Using a payment processor like as PayPal Holdings Inc., you may purchase bitcoin (PYPL). utilizing PayPal, you may buy bitcoin in two different ways: either by linking your account to a bank or debit card, or by utilizing the account’s balance to buy bitcoins from an outside source.
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Additionally, you may immediately purchase Bitcoin, Ethereum, Litecoin, and Bitcoin Cash with PayPal. Residents in every other state, with the exception of Hawaii, have the option to purchase bitcoin using their current PayPal accounts or create new ones. Additionally, you may utilize the “Checkout With Crypto” function to pay for goods and services using your cryptocurrency holdings.
PayPal makes money from the crypto spread, which is the discrepancy between the market price of bitcoin and its exchange rate against the US dollar, when you purchase it straight from them. PayPal furthermore levies a transaction fee for each purchase, which is based on the total amount paid.
PayPal allows you to send cryptocurrency, such as Bitcoin, to an external digital asset wallet that you own and manage or that you may give to a friend or relative. You will need to give the wallet address where you wish to send the assets if you want to send your bitcoin outside of PayPal. You cannot use a destination wallet address meant for Bitcoin Cash, for example, if you are transferring bitcoin. Instead, you must use one meant for Bitcoin.
One of the few online dealers that permits PayPal to be used for bitcoin purchases on its site is eToro, a social trading and multi-asset investment platform.
How to Use a Credit Card to Purchase Bitcoin
It is comparable to utilizing debit cards or automated clearing house (ACH) transactions to purchase bitcoin with credit cards. Due to related processing costs and fraud risks, not all exchanges let you purchase bitcoin using a credit card.
Credit card processors may impose additional fees on certain kinds of transactions. The buyer may be charged processing costs by the exchange in addition to transaction fees. Purchases of bitcoin are treated as cash advances by credit card issuers, who impose high fees and interest rates on them.
For example, for such purchases, American Express customers will pay the current cash advance cost, which varies depending on the exchange. Additionally, the credit card issuer caps monthly bitcoin purchases at $1,000 for consumers.
Credit cards that give rewards in the form of bitcoin, such as the BlockFi Bitcoin Rewards credit card, operate similarly to other credit cards.
Other Methods for Purchasing Bitcoin
ATMs for bitcoin
Bitcoin ATMs function similarly to physical bitcoin exchanges. People can buy bitcoin with cash by inserting it into a machine; the cryptocurrency is then transferred to the consumers’ online wallets. Bitcoin ATMs are offered at Walmart Inc. (WMT), a massive retailer, and have grown in popularity in recent years.
Purchasing bitcoin via an ATM entails two fees: the purchase price and the conversion fee for turning fiat money into bitcoin. When compared to alternative solutions, both costs are somewhat high. The average purchase cost at bitcoin ATMs around the globe is 5.4% for sales at ATMs and 8.4% of the purchase amount.
A more direct link between users is offered by certain P2P exchange systems. One example of such an exchange is LocalBitcoins. Users may submit requests to purchase or sell bitcoin, along with details about pricing and payment options, after registering an account.
P2P exchanges provide consumers the opportunity to compare prices and get the best offer, even if they don’t provide the same level of anonymity as decentralized exchanges. In order to provide consumers a method to assess possible trading partners before engaging in a transaction, many of these exchanges also have rating systems.
HOOD, also known as Robinhood Markets Inc., is one cryptocurrency trading exchange. By passing on its trading volume to other trading platforms or brokerage houses, it generates revenue from the payment for order flow and levies no commission on cryptocurrency transactions and purchases. Among other cryptocurrencies, Robinhood previously allowed trading on its platform for Dogecoin, Ethereum, Bitcoin Cash, Litecoin, and Ethereum Classic.
On the other hand, Coinbase allows you to trade hundreds of cryptocurrencies, and starting in 2022, conventional brokers like Fidelity Investments started offering 401(k) accounts with bitcoin trading.