How degenerate is it buying and sitting on PayPal Bitcoin ?

[exstasie]

If it turns out they are fractional?  Then I would frown on it.  But if they are actually custodying BTC then yeah... doing something small to help make them successful is not a bad idea.

And if they chose to have a fractional BTC reserve?  It would very possibly be their undoing.

They have a Bitlicense, which requires 100% reserves. Not a guarantee of anything obviously, but they appear to be doing everything very by the book. I'd be much more worried about a hack than intentional fractional reserve.

Honestly, it's pretty cool to see "Your crypto" in my Paypal dashboard. Not cool enough that I'm going to load up my Paypal account, but if I ever have some cash on there, I'll buy some Bitcoin IOUs.

[stompix]

Playing the devil advocate right now, but legally speaking, if you would have done this on Coinbase for example, wound't you still be liable for the same taxes?

Buying Bitcoin is not a taxable event. Selling it and converting to fiat is. That's why I make sure to always sell my coins FIFO, so I'm only owing long term capital gains.

That's what I was aiming at, don't sell till they enable real coin withdrawals.

And if they chose to have a fractional BTC reserve?  It would very possibly be their undoing.

They have a Bitlicense, which requires 100% reserves. Not a guarantee of anything obviously, but they appear to be doing everything very by the book. I'd be much more worried about a hack than intentional fractional reserve.

I don't think they even need to run this scheme, Paypal has some serious fees, and BTC will not be the exception, yet they will make a lot of money, why risk not only these but their entire company and getting involved in this? Indeed Paxos might be cheating them behind their back and feeding false information but again, why would they do this, any financial gain is clearly outweighed looking at the consequences.
Indeed a hack might be something more serious but I still haven't heard of a serious cold wallet hack from a custodian, a real hack not an inside job.

I don't want mainstream adoption, I want INNOVATION.

The story of the BMW 8-series 

[hatshepsut93]

Playing the devil advocate right now, but legally speaking, if you would have done this on Coinbase for example, wound't you still be liable for the same taxes? Or on any exchange? Of course, buying and selling at an ATM or P2P would have given you some privacy but still from a legal point of view that would be tax evasion, right? I'm not talking about what's moral or views on it but strictly legally! So, you do it with PPBTC or withBTC  at Kraken it's the same in the end, right?

I've seen so many people here saying "don't use custodial services, they will report you to IRS". Do they plan to not pay tax on their Bitcoin gains? IMO that's an extremely risky thing to do in the US, especially if we talk about big amounts - there's a very high chance that they will uncover it eventually and slap you with such a big fine on top of what you owe, that you'll regret not reporting it yourself.

Anyway, what are your thoughts on buying PPBTC ? I believe it's fully degenerate, mostly due to the fact you cannot transfer PPBTC out to your own custody.

If you're an active PayPal user and a Bitcoiner, I see no problems with converting your PayPal balance to BTC. But if you're not a PayPal user, and you want to get into Bitcoin through PayPal, this is not optimal. I think it's only good for those who'd have higher chance of losing coins in their own wallets than losing because of PayPal.

[Fundamentals Of]

There seems to be no special feature of Paypal's Bitcoin that would convince a lot of Bitcoin supporters to make their purchases there. On the contrary, there are a lot of reasons why they should not make the purchases there.

In my mind, Paypal's Bitcoin is especially tailored for newbies in the market who haven't been sufficiently informed yet as to the basics of Bitcoin and how it is to be truly owned and kept safely.

[exstasie]

I think it's only good for those who'd have higher chance of losing coins in their own wallets than losing because of PayPal.

Sadly, this may apply to most people, at least until offline key storage is the norm. Too many people are prone to surfing the internet insecurely and downloading files on the same PC their wallets are on. When I tell people IRL they should have a dedicated offline device or hardware wallet, they look at me like I'm crazy. Most newbies aren't properly securing their wallets, and I honestly wonder sometimes how many ever will.

In a sense, Paypal/Paxos should be more secure than a typical exchange as well since they don't process customer withdrawals. That drastically cuts down on the frequency that private keys are handled and removes the need to ever use hot wallets.

[Fortify]

You should be careful counting your "unrealized" gains. Until you sell and have the cash out of the asset you should never really count on it. Bitcoin is currently up, but over the last couple months it has been very turbulent and as we saw last time - when it chooses to tank, it will drop very quickly and it is very possible to lose 20% within less than a day. Depending on the amount you have invested and when you started, it might be worth banking a little.

[hatshepsut93]

Sadly, this may apply to most people, at least until offline key storage is the norm. Too many people are prone to surfing the internet insecurely and downloading files on the same PC their wallets are on. When I tell people IRL they should have a dedicated offline device or hardware wallet, they look at me like I'm crazy. Most newbies aren't properly securing their wallets, and I honestly wonder sometimes how many ever will.

In a sense, Paypal/Paxos should be more secure than a typical exchange as well since they don't process customer withdrawals. That drastically cuts down on the frequency that private keys are handled and removes the need to ever use hot wallets.

This can be really bad for the future of Bitcoin. In 2017 Bitcoin community defended itself from the SegWit2x attack by clearly signalling that the users won't recognize the fork as new Bitcoin. But if in the future majority of Bitcoin users will only own custodial Bitcoin and won't know anything about the technicals of Bitcoin, it would be easy to hard-fork the network if miners will be onboard.

[philipma1957]

Sadly, this may apply to most people, at least until offline key storage is the norm. Too many people are prone to surfing the internet insecurely and downloading files on the same PC their wallets are on. When I tell people IRL they should have a dedicated offline device or hardware wallet, they look at me like I'm crazy. Most newbies aren't properly securing their wallets, and I honestly wonder sometimes how many ever will.

In a sense, Paypal/Paxos should be more secure than a typical exchange as well since they don't process customer withdrawals. That drastically cuts down on the frequency that private keys are handled and removes the need to ever use hot wallets.

This can be really bad for the future of Bitcoin. In 2017 Bitcoin community defended itself from the SegWit2x attack by clearly signalling that the users won't recognize the fork as new Bitcoin. But if in the future majority of Bitcoin users will only own custodial Bitcoin and won't know anything about the technicals of Bitcoin, it would be easy to hard-fork the network if miners will be onboard.

Well instead of worrying about the danger of PayPal holding a few billion worth of btc if they have that much. The true fear is governments copying Norway's move of putting some BTC into the entire nations retirement fund.

Norway is small under 6 million and it is only 2 dollars per person so well under 20 million.

Pick the UK with 66 million make it 100 per person and you are at 6.6 billion

Better yet Pick the EuroPean union 450 million add 1% vat to the whole union sink it into a BTC fund.

See where I am going. Adaption or adoption of BTC big time.

The upside of Paypal is it may have influenced Norway to invest in BTC for its pension fund. The upside of Graystone buying a lot of coins may have been a factor keep this up and maybe just maybe we see a dozen countries adding btc into its longterm holdings.

Many talk about 1 dollar satoshi's which is a 10,000,000 bitcoin.  Paypal Norway Gray-stone so dare I say Singapore and UK along with Italy in 2021. With more to follow in 2022.

[exstasie]

Sadly, this may apply to most people, at least until offline key storage is the norm. Too many people are prone to surfing the internet insecurely and downloading files on the same PC their wallets are on. When I tell people IRL they should have a dedicated offline device or hardware wallet, they look at me like I'm crazy. Most newbies aren't properly securing their wallets, and I honestly wonder sometimes how many ever will.

In a sense, Paypal/Paxos should be more secure than a typical exchange as well since they don't process customer withdrawals. That drastically cuts down on the frequency that private keys are handled and removes the need to ever use hot wallets.

This can be really bad for the future of Bitcoin. In 2017 Bitcoin community defended itself from the SegWit2x attack by clearly signalling that the users won't recognize the fork as new Bitcoin. But if in the future majority of Bitcoin users will only own custodial Bitcoin and won't know anything about the technicals of Bitcoin, it would be easy to hard-fork the network if miners will be onboard.

I'm not overly concerned about the political stuff. I think there is a very strong contingent of Bitcoin holders and users, as well as more ethical exchanges (at least regarding Bitcoin politics) like Bitfinex and Kraken who will continue running full nodes. I also think a contentious hard fork will only become increasingly difficult to pull off as the years go by, as stakeholders become increasingly entrenched in the existing rule system.

In terms of key security, I also have some hope that offline key storage will become more commonplace among regular users. We need better and cheaper hardware wallets, and we need better offline solutions from wallet developers. At this point, I think Electrum is the only desktop wallet with an intuitive offline wallet UI. That's pretty disappointing, but it's not a permanent limitation. Wallet UX in general is still holding Bitcoin back. This stuff takes time.

[wheelz1200]

So, in the course of doing everyday stuff, I use Paypal occasionally, which means I hold a cash balance with them.

I have started buying small chunks of PPBTC, and having them holding it in custody.

So far, it's been way profitable for me (unrealized), but I'm fully aware of the tax implications involved with selling PPBTC (Already had to sell off a sliver of PPBTC, and was forced to enter my SSN to continue. I see what you did there PayPal. Har har IRS. That $25 was sold at a loss !!)

Anyway, what are your thoughts on buying PPBTC ? I believe it's fully degenerate, mostly due to the fact you cannot transfer PPBTC out to your own custody.

The only way I'm rationalizing it right now, is whatever PPBTC I'm scooping, aren't going to be sold for at least 365 days after they are purchased, so I'm at least being taxed at long-term capital gains.

Thoughts ? Let's have a PPBTC catharsis thread.

For me personally I see paypal as a crooked company that will end up screwing their customers somehow.  But hey how no different from any other crypto exchange.  Only part I dont like is letting them hold it in their custody.  I wouldnt trust their storage opsec.  I find it more for the normies than that of people who have been in crypto for awhile.

[philipma1957]

Funny thing I have been with PayPal since 2003 maybe 2002.  I have three accounts two super active one almost never used.

So I grabbed say 160 and say 100 for the two active accounts.  They are now worth 260 and 177 or

260 became 437


Today I got an offer to buy 100+ of BTC and get a 25 usd voucher for the less used third account.

So I just did that. So I now have put in 360 to get 537 and I have a $25 coupon to use as I please as long as seller takes PayPal.



That offer will be done for 40000 people.

Give me a minute to show screen shot of offer.

[DustyRah]

Avoid PayPal, they are no good. They are providing this option to ensure that they keep their user base.

Note that PayPal has a reputation to cancel merchant accounts without providing any reason and will block withdrawal of funds for 6 months or more.

User accounts are suspended for vague reasons as well including buying and selling crypto too often. They do this because THEY CAN and are bad news for anything in the financial system.

[philipma1957]

I have been with them from 2002 or 2003.  No issues or real problems.

I do know someone that was closed out he did a 5 to 6k callback on mining gear that never arrived paid with PayPal.

PayPal did pay have and then closed him "out for life" IIRC

[LUCKMCFLY]

It does not seem strange to me about Paypal, if only with the fees so high in front of each transaction made with Paypal, just thinking about the fee with Bitcoin will be something monumental, Paypal will never lose, if the big paypal clients like OP happened to something like that, it is difficult to enter there with small amounts to make transactions with Bitcoin.

[masterzino]

..
Anyway, what are your thoughts on buying PPBTC ? I believe it's fully degenerate, mostly due to the fact you cannot transfer PPBTC out to your own custody.
..

Yep, I would agree than buying PPBTC for than just fun isn't the smartest option around. I found the PPBTC as a way for PayPal to monetize over the hype without risking anything. PPBTC is similar to CFD - not the real deal.

[philipma1957]

..
Anyway, what are your thoughts on buying PPBTC ? I believe it's fully degenerate, mostly due to the fact you cannot transfer PPBTC out to your own custody.
..

Yep, I would agree than buying PPBTC for than just fun isn't the smartest option around. I found the PPBTC as a way for PayPal to monetize over the hype without risking anything. PPBTC is similar to CFD - not the real deal.

Oh yeah I tossed a few hundred into it so far



I think 380 usd which is now worth about 530 and a 25 dollar voucher to use with any PayPal purchase.

By Jan 1 2022 I will have put in around 500usd maybe 600usd

[adaseb]

I don’t think there is anything wrong with investing in Bitcoin thru PayPal. The way that people get their Bitcoin stolen left and right it’s a good thing if the actual coins are not in their custody but instead inside PayPal’s which is more secure.

You don’t have to worry about someone hacking into your PayPal and stealing your Bitcoin, because they can’t withdraw it anyways.

Sure you can’t withdraw it but most people just are in it for the money and not technology so they don’t really care. As long as their in profit they are happy.

Only issue is the high fees that they will charge. It’s like 2% one way so 4% round trip pretty much. Which are crazy high but still cheaper than a Bitcoin Atm which is like 10%.

[pixie85]

to not buy it when you legally can simply means you do not want btc to be mainstream.

I want it to go mainstream and I want to buy it, but why should I use paypal to do it when there are easier, faster, cheaper ways?

I don't have a paypal account. I don't have a USD bank account. I don't live in the US. I know that PayPal's fees are ridiculous when it comes to foreign currency transfers and such.

I don't trust PayPal, I don't want my name to go to some tax agency with a label "owns bitcoins".

I value my privacy, therefore I will not be buying through paypal, which doesn't mean I will not be buying at all.

[STT]

Is Paypal charging a % fee to hold BTC or they will gain from the spread cost probably  ?    I checked for an email like you posted but I have not received anything about BTC just a general bonus if I log into a long time unused account, better then nothing I guess.   I do remember Paypal stating an inactivity fee coming into play but when I last looked it wasnt overly harshly enforced.


Pixie thats a fair point and its true generally if you dont have keys then you are effectively lending your BTC to that company for free.   However convenience means this is common and Paypal is hoping to capitalise on the mainstream population moving into the Bitcoin realm.    Its arguable who gains more here, Paypal from % business addition or crypto from reputation and the monetary inflow from people who wouldnt come into this sphere of influence otherwise.
  Alot of people took this as bullish and price no doubt rose from the news but I think its secondary effect further down the line that really matters, for now this is all speculative not hard line actual population increasing usage, reliance and utility via BTC.   The difference matters because speculative flows reverse far more easily and I still assume we can go back to 10k in stormy weather.

[philipma1957]

to not buy it when you legally can simply means you do not want btc to be mainstream.

I want it to go mainstream and I want to buy it, but why should I use paypal to do it when there are easier, faster, cheaper ways?

I don't have a paypal account. I don't have a USD bank account. I don't live in the US. I know that PayPal's fees are ridiculous when it comes to foreign currency transfers and such.

I don't trust PayPal, I don't want my name to go to some tax agency with a label "owns bitcoins".

I value my privacy, therefore I will not be buying through paypal, which doesn't mean I will not be buying at all.

Well it is not for you.

But if you want to mainstream btc you need to use real companies.

Exchanges are not mainstream.
Paypal is mainstream.

So what is mainstream in your country?
You need to realize that in order for mainstream acceptance it is going to be tax reportable if your country charges taxes.

to quote you "...I don't want my name to go to some tax agency with a label "owns bitcoins". "

All mainstream in almost all countries will involve taxes.

So I am just saying most people in bitcointalk miss out on what mainstream is if they think it won't be taxable.

In my country USA both coinbase and PayPal will report my holdings to the IRS.  I will pay the tax and do my accounting correctly.

I did not ask "to be born in the USA"

My birthplace was decided with out my consent. At my older age of 63 I am not going to move out of USA. So for me to correctly support BTC I pay taxes.

Anyone in my position already playing the game legally that can buy PayPal BTC legally should.

Not that they need to buy a lot just some.  Hell PayPal just gave 25 dollars to buy 100 usd worth of BTC and I did.