Although bitcoins have been around since 2008-09 but a lot of people, masses in general are unaware about the methods they can use to purchase bitcoins. In the last few months the demand of bitcoins has sky rocketed and this rise in demand has also resulted in a lot of queries by enthusiastic potential investors on the best way to purchase bitcoins.
In theory the best way to purchase anything is usually the way that is the fastest and most convenient. Therefore is we talk about the best way to purchase bitcoins then you have got credit card and PayPal as the two most convenient ways. There is however an issue when it comes to these two ways and that is of privacy.
Bitcoins are a crypto currency issued on the blockchain platform and this means that they cannot be regulated or controlled by any government or central regulatory authority and in addition to this bitcoins also cannot be tracked or the information of the bitcoin users cannot b revealed, this makes bitcoins big on privacy. Governments cannot track who has how many bitcoins and who does what with their bitcoins; these are the two main reasons why governments are not in favor of completely embracing bitcoins.
Governments have therefore found a way to trace the users. At some point, in order to purchase bitcoins every user has to exchange their local currency and it is at this point that the government can start tracing the users. Therefore if users purchase bitcoins through bank or PayPal, then they lose their privacy. Most users do not really mind this as they feel that they have got nothing to hide. So if you do not have any issue with losing your privacy of using bitcoins then indeed PayPal and credit cards are the best ways to purchase bitcoins.
Although purchasing bitcoins with PayPal is far easier than credit cards, there is an issue. Bitcoin exchanges and merchants aren`t very keen to use PayPal as a method of payment because of the charge back issue.
What Is The Charge Back Issue?
Charge back isn’t an issue under normal circumstances. Whenever you buy goods and pay for them through PayPal, those goods can be returned under 120 days and PayPal is like any other payment company, it helps the buyers in case of fraud or non delivery of goods. So for example if you bought something from Amazon and paid for it through PayPal but you never received the goods, then PayPal will make you good and charge the seller for no delivery. This is called chargeback. The same can apply in case the buyer returns goods within the time period.
Now when we apply this chargeback to bitcoins, a few problems arise. Firstly bitcoins are issued on blockchain and among other benefits; one major benefit of the blockchain platform is that it cannot be hacked. Blockchain is virtually unhackable, that makes it extremely secure. The way it becomes unhackable is by eliminating the transaction as soon as it is done this means that transactions on blockchain that deal in bitcoins cannot be reversed.
If you bought clothes online and paid with bitcoins and didn`t like the clothes then you cannot legally reverse the transactions although it is another thing if the merchant agrees to do it.
This creates a problem. What if someone bought bitcoins via PayPal and then later claimed that they never received them? The seller would have no way to prove that they delivered the bitcoins because the transaction cannot be reversed or accessed.
This is one major reason why bitcoin exchanges have been rather reluctant to use PayPal as a payment method. If you are a buyer then you do not need to worry as these things do not affect you. Lately however ore and more exchanges have been accepting PayPal as a method to sale and purchase bitcoins.
Set Up An Account
In order to purchase bitcoins through PayPal first you will need to set up an account on PayPal. This should ideally be done a few days in advance so that you can get enough time to upload and verify your account and get it ready for transactions. Once your account is ready you can move on to the next step
Choose A Bitcoin Exchange
A bitcoin exchange is an online platform where users can exchange their local currencies for bitcoins and vice versa. As mentioned above it is not that easy to find exchanges that accept Paypal. You will have to carry out your own research to find which exchanges allow PayPal as a valid payment method. Our research indicates that Coinbase is now accepting PayPal but only for bitcoin sellers. Binance is a major bitcoin exchange that doesn’t at this time support PayPal. eToro certain accepts PayPal as a valid payment method.
You can read more about great bitcoin exchanges that accept PayPal here.
Peer to peer exchanges are quite common with bitcoin users as these have a greater level of privacy. Exchanges such as local bitcoins and Paxful allow users to buy bitcoins. However you will have to look for buyers on these exchanges who are willing to accept payment through Paypal. Once the payment has been confirmed the bitcoins will be transferred to your bitcoin wallet.
By following these steps you can purchase bitcoins through PayPal. Just make sure to carry out due diligence of the bitcoin exchange or the buyer before you engage in the transaction.