How does one transfer money from PayPal to Bitcoin?

At first glance, Paypal and Bitcoin seem to be made for each other. Paypal is a well-established platform which was created for transferring money simply and easily over the Internet without the use of financial intermediaries. Bitcoin is a medium of exchange that is specifically engineered to operate outside the financial mainstream.

Yet the combination of these two has seemed like mixing oil and water. There have been times when it seems that they are blending well together. At other times they seem to have very obvious differences that cannot be overcome. These different periods are overlaid with the always interesting and changing cryptocurrency markets.

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Bitcoin and PayPal – Roadblocks

At the time this is being written, there is no way to directly buy Bitcoin with the payment coming directly from a PayPal account. PayPal will not allow transfers of funds to pay for Bitcoin. Rumors that these transactions will be allowed have circulated for several years. There have even been rumors that PayPal is developing its own cryptocurrency to facilitate monetary transfers in a manner similar to how Ripple fills this role for banks and financial institutions.

However, PayPal has not changed its policy and has not announced the development of a cryptocurrency. In fact, given that PayPal works as an intermediary between banks and individuals a cryptocurrency seems counter to their business model. Unless banks begin to hold accounts in cryptocurrencies, there seems to be little incentive for PayPal to engage in the cryptocurrency sector.

Global Currencies, National Restrictions

Part of the problem that PayPal faces is operating across international boundaries, which requires conforming to different rules and regulations. PayPal has expertly navigated that minefield. Cryptocurrency exchanges are developing that same ability, but are not there yet. This means that all exchanges do not operate in all countries.

This is the case with eToro, a popular financial trading site that has offers trades in various cryptocurrencies. The site offers the option to fund a trading account by transfer from PayPal but does not operate in the US. Fortunately for non-US citizens, the site does support trade in Bitcoin funded by Paypal. It also offers easy, step-by-step instructions, as shown below.

Card Methods

It is important to remember that direct transfers from PayPal are not the only means of transacting business with funds stored on the PayPal platform. PayPal also offers a credit card and a debit card that provide a convenient intermediate step in transferring funds through the existing credit card network.

Utilizing this method of paying with PayPal is straightforward, although it is not a direct means of paying for Bitcoin with PayPal. It involves creating either a debit or credit account through PayPal, and then using that account at an exchange to purchase Bitcoin. To the extent that this credit or debit card would be used for other purchases, this may be a reasonable approach.

Other Methods

For the one time purchaser of Bitcoin, creating a PayPal MasterCard debit card exclusively for this purpose may seem complicated and too burdensome. For this individual, there are other methods that use an intermediary relationship to arrive at the same destination. One of the more imaginative of these routes is through the Virwox site.

Virwox (the “Virtual World Exchange”) is not a cryptocurrency exchange or site. It is a platform for trading imaginary currencies used in online gaming. One of these currencies is Second Life Linden Dollars (SLL), an imaginary currency used in the game Second Life. This game is one of the most popular online fantasy games on the Internet.

Derivative Transactions

Although not technically buying Bitcoin with funds on PayPal, there are two other methods that create the same financial position. These are supported by PayPal and have other advantages as well. The first of these involves purchasing a Contract for Difference (CFD)

 which gives the owner the right to the profit from a change in the value of Bitcoin.