Why I Don't Think Using Paypal For Bitcoin Tx Is Needed, Newbie Need To Know

[Es Cendol]

Paypal adopted Bitcoin, this is very good news for the Bitcoin community. Because, Paypal is a payment media provider that is most commonly used throughout the world. Their bitcoin adoption made Bitcoin easier to use. However, there are some things I think why it is better not to use paypal even though they can now receive and send Bitcoin?

1. Disputes issue
The first thing you should remember is when you have a dispute. We can indeed track every transaction made using bitcoin. However, we must remember that there is a mix that makes bitcoin transactions difficult to trace. From here, when there is a dispute, it will be difficult for us to defend. Even with bank data we have, we can lose a dispute and have to return the money we receive. if you are lose on disputes, you need to refund the payments made by buyers. Or, if the sellers won on disputes, you will never got your money back.

2. Privacy concerns
If you really prioritize privacy, then making payments using bitcoin via paypal is a way that is not recommended. You are required to do KYC to make a certain nominal withdrawal.

3. The withdrawal process
I am no longer as paypal user, but from my experience, to withdraw money (fiat) it takes 1 - 3 days to be accepted. It is possible for bitcoin withdrawals to also go through a verification process and so on, which incidentally using an exchange will be easier to withdraw bitcoins than paypal. (I only speculate on this, because I do not use the service, if anyone uses and wants to add / correct please leave your comments)

4. Additional service fee
Make any payment directly between seller & buyers just need to pay network fees, I don't think Paypal will not ask additional service fee. So you need to double your fee (network + paypal fee). If the seller known as trusted seller, why we need to pay BTC via Paypal?

[TryNinja]

It is possible for bitcoin withdrawals to also go through a verification process and so on

PayPal won't allow you to withdrawal nor deposit any coins. You can only buy, sell, hodl and pay for stuff through paypal-supported merchants (edit: not even that apparently ). You are not really buying any BTC. You are buying an IOU that is worth the amount in BTC, but that's all.

The only good thing about this is that more people hear and maybe think about trying crypto. We can only hope they will buy some coins, learn that they can't withdrawal and start learning more to buy the right way.

[Daniel91]

It is possible for bitcoin withdrawals to also go through a verification process and so on

PayPal won't allow you to withdrawal nor deposit any coins. You can only buy, sell, hodl and pay for stuff through paypal-supported merchants. You are not really buying any BTC. You are buying an IOU that is worth the amount in BTC, but that's all.

The only good thing about this is that more people hear and maybe think about trying crypto. We can only hope they will buy some coins, learn that they can't withdrawal and start learning more to buy the right way.

A couple of years ago I was in a situation where I could only pay for something through Paypal and I struggled a lot while I found a way to transfer my btc funds to Paypal.
I used VirWoX service for that purpose.
I'm glad that Paypal has finally opened up for crypto as well 

[mk4]

You've put up some good points, but the one main reason why PayPal will be heavily used, well, is simply because PayPal is accepted in pretty much 90% or more of online stores, whereas bitcoin isn't. Looking at it at a optimistic way, at least we actually have a way to use our bitcoin to pay for stuff online. This is at the very least a sort of a temporary "bandage solution" while bitcoin isn't accepted that much yet.

PayPal won't allow you to withdrawal nor deposit any coins.

This is true; though I really assume that this will only be temporary. Same with how Cash App works in the past. *fingers crossed*

[DdmrDdmr]

<…>

I don’t think that the dispute argument applies. As far as I’m aware, Paypal’s solution (at least version 1.0) does not allow direct payment in BTC, but rather, it liquidates the BTCs into FIAT and pays in FIAT. That is to say, there is an implicit sell that applies first, and from there on, it’s back to the FIAT world, so the dispute will still be based on FIAT movements, as they are currently.

The privacy concern’s for a Paypal user are perhaps more related to the IRS (or equivalent) than to anything else. Paypal customers have already forgone KYC, so there is no added privacy related aspects here (incidentally, no BTC withdraws are actually going to take place in BTCs – they must be liquidated into FIAT first).

[Saisher]

It is possible for bitcoin withdrawals to also go through a verification process and so on

PayPal won't allow you to withdrawal nor deposit any coins. You can only buy, sell, hodl and pay for stuff through paypal-supported merchants. You are not really buying any BTC. You are buying an IOU that is worth the amount in BTC, but that's all.

The only good thing about this is that more people hear and maybe think about trying crypto. We can only hope they will buy some coins, learn that they can't withdrawal and start learning more to buy the right way.

People are exciting about Paypal adoption of Bitcoin but they have to fully understand how PayPal will integrate Cryptocurrency, but at least we have a big platform like Paypal that integrate Cryptocurrency, it's good fort awareness of Cryptocurrency we'll see if this adoption can convert to leads and new users of Cryptocurrency, but I'm sure we'll have conversion.

[Pmalek]

Anyone thinking of using PayPal for purchasing Bitcoin or one of the other coins they support needs to know that their service is only available for US customers at the moment, nobody else. In 2021, it will most probably be expanded on other territories. 

PayPal won't allow you to withdrawal nor deposit any coins. You can only buy, sell, hodl and pay for stuff through paypal-supported merchants.

That is how I understood it as well. But I just took a look at their cryptocurrencies TOS.
Check out this part:

You currently are NOT able to send Crypto Assets to family or friends, use Crypto Assets to pay for goods or services, or withdraw Crypto Assets from your Cryptocurrencies Hub to an external cryptocurrency wallet.

https://www.paypal.com/us/webapps/mpp/ua/cryptocurrencies-tnc

Based on that, the only options are to buy, hold, and eventually sell your crypto by converting it back to cash.

[sheenshane]

All that has been mentioned by the OP was have a point but there's one thing that I think shouldn't include.  The Dispute issues, I don't think there are dispute issues behind the announcement of PayPal in accepting crypto.  PayPal has been in long years in service that for sure already gained trust and government regulated, I don't think if there something to argue.  Besides, you can't send your Bitcoin out of your PayPal account or even transfer to another account.

For now, we can't give any feedback yet, let's wait for further results if this awareness that gives by the PayPal adoption will lead to having a mass adoption.  For sure those who know how Bitcoin will work will not use PayPal upon purchasing Bitcoin, there are too many ways that you will have full control of your key not just held by the custodial wallet and don't have the freedom to send into other Bitcoin address.

[khaled0111]

The only obvious benefit from using PayPal to sell, buy and hold bitcoin is to profit form price fluctuation.

You currently are NOT able to send Crypto Assets to family or friends, use Crypto Assets to pay for goods or services, or withdraw Crypto Assets from your Cryptocurrencies Hub to an external cryptocurrency wallet.

https://www.paypal.com/us/webapps/mpp/ua/cryptocurrencies-tnc

This makes sense and I am pretty sure it will work like all other custodial wallets and they will not hand private keys to their customers.
It makes sense because allowing crypto withdrawals to external wallets will cause problems when handling disputes. Since bitcoin transactions are irreversible, PayPal will not be able to freeze funds or cancel a transaction when someone files a complaint.

[BlazingHashes]

A lot of people have always assumed that bitcoin will easily disappear or burst like a bubble someday in the future. Combined with the recent very bad conditions, the decline in stock prices, the Coronavirus disease (COVID-19) raging.

Paypal adopted Bitcoin, agree with you, this is very good news for the Bitcoin community specifically, and the cryptocurrency community in genarally. PayPal is accepted around 80- 90% of online stores. I didn't know if I should accept it, but it adopted Bitcoin created a huge support for bitcoin.

[o_e_l_e_o]

Looking at it at a optimistic way, at least we actually have a way to use our bitcoin to pay for stuff online.

We don't really though. All PayPal are actually offering here is exposure to the bitcoin price through their platform. They are not implementing bitcoin support in any meaningful way. As TryNinja says, I can neither deposit nor withdraw bitcoin to or from PayPal. And so, if I did want to use my bitcoin to pay for stuff online, I can't just send it to my PayPal account (not least because I don't have one, ha) and spend it from there. The only bitcoin I can effectively spend via PayPal are bitcoin which I have bought via PayPal.

This may change over time, and PayPal may implement the ability to send and receive bitcoin, but for the time being all you can essentially buy and sell via PayPal is a bitcoin price tracker, not bitcoin itself.

[khaled0111]

...

So if you purchase something using PayPal and choose bitcoin as a payment method they will simply update their databases to reflect the new values without making a real bitcoin transaction!
This makes me wonder if they will really hold the coins you bought from them or they will just show you its value as well! (probably they won't because of price fluctuation).

[o_e_l_e_o]

So if you purchase something using PayPal and choose bitcoin as a payment method they will simply update their databases to reflect the new values without making a real bitcoin transaction!

From the comments above, it seems like they won't even do that. If you want to spend your bitcoin tracker which PayPal is holding for you, you'll have to manually sell it yourself back in to fiat and then spend the fiat.

This makes me wonder if they will really hold the coins you bought from them or they will just show you its value as well!

Impossible to know either way, and actually, it probably doesn't matter. Regardless of whether they do or do not buy the relevant amount of bitcoin, it will never be yours, you will never own it, you cannot withdraw or spend it, and you are at the complete mercy of PayPal allowing you to access it and not freezing your account for any reason.

[mk4]

This may change over time, and PayPal may implement the ability to send and receive bitcoin, but for the time being all you can essentially buy and sell via PayPal is a bitcoin price tracker, not bitcoin itself.

Yeap. It's been the same with Cash App in the past whereas functionalities were pretty limited initially. I doubt a company as big as PayPal would allow their Bitcoin service to be this limited. Well, unless they're going to leave it this way to sort of "play safe" regulations.

[hd49728]

PayPal and this news help more people who have not known or heard about bitcoin, crypto will get their first or more exposure with bitcoin and crypto. It is good, not bad, not harmful.

If I am a loyal user on PayPal, after I see the news, I might try to make my research on bitcoin and crypto. Start with articles on PayPal and with Google. After reading, I might try to buy my first crypto. It is good if you look at the news with its good contribution.

I made my research with their Help center and use Bitcoin to search. Results: no result for Bitcoin. There are some for Bitcoin Cash, Litecoin, Ethereum, blockchain, vocabulary glossary. What is PayPal plan to integrate Bitcoin on their platform? I feel that they are not much friendly with Bitcoin (from their Help center). 

https://www.paypal.com/us/smarthelp/search?q=bitcoin

[joniboini]

PayPal and this news help more people who have not known or heard about bitcoin, crypto will get their first or more exposure with bitcoin and crypto. It is good, not bad, not harmful.

I'm not sure if the news is really going to make any difference in terms of 'marketing'. I mean crypto is pretty much being the talk of the town for a while and pretty sure more people know about it compared to a few years ago but don't have that push to join yet. Considering the current structure of Paypal's Bitcoin trading option, I think it is bad since there is no guarantee you buy the actual thing (just like mentioned earlier, you're buying a price tracker and not BTC itself).

[o_e_l_e_o]

I doubt a company as big as PayPal would allow their Bitcoin service to be this limited.

I'm not so sure. Bitcoin adoption is a direct threat to PayPal. Online stores accepting bitcoin allows them to accept payments more cheaply and with less risk than PayPal. If bitcoin becomes widespread, it will take away a good chunk of PayPal's business. Given that, I don't think PayPal are going to want to aid that until it is already inevitable. Doing what they are doing at the moment is an easy way for them to take some profit via trading fees without actually allowing people to spend or use bitcoin and affecting their own share of the market. Only if bitcoin is already eating away at their market is there any real incentive for them to start supporting sending and receiving.

[mk4]

*snip*

I think it's just either one of two: (1)PayPal doesn't really look at bitcoin as a threat, or (2)PayPal thinks they can be a mass-used custodial when bitcoin gains more transaction(e.g. Coinbase, Purseio, etc).

PayPal has always been play safe, especially when there's disputes issue. They probably will add more feature (such as transfer Bitcoin between paypal user or pay to paypal merchant with Bitcoin), but it's unlikely they will allow bitcoin transfer to bitcoin address.

Siding with buyers on disputes makes a lot of sense on a business perspective though, not necessarily in a regulatory perspective. But one thing's for sure, time will tell.

[nakamura12]

Paypal adopting bitcoin means that many people will know and learn about bitcoin until they are exposed to other cryptocurrency. More like paypal as a bridge in know cryptocurrency. It would be best to buy bitcoin from legit or reputed exchanges and hodl bitcoin much easier and faster.

[libert19]

Many used to sell BTC for PayPal with some premium, everytime there was a dispute it would go against the seller of BTC. Now at least I think there will be a fair ground.