PayPals Bitcoin is a scam

[Thavash]

After researching it , I think the while "buy Bitcoin on PayPal" is a scam at best , and could be something more sinister at worst. Basically , you cannot withdraw the crypto , which for me means that it isn't crypto at all. But after doing research , I found that you cannot EVEN PAY another person with it - you're simply buying a token that is linked to the Bitcoin price - what is the value of this ?

I believe that this could be an attack on Bitcoin - I discuss this in detail here : https://youtu.be/bApVhoTemGw

To recap :
- You cannot withdraw your Bitcoin
- You cannot Pay anyone ( ironic ) , so it can't even go to another PayPal account
- You dont own the keys

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[yayayo]

I'm really not sure about what you are telling I think you should cite some from the paypal's official terms and condition or any information beside from that youtube video you have linked, but I agree on the fact that you are not able to have your own private key which is mostly like the blockchain wallet.

ya.ya.yo!

[LeGaulois]

1) Revolut does the same thing IIRC, you can't transfer out the bitcoins (either to someone else or a wallet you own) or to pay something with. Does it mean Revolut is a scam too?

2) The person doesn't own the keys, perhaps but it's the same thing with Coinbase for example, so Coinbase is also a scam?

3) Paying someone with bitcoins: if I'm correct on their press release they said it could be used to pay a merchant, so people will be able to pay someone with (the merchant). The fact you can't do it with a random individual is something else.

The definition of a scam isn't what you describe. We are only at the beginning and the service could very well be improved in the future.

[Malam90]

After researching it , I think the while "buy Bitcoin on PayPal" is a scam at best , and could be something more sinister at worst. Basically , you cannot withdraw the crypto , which for me means that it isn't crypto at all. But after doing research , I found that you cannot EVEN PAY another person with it - you're simply buying a token that is linked to the Bitcoin price - what is the value of this ?

I believe that this could be an attack on Bitcoin - I discuss this in detail here : https://youtu.be/bApVhoTemGw

To recap :
- You cannot withdraw your Bitcoin
- You cannot Pay anyone ( ironic ) , so it can't even go to another PayPal account
- You dont own the keys

It is too early to say it as scam but i don't think it is scam anyway. I have read Paypal's official news about Bitcoin's acceptance where they said from the beginning of 2021, Members of Paypal account will be able to use their cryptocurrencies as a funding source at Paypal's supported merchants. They can instantly convert their balance into Fiat currencies. So it is on testing situation. You have to wait for full upgrade of Paypal. You can read official press release of Paypal.
Source= https://newsroom.paypal-corp.com/2020-10-21-PayPal-Launches-New-Service-Enabling-Users-to-Buy-Hold-and-Sell-Cryptocurrency

[Thavash]

It is too early to say it as scam but i don't think it is scam anyway. I have read Paypal's official news about Bitcoin's acceptance where they said from the beginning of 2021, Members of Paypal account will be able to use their cryptocurrencies as a funding source at Paypal's supported merchants. They can instantly convert their balance into Fiat currencies. So it is on testing situation. You have to wait for full upgrade of Paypal. You can read official press release of Paypal.
Source= https://newsroom.paypal-corp.com/2020-10-21-PayPal-Launches-New-Service-Enabling-Users-to-Buy-Hold-and-Sell-Cryptocurrency

If they allow you to pay another merchant eventually, then I stand to be correct - that would be a good thing ( I'm assuming that there will be some sort of settlement between the two parties in Bitcoin ). This could then actually be a way of scaling Bitcoin and could be good for Bitcoin overall. But I would still like to see the option to withdraw.

[Teresa_FX1]

I really don't think it's a scam, I believe it's a first trial step for PayPal and if they see some profit making opportunity they will take it and some more features for users will come later.

[mk4]

We really need to stop using the "scam" word as a sort of synonym to "bad service"; because obviously there's a HUGE difference between the two.

PayPal's cryptocurrency-related services are definitely very very limited, but it has been the same with Cash App in the past. The likeliness of what's going to happen is, it's a slow rolling out of features; because I'm pretty sure PayPal is totally aware that bitcoin is really hot right now, and it's smart for them(business wise) to take advantage of this hype and roll out their buy/sell feature asap.

[Lucius]

Show me the perfect crypto-related service, so we can discuss how good PayPal is or bad for Bitcoin?

Things are currently set up in this way which does not mean that it will not change in the future, especially if numerous users ask for the possibility of deposit and withdrawal - in other words "give us the same conditions as for fiat". Meanwhile, PP has made it clear that at some point BTC will become a payment option at all points of sale where it is possible to pay with PP - meaning 26 million merchants.

Therefore, the word scam is not appropriate in this case - everyone will have the opportunity to buy BTC, but also to sell that same BTC within PP. From the perspective of the average Joe, who will invest $100 to buy BTC and then sell them for $130, PP will not be a bad option at all - although any custodial wallet is not the right option for storing crypto.

[cheezcarls]

I don’t agree that Paypal is a scam. They’ve been around for a very long while and will not go anywhere. I’ve been using them since 2009. They even don’t want to be left behind, so they are accepting cryptocurrency deposits. However, what I didn’t like about them is that when our balance gets bigger, they can freeze our accounts without warning and it’s a hassle for us to provide additional documents when this incident happen. This is why I never use them anymore, but I choose to go with Bitcoin and cryptocurrencies for sending and receiving payments.

[DdmrDdmr]

<…>

It’s certainly not ideal from a purist’s point of view, but we are going to see a surge in custodial institutions selling crypto. Many newcomers will have no idea that they could/should custody their crypto themselves, and a large portion of newcomers will not want to get involved with the hassle it entails. That is something we need to get used to, and whilst most around here will certainly vouch for looking after their own crypto, and frown upon those who don’t, the world is slightly larger than the forum, and most people out there are a lot less skilled that we may think.

Having said that, Paypal’s solution is not Token based. Paypal uses Paxos’ Crypto Brokerage API-based solution (see https://www.paxos.com/crypto-brokerage/) to deal with crypto holding and management, and interfaces to operate and display balances stored with Paxos.

I’d personally love to see the technical details of the TX flow through the different corporations and interfaces (Paypal<->Paxos<->ItBit, or whatever other topology gets deployed), but it’s not a token based implementation, nor a scam. Just a commodity solution that’s fine for many, not so much for others.

[mindrust]

More fractional reserve banking is just what we need.

This is how they are going to FIATize crypto. Soon nobody will give a damn about bitcoin's limited supply.

[death69]

Well, they offer us a bad service, but it does not mean they are trying to scam us. Adding crypto to a fiat payment gate is a hard task and I think they try to improve this step by step. Just wait and see. If they really want to jump in this industry, they have to take it serious.

Personally, it is annoying me that you can not make any withdraw of your coin. You can only hold your bitcoin in your account without having any other actions but to buy an sell. And Paypal is not my option if I want to buy bitcoin. There are other exchanges better than paypal.

[Maus0728]

Perhaps calling it "fraud" is something that is inappropriate to say the least. Maybe, as of now, they are disappointing in terms of the fundamental tenet of bitcoin or cryptocurrency in general but it doesn't mean that Paypal will going to be stagnant for a long period of time of being unable to withdraw/send bitcoin to whatever crypto wallet they want to send or receive to.

It is not a bad thing though since Paypal will actually help introduce crypto for newbies or for an average Joe who doesn't have any technical background when it comes to bitcoin.

[Lizzylove1]

I don't believe Paypal's bitcoin is a scam. They just started offering support to bitcoin. We should see major service improvement as the day goes bye.

[Haunebu]

You cannot expect great things from PayPal if you know their history. Their customer service is average and their taxes on payments are a joke sometimes. Paypal accepting BTC out of the blue stunned me, but I never expected a big boost to BTC adoption because of it.

However, I wouldn't necessarily call it a scam or anything. It's just an adoption boost with restrictions as expected from PayPal which is still a win for BTC in the long term.

[NeuroticFish]

while "buy Bitcoin on PayPal" is a scam at best , and could be something more sinister at worst

We'll have to wait and see.
PayPal is working indeed with IOUs now (like Revolut does and I've didn't see such loud complains). But they have plans to connect with an exchange service and then I think that proper deposits and withdrawals will be possible.
However, PayPal doesn't seem to intend to ever use actual Bitcoin. But as long as a third party will do that on behalf of PayPal it should be fine, I think. If they won't do this even though a third party, then yes, we'll have a problem.

[DooMAD]

We really need to stop using the "scam" word as a sort of synonym to "bad service"; because obviously there's a HUGE difference between the two.

I agree to a point, but there is a limit.  If it transpires PayPal are operating fractional reserve, then I'd be inclined to call it a scam.  They'd be selling something that doesn't necessarily exist.  Those who understand how fiat works begrudgingly accept the premise that fiat works that way.  But it's wholly incorrect to accept the practice of Bitcoin IOUs which literally cannot be spent on the blockchain.  That would be a step too far and is 100% a scam.  Best we reserve judgement until their third party custodian, Paxos, provide evidence of full reserve.

More fractional reserve banking is just what we need.

This is how they are going to FIATize crypto. Soon nobody will give a damn about bitcoin's limited supply.

But perhaps we should await some proof before we grab the pitchforks?  I'm suspicious too, but facts are better to act upon.

[Vishnu.Reang]

To recap :
- You cannot withdraw your Bitcoin
- You cannot Pay anyone ( ironic ) , so it can't even go to another PayPal account
- You dont own the keys

PayPal has made it clear that they will allow withdrawals and payments using Bitcoin, once the testing phase is over. We can expect this by mid-2021. But it is true that they don't allow us to own the private keys. But that is the case with 99% of the cryptocurrency exchanges. If you are using any of these cryptocurrency exchanges, then I don't think that you should be having an issue with PayPal.

[Periodik]

If you buy Bitcoin with Paypal, you don't own anything. You don't own a Bitcoin, you don't own a private key, you don't own an address. What you have is not in your possession. What you have is not yours because you cannot send it or pay it to buy something. This is very shady. This looks like a strange asset which is surely not Bitcoin.

[buwaytress]

Oh deal with it. Plenty of people "own" their bitcoin on similar platforms, with far less standing between them and scamming. Least Paypal has a bit license, not notoriously difficult to get for nothing.

If ppl liked bitcoin that much as a result of PP exposure and then decide they want the real thing, mission accomplished.