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Why You Shouldn’t Use PayPal for Crypto

Paypal now lets you buy and sell cryptocurrencies, like Bitcoin and Ethereum. A lot of people are excited about it, and some have speculated that this is why the price of bitcoin has gone up.

When a household brand like PayPal starts selling Bitcoin, it’s probably not because they want to spur healthy adoption.

If millions of newcomers are onboarded to Bitcoin by PayPal, there could be a very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency.

The whole setup could also open a huge can of worms when it comes to taxes. PayPal is only offering crypto services to U.S. account holders initially, and America happens to have some of the harshest tax regulations on the planet.

The U.S. Internal Revenue Service (IRS), classifies crypto assets such as Bitcoin as property, not currencies, therefore they are subject to capital gains taxes. The means that PayPal users buying, selling, or spending crypto will be generating taxable events that need to be reported.

We also learned from reading the FAQ that Paypal controls the private keys associated with any cryptocurrency you buy through Paypal. This means that you only have minimum control over your cryptocurrency, not real control. They may decide to take your bitcoin away from you and force you to go through a difficult appeal process to get it back. With Paypal’s long history of freezing people’s accounts for all kinds of reasons, it doesn’t seem like a good idea to buy crypto through Paypal.

Security Concerns

Over the past few years, a number of high-profile crypto-exchanges around the world have fallen victim to cyber-attacks, with malicious hackers gaining access to internal networks, emptying users’ virtual wallets in the process.

Crooks also continue to target crypto-enthusiasts with phishing emails designed to gain access to their accounts.

Since PayPal is essentially opening the door for more people to venture into the cryptocurrency market, including those inexperienced with blockchain-related payment processes, could this spark a fresh wave of economic cybercrime?

Not exactly. PayPal is not offering what crypto experts call a ‘custodial service’, meaning that users cannot transfer the cryptocurrency they have bought there off the platform in order to use it elsewhere.

FAQ Crypto for Paypal

What can I do with crypto on PayPal?

You can buy four different cryptos on PayPal: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. You can also sell the crypto you buy on PayPal or keep it in your account.

Do I have to register for something?

If you have a PayPal Cash account, all you need to do is confirm some account information on your first purchase. If you don’t have a PayPal Cash account, you can request one when you make your first purchase.

Can I use crypto to pay or send money?

While you currently can’t use crypto as a way to pay or send money on PayPal, we love the way you think! A lot of people have big dreams for the future of crypto and so do we.

Are there any fees?

When buying and selling crypto, transaction fees and a currency translation difference are included in the exchange rate. You will see the transaction fees and the final exchange rate before confirming any crypto buy or sell (see prices and fees at https://www.paypal.com/en/webapps/mpp/paypal-fees). There is no charge for holding crypto in your account.

Why is there an exchange rate for crypto?

Since crypto is digital money, you are essentially exchanging one currency for another when you buy and sell it. The exchange rate tells you how much crypto or dollars you will get in the swap and often updates as the value of the crypto is constantly changing.

Can I transfer cryptocurrencies to and from PayPal?

Currently, you can only keep the crypto you buy from PayPal in your account. Additionally, your account’s cryptography cannot be transferred to other accounts on or outside of PayPal.

Will PayPal protect my crypto?

PayPal works 24/7 to prevent theft and fraud. If you suspect fraudulent activity on your account, please contact customer service by visiting https://www.paypal.com/us/smarthelp/home or immediately call (888) 221-1161 to report it and we will investigate the matter. your account activity.

What we cannot protect you from are losses resulting from falling crypto prices. Yes, crypto can be fun and exciting, but it’s also volatile, so we recommend that you do your research and make decisions carefully.

Will I get a private key for the crypto I buy from PayPal?

You own the crypto you buy on PayPal but you will not receive a private key. In case you were wondering, a private key is a person’s secret code to access and manage their crypto. If they are lost, stolen or even forgotten, they can never access their crypto again – quite risky in itself. As long as you can log into your PayPal account, your crypto will always be at hand.

Where does the money go when I sell my crypto?

The money goes directly to your PayPal Cash or PayPal Cash Plus balance where you can use it as you normally would.

How long does it take to receive money from crypto sale?

Usually, the money you receive from selling crypto will be available instantly in your PayPal Cash or PayPal Cash Plus balance. As with all transactions, crypto sales are subject to review and could be delayed or stopped if something goes wrong.

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