If you’re reading this post then you’ve probably tried to so what every other person does when he first hears about Bitcoin – to buy them using Paypal.
Since Bitcoin came into the general public’s awareness the problem of buying Bitcoin with Paypal hasn’t been given a proper solution. In this post I’ll show you how to do it quickly and easily (although in a somewhat expensive manner).
The reason that Paypal doesn’t allow people to sell Bitcoins in exchange for Paypal credit is very simple. Bitcoin is like cash and Paypal is credit. If someone disputes the sale of the Bitcoins after they bought them with Paypal, the company (Paypal) has no way of knowing if the transaction actually happened. This is mainly due to the pseudonymous nature of Bitcoin. Therefor, Paypal closes down any account that will accept payment for Bitcoins with their credits.
This being the Internet and all, there’s always a way to do something that can’t be done directly :)
So here are some ways you can still buy Bitcoins with Paypal credits, I’ve listed them from the most popular to the least. Keep in mind that whenever you use Paypal to purchase Bitcoins you’ll encounter the issue of high fees. Since the sellers in these methods know this is a problem they allow themselves to charge a lot for it unfortunately. So make sure you’re aware of all of the fees before closing the deal.
Trading Second Life Lindens (SLL) that you bought with Paypal for Bitcoins
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This first method is kind of a workaround. Instead of buying Bitcoins with Paypal which is not allowed, we are going to buy a different currency which is allowed and then trade it for Bitcoins.
Second Life Lindens or SLL in short is the virtual currency used in the game Second Life. It can be bought with Paypal through a website called Virwox. Once you buy SLL through Virwox you can easily exchange it for Bitcoin on the SLL/BTC exchange (also on Virwox).
The whole process can take up to 48 hours as Virwox approves every new customer manually, but since 2013 this method has been proven to work time and time again. It’s only downside is that it has high fees.
Here are the steps in short:
- Open an account with Virwox
- Deposit money in your account with Paypal
- Buy SLL in the SLL/USD exchange
- Exchange SLL to Bitcoin in the SLL/BTC exchange
- Withdraw your Bitcoins
If you need a more detailed description of the process check out this guide.
Buying from a local seller or online vendor through Local Bitcoins
Another option that you can use is the website Local Bitcoins. This website allows you to find sellers near you geographical location. However since you want to pay with Paypal you can look for sellers from all around the world.
When dealing with Local Bitcoins it’s important to read each seller’s note regarding the transaction and make sure you comply. Some sellers have very strict rules regarding selling you Bitcoins with Paypal. Also, make sure to deal only with experienced sellers that have a high reputation on Local Bitcoins.
Since the risk in buying Bitcoins with Paypal is only posed to the seller, some sellers will not be inclined to sell to you if you have no reputation on the site. That’s why this method may be a bit more hard to execute than the first one.
If you have a Paypal debit card – use this method
If you leave in the US then you probably are able to issue yourself a Paypal debit card. If this is the case then you can easily buy Bitcoins with Paypal with very low fees. Just open an account on Circle and make sure to connect your debit card to your profile.
From now on whenever you use this debit card to buy Bitcoins it will be deducted from your Paypal balance.
Beware of scams!
There are of course various other websites that will claim to sell you Bitcoins with Paypal. However none of them have been around long enough for me to vouch for. At the moment these three options are the best available depending on your personal preferance.
If you leave in the US – use Circle with a Paypal debit card.
If you want a hassle free transaction – use Virwox.
If all else fails – use Local Bitcoins.