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Buying Bitcoins with PayPal – Tricky But Possible

Mark Kosierowski

At first glance, Paypal and Bitcoin seem to be made for each other. Paypal is a well-established platform which was created for transferring money simply and easily over the Internet without the use of financial intermediaries. Bitcoin is a medium of exchange that is specifically engineered to operate outside the financial mainstream.

Yet the combination of these two has seemed like mixing oil and water. There have been times when it seems that they are blending well together. At other times they seem to have very obvious differences that cannot be overcome. These different periods are overlaid with the always interesting and changing cryptocurrency markets.

Bitcoin and PayPal – Roadblocks

At the time this is being written, there is no way to directly buy Bitcoin with the payment coming directly from a PayPal account. PayPal will not allow transfers of funds to pay for Bitcoin. Rumors that these transactions will be allowed have circulated for several years. There have even been rumors that PayPal is developing its own cryptocurrency to facilitate monetary transfers in a manner similar to how Ripple fills this role for banks and financial institutions.

However, PayPal has not changed its policy and has not announced the development of a cryptocurrency. In fact, given that PayPal works as an intermediary between banks and individuals a cryptocurrency seems counter to their business model. Unless banks begin to hold accounts in cryptocurrencies, there seems to be little incentive for PayPal to engage in the cryptocurrency sector.

In fact, PayPal may view Bitcoin as a rival for transactions between individuals. This point-of-view would be consistent with that of the banking industry generally. It is also possible that PayPal values their credibility and so is hesitant to get involved with cryptocurrencies. The number of scam transactions in the cryptocurrency world supports this theory. It would be consistent with their reluctance to allow users to access funds to pay for services on pornography websites.

However, like that industry, the cryptocurrency sector has developed several workarounds for using the PayPal infrastructure to pay for purchases of coins and tokens. These include the use of intermediaries in various forms. PayPal’s resistance to cryptocurrency may cause these avenues to be shut down, or PayPal may relent and allow them to continue. The very dynamic nature of cryptocurrency markets may also develop other solutions.

Global Currencies, National Restrictions

Part of the problem that PayPal faces is operating across international boundaries, which requires conforming to different rules and regulations. PayPal has expertly navigated that minefield. Cryptocurrency exchanges are developing that same ability, but are not there yet. This means that all exchanges do not operate in all countries.

This is the case with eToro, a popular financial trading site that has offers trades in various cryptocurrencies. The site offers the option to fund a trading account by transfer from PayPal but does not operate in the US. Fortunately for non-US citizens, the site does support trade in Bitcoin funded by Paypal. It also offers easy, step-by-step instructions, as shown below.

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After creating a trading account and selecting “Fund Your Account”, you can simply type in the amount and pay through PayPal. The eToro site will then direct you to PayPal to log in and complete the transaction.

Please note that this step does not complete the transaction to purchase Bitcoin or any other cryptocurrency. That requires an additional step, which may offer some insight into why PayPal supports this transfer. A transfer to eToro is a transfer to another banking institution and not a purchase of Bitcoin.

If eToro is an example of a global trading platform, LocalBitcoins is at the other end of the spectrum. It is an intermediary that lists individuals willing to sell (and buy) Bitcoin to other individuals located nearby. The form of payment varies, but PayPal may be acceptable to some individuals. Many sellers list a local bank as a place to deposit funds, and the time required to transfer funds with PayPal may be a limiting factor.

This issue is resolved with online trading platforms such as Paxful. This is another intermediary what matches buyers and sellers of Bitcoin. Many individuals list PayPal as a method of payment. However, reviews of this site include complaints of stolen Bitcoin and poor or nonexistent customer service. These might reflect the growing pains of the cryptocurrency industry, or they may be the reason PayPal does not explicitly support trading in Bitcoin.

Card Methods

It is important to remember that direct transfers from PayPal are not the only means of transacting business with funds stored on the PayPal platform. PayPal also offers a credit card and a debit card that provide a convenient intermediate step in transferring funds through the existing credit card network.

Utilizing this method of paying with PayPal is straightforward, although it is not a direct means of paying for Bitcoin with PayPal. It involves creating either a debit or credit account through PayPal, and then using that account at an exchange to purchase Bitcoin. To the extent that this credit or debit card would be used for other purchases, this may be a reasonable approach.

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As described on the PayPal website, the process of obtaining a PayPal Prepaid MasterCard is straightforward. The card is ordered through the PayPal website and is sent through the mail. After it is activated on the site, funds currently in PayPal can be transferred to the card account. It can then be used at any website that supports the use of MasterCard debit cards to purchase Bitcoin or other cryptocurrencies.

CEX.IO is one exchange that allows links to MasterCard debit cards and other credit cards. These can be used to both buy and sell Bitcoin and other cryptocurrencies. The website has at times reported that the link to the PayPal cards is inoperative, and the exchange is not currently accepting new accounts. However, these can be considered temporary problems that should be resolved shortly.

Other Methods

For the one time purchaser of Bitcoin, creating a PayPal MasterCard debit card exclusively for this purpose may seem complicated and too burdensome. For this individual, there are other methods that use an intermediary relationship to arrive at the same destination. One of the more imaginative of these routes is through the Virwox site.

Virwox (the “Virtual World Exchange”) is not a cryptocurrency exchange or site. It is a platform for trading imaginary currencies used in online gaming. One of these currencies is Second Life Linden Dollars (SLL), an imaginary currency used in the game Second Life. This game is one of the most popular online fantasy games on the Internet.

The transaction begins with purchasing SLL with money in a PayPal account. Create an account on the Virwox exchange, ignoring the information on the avatar you will use in the Second Life game. Fund this account with money transferred from your PayPal account. Once this transfer has been completed, you can purchase SLL by going to Exchange->USD/SLL on the left side of the screen.

Once this transaction is confirmed, return to the same section on the left side of the screen and exchange SLL for Bitcoin. You will need a Bitcoin wallet to hold the newly purchased Bitcoin. This exchange is not a Bitcoin exchange but accepts Bitcoin as one way of paying for SLL. Because the Second Life game can make money for players, the site also accommodates transfers back to other currencies.

Keep in mind that buying Bitcoin through Viwox involves two transactions and a fixed price for Bitcoin. The dual transactions mean that the total fees for this transaction are higher than for other methods, and the fixed price for Bitcoin may not be the lowest available on the market. However, by “washing” PayPal funds through SLL it is possible to complete a Bitcoin purchase.

Individuals who want more flexibility in conducting business with Bitcoin may find a significant benefit by creating an account on Wirexapp. This is an integrated cryptocurrency site that supports several functions, including buying and transferring Bitcoin. It also offers a Bitcoin wallet and a payment card. This card is the link to the PayPal system.

After creating an account on the Wirexapp site, click on “Request a card” on the upper right-hand portion of the screen. You can select either a physical or a virtual card.

Once you have the card information, go to the PayPal site and link this card to your PayPal account. You can now transfer funds from your PayPal account to this Wirexapp card. Please note that this is subject to the normal transfer times of any PayPal transaction.

Once your Wirexapp card has received the US dollars from your PayPal account, you can return to the Wirexapp and purchase Bitcoin. As with the Viwox site, there is only one price for Bitcoin on Wirexapp. However, unlike Viwox there is only one transaction fee since you are purchasing Bitcoin with US dollars. Once the card is established and linked to PayPal it can also be used to transfer sale proceeds to PayPal from the Wirexapp site when you sell Bitcoin.

Coinbase is one of the Bitcoin exchanges that lists PayPal as one of the available methods for withdrawing funds from the sale of Bitcoin. Like Cex.io, this link is sometimes inoperative. It should also be noted that Coinbase charges a fee of 3.99% to transfer money to a PayPal account. Some users may consider this too high, considering transfers through ACH are done free of charge.

Derivative Transactions

Although not technically buying Bitcoin with funds on PayPal, there are two other methods that create the same financial position. These are supported by PayPal and have other advantages as well. The first of these involves purchasing a Contract for Difference (CFD) which gives the owner the right to the profit from a change in the value of Bitcoin.

CFD are available to non-US citizens on the eToro site, but available to US citizens and others through Plus 500. Please note that this financial exchange does not involve actually purchasing Bitcoin and that the financial instrument involved includes the use of leverage. This magnifies both gains and losses. Financial leverage is a powerful tool but is not suitable for novice or beginning investors.

Another transaction that fully mimics the ownership of Bitcoin without the use of leverage is a secured loan as offered by Xcoins. This platform does support the transfer of funds from PayPal and boasts a secure and stable connection. This provides what is perhaps the closest and most direct way to “buy Bitcoin with PayPal.”

The transaction looks like a sale, and produces the same financial result, but is structured as a loan of Bitcoin with the market value plus an interest payment held as collateral by the lender.

After the payment through PayPal to the person loaning the Bitcoin, Xcoin transfers the Bitcoin to your wallet. They are now yours to hold, spend or sell.

If the price of Bitcoin falls, you will need to add additional money to the transfer when you return them to repay the loan. If the price of Bitcoin goes up, you can sell the Bitcoin and repay the loan while pocketing the increase. In every way, the secure loan mimics the direct ownership of Bitcoin.


Buying Bitcoin with funds on deposit at PayPal directly is not possible. Some exchanges report that sales proceeds can be transferred to PayPal, but those systems have also reported outages. It is fair to say that PayPal’s reluctance to get involved in the Bitcoin market has been effective. Some third-party intermediary is necessary to complete a direct purchase of Bitcoin.

For some, the use of a bank as an intermediary through a PayPal MasterCard debit card is a simple step and even one that is already in place. For trading platforms that allow links to MasterCard, this is the most direct approach. However, for the one-time purchaser, creating a new card may be more trouble than it is worth. This is probably the case with creating a Wirexapp account as well, which is simply the same relationship from the other side of the trade.

All things considered, the Xcoins transaction, although not an actual purchase of Bitcoin, probably comes closest to the goal of buying Bitcoin with PayPal funds. It replicates the financial results of owning Bitcoin and can be completed through PayPal. It is admittedly more complicated but gets the job done.

This article was originally posted on FX Empire