcoin with PayPal, the best way to do so is with a direct trade. Websites that facilitate these kinds of peer-to-peer transactions help put you in touch with someone who is looking to sell Bitcoins who accept PayPal as a payment method.

The two main websites for conducting these kinds of transactions are LocalBitcoins and Paxful. Both offer a multitude of payment methods for Bitcoin, from gift cards to cash, but PayPal is a popular choice. To buy Bitcoin with PayPal on either service, follow the steps below:

Step 1: Head to the homepage of LocalBitcoins or Paxful and sign up for an account.

Step 2: Use the respective site’s search tools to select the amount of Bitcoin you want to buy (or USD you want to spend), with PayPal as your preferred payment option.

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Step 3: Choose an offer based on the relative Bitcoin price, user rating, or customer reviews. Click the “Buy” button on the right-hand side.

Step 4: Make sure to read the specific terms of the deal with your chosen seller. Some request ID, others a contact number.

Step 5: If you are happy with their stipulations, confirm the amount of Bitcoin you want to buy and click the large “Buy” button to continue the transaction.

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Step 6: You will then be put into direct contact with the seller. The specifics of the transactions will be up to you to discuss and confirm with them, but once the process is complete and you have sent your payment using PayPal, your newly acquired Bitcoin will be sent to your specified wallet.

Method 2: Bitcoin “loans”

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Although no exchanges will accept PayPal transactions, there is one website which offers a more automated system than the pure direct trade sites outlined above. XCoins operates what it describes as a Bitcoin secured loan system, whereby it allows Bitcoin owners to “lend” their cryptocurrency to potential PayPal buyers, who can then do with it what they will. They loan it, in exchange for payment and one of those payment options is PayPal.

XCoins touts itself for offering low fees for Bitcoin purchases, though for the convenience of using its service you pay a lenders fee, which at its lowest is 15 percent. You also pay a “loan origination fee,” at 7.5 percent of your investment and a PayPal processing fee of several percent plus a flat rate of a few cents on top of that. As with buying through direct trade websites, PayPal transactions on Xcoins are not cheap.

Step 1: Head to the XCoins homepage and click “Get Bitcoin” in the top menu.

Step 2: Sign up for an account and verify it with the link emailed to you.

Step 3: Set up two-factor authentication through your mobile device.

Step 4: Input the amount of Bitcoin you want to buy in Bitcoin or your chosen currency. Xcoins will then search for a suitable lender for your transaction.

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Step 5: When a lender has been found, you’ll be shown the details of the transaction, including processing and lender fees. If you are happy to go ahead with the purchase based on those figures, read the linked loan agreement and tick the corresponding box to show you have done so. Then click “Continue to Payment.”

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Step 6: You will then be redirected to your PayPal account, where you will need to login and validate the transaction as usual.

Step 7: Once you have returned to Xcoins, your Bitcoin will be sent straight to your Xcoins wallet, at which point you can send it to a more secure wallet of your choice.