Bitcoin remains in the headlines as prices continue to crash and recover on a daily basis, attracting interest from those considering investing for the first time.
But Bitcoin is not a guaranteed investment. Nothing says you will make a profit or even get your investment back. While the price of Bitcoin has risen over 4,000% since 2016, a crash between 2017 and 2018 knocked almost £16,000 off the price of a Bitcoin.
The early May turmoil saw the price crash further, bringing the price down to half of its all-time high – near $69,000.
It is this volatility that has led Britain’s financial watchdog, the Financial Conduct Authority (FCA), to issue repeated warnings to potential investors, advising them that they must be prepared to lose it all.
But if you’re aware of the risks and want to invest through PayPal or through another exchange using PayPal as your payment method, here’s what you need to know.
Buy Bitcoin through PayPal
You can buy bitcoins through the PayPal website or the smartphone app. Once you have logged in or created an account, start by selecting Crypto from the navigation bar.
Once you choose Bitcoin from the list of cryptocurrencies, you will be asked to pass an identity check which involves sharing some personal information. After passing the verification, you can enter the amount you want to invest or select a predefined amount from the list.
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Crypto-assets are highly volatile and unregulated in the UK. No consumer protection. Income tax may apply.
Buy Bitcoin from an exchange using PayPal
Some crypto exchanges will allow you to deposit funds into your account from PayPal which you can then use to purchase Bitcoin. Some exchanges, for example Coinbase, only allow this feature in the US, while others, like eToro, allow UK users to deposit money from PayPal free of charge.
Once you’ve chosen an exchange that accepts PayPal, check to see if it includes a wallet to securely hold your Bitcoin. If so, but you prefer to keep your Bitcoin in a wallet outside the exchange – hot (online) or cold (offline) – check if it allows transfers and if there are any fees to pay if you withdraw your assets.
Once you’ve deposited your money into your account from PayPal, go to your exchange’s Bitcoin page and enter the amount you want to invest. The amount cannot be more than what you deposited from PayPal.
Remember that with the price of Bitcoin hovering around the £30,000 mark, you are likely to buy a share of one Bitcoin. If, for example, the price of Bitcoin was £30,000 at the time of the exchange and you bought it for £1,000, you would buy 3% of a Bitcoin.
Store your Bitcoins securely
Bitcoin should be kept in a secure wallet, whether it’s your exchange’s built-in wallet, a third-party provider, or an offline storage drive you own.
Hot (online) wallets are less secure as they are hosted online and vulnerable to hackers, but your assets could be recovered if you forget your access codes.
Cold (offline) wallets are more secure because they are not connected to the web, but if you lose your access codes, there will be no one to help you recover them, which means you could lose your access codes. access to your Bitcoin.
Sell your bitcoin
If you decide to sell your Bitcoin holdings, it is possible to transfer the sterling currency you recover to your PayPal account, but there may be a withdrawal fee to pay.