Table of Contents
- Buying Bitcoin via PayPal
- Buying Bitcoin from an exchange using PayPal
- Place an order
- Securely store Bitcoin
- Selling Bitcoin
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Forbes Advisor has provided this content for educational reasons only and not to help you decide whether or not to invest in cryptocurrency. Should you decide to invest in cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.
Bitcoin remains in the headlines as prices continue to crash and rally daily, piquing the interest of those looking into investing for the first time.
But Bitcoin isn’t a guaranteed investment. There’s nothing to say an investor will make a profit or even recoup their initial investment. While the price of Bitcoin has risen by more than 4,000% since 2016, a crash between 2017 and 2018 saw almost £16,000 wiped off the price of a Bitcoin.
Turmoil in early May saw the price collapse further, taking the price to half the highest point achieved – almost $69,000.
It’s this volatility that has led the UK’s finance watchdog the Financial Conduct Authority (FCA) to issue repeated warnings to would-be investors, advising that they should be prepared to lose everything.
But if an investor is aware of the risks and wants to invest either via PayPal or via another exchange using PayPal as a payment method, here’s some things they might need to know.
Bitcoin prices
Buying Bitcoin via PayPal
Investors can buy Bitcoin through the PayPal website or smartphone app. Once they’ve logged in or created an account, start by selecting Crypto from the navigation bar.
Once they’ve chosen Bitcoin from the list of cryptocurrencies, they’ll be asked to pass an identity check that involves sharing some personal information. After the investor passes the check, they can type in the amount they want to invest or select a preset amount from the list.
Buying Bitcoin from an exchange using PayPal
Some crypto exchanges allow investors to deposit funds into their account from PayPal that they can then use to buy Bitcoin. Some exchanges however might restrict this functionality to the US while others allow UK users to deposit money from PayPal but charge a small fee.
Once the investor has chosen an exchange that accepts PayPal, they should check whether it includes a wallet to securely hold Bitcoin. If it does, but they’d prefer to hold their Bitcoin in a wallet outside the exchange – either hot (online) or cold (offline) – they should check if it allows transfers and whether there are fees to pay if they withdraws their assets.
Place an order
Once the money has been deposited into the account from PayPal, users should navigate to the Bitcoin page within their exchange and enter the amount they’d like to invest. The amount cannot be any greater than the amount that has been deposited from PayPal.
Remember that with the price of Bitcoin hovering around the £30,000 mark, investors are probably going to be buying a share of one Bitcoin. If, for example, Bitcoin were priced at £30,000 at the time of exchange and an investor bought £1,000 worth, they’d be purchasing 3% of a Bitcoin.
Securely store Bitcoin
Bitcoin should be held in a secure wallet, whether it is an exchange’s integrated wallet, a third-party provider or an offline storage drive the investor owns.
Hot (online) wallets are less secure because they’re hosted online and vulnerable to hackers, but a user’s assets could be recovered if they forgot their passcodes.
Cold (offline) wallets are more secure because they’re not automatically web-connected, but if an investor lost the access codes there would be nobody to help recover them, which means access to the Bitcoin could be lost.
Selling Bitcoin
If an investor decides to sell their Bitcoin holdings, it’s possible to transfer the Sterling currency back to a PayPal account, but there may be withdrawal fees to pay.
Cryptocurrency is unregulated in the UK. The UK regulator, the Financial Conduct Authority, has repeatedly warned investors that they risk losing all their money if they buy cryptocurrency, with no possibility of compensation.