PayPal Now Sells Bitcoin on its Platform!

In late October of 2020, Paypal announced it would begin selling Bitcoin and 3 other common cryptos on its platform, directly to its 346 million users.

Here is what that looks like from within the Paypal app

Hardcore Bitcoiners will be sad to know that the buying functionality is really limited for now.

Users can only buy and sell thier Bitcoins within Paypal. That means that users cannot withdraw the coins or even transfer them to other paypal users. Because of this, there is no way for a buyer to take custody of the coins himself. He must trust Paypal to custody them for him.

This may be ideal for older, less technically abled investors who merely want price action from Bitcoin. Still, for now, Paypal is basically offering users a way to speculate on the price of Bitcoin and nothing else.

There is one exception to this. Users can spend the Bitcoin with merchants who accept Bitcoin via Paypal. This is because Paypal is not sending the merchant Bitcoin anyway. They are payhing the merchant in USD and accepting the Bitcoin on their behalf. So when you spend your Paypal Bitcoins at one of these merchants, they are just selling your Bitcoin for you in order to pay the merchant.

What has PayPal said about Bitcoin in the past?

Back in April 2018, the founding CEO of PayPal said that Bitcoin was the biggest scam in history. Bill Harris used the words ‘speculative’, ‘gamble’, ‘scam’ and ‘bubble’ to describe the cryptocurrency. He warned people to be careful against what he termed as a “pump and dump scheme” with risks that the world had never witnessed.

This announcement seemed to negate an earlier suggestion by a top executive at PayPal that Bitcoin would become a popular payment option. In February of 2018, Chief Financial Officer John Rainey was interviewed by Wall Street Journal. In a part of the interview titled “Crypto Factor”, he maintained that there was a likelihood of Bitcoin becoming a popular payment option.

However, Rainey indicated that it would take years before this would ever become a reality. This is a position that PayPal’s co-founder shares. Max Levchin was quoted in December 2017 saying that the digital asset technology was revolutionary. Even so, Levchin did not think that PayPal was ready to embrace the technology yet.

Paypal changing its tune on Bitcoin

In early 2020, it emerged that Paypal had begun something called the "Blockchain Research Group" and posted job openings for eight engineering positions in San Jose, California and Singapore.

[Paypal wants its own] perspective and view on [blockchain] technology itself to see how it can help us contribute to the concept of creating an open digital payments platform that can serve everyone....We are a strong believer in the potential of blockchain. The digitization of currency is only a matter of when not if.

Sri Shivananda CTO, PayPal

Then, on July 22, 2020, Coindesk broke the story that Paypal would be adding Bitcoin and other crypto purchasing through its platform soon. As of now, we do not know when Paypal intends on launching this service or even what coins it will support, though its almost certain Bitcoin will among the coins offered.

What we do know is that the service will be provided via Paxos Crypto Borkerage API. Paxos will handle all custody, KYC, and compliance. Paypal will merely allow you to use your paypal balance to or connected cards to buy and sell Bitcoin through its own user interface.

Paypal is adding crypto via Paxos Crypto Brokerage

PayPal has already partnered with Coinbase, BitPay and GoCoin for transactions of digital goods. This allowed merchants using Paypal to also accept cryptocurrencies with minimal effort. John Donahoe, the Chief Executive Officer at eBay, said he believed such a partnership would hugely benefit his company in the future.

It's important to note, though, that this story comes from an anonymous source, and has not been confirmed by Paypal at this time. However, the source suggested that an announcement would be mader later this week. We'll update this page accordingly as we find out more.