If you have money in your PayPal account and you want to use it to buy Ether, you have to use a roundabout method. First, you have to find a Bitcoin seller that will accept PayPal. After you have some Bitcoin, you can trade it in for Ether on a digital currency exchange.
Read on to learn more about how to buy Ether with PayPal via the Bitcoin method.
The best way to buy Ether for PayPal users
The reason why it’s hard to buy cryptocurrency with PayPal boils down to issues with PayPal chargebacks. Chargeback is designed to let PayPal buyers get their money back if there’s a problem with a transaction after a sale.
Unfortunately, scammers sometimes abuse PayPal’s chargeback feature to steal money from cryptocurrency sellers. Unlike PayPal, cryptocurrencies do not allow chargebacks. Despite that, you can still find some cryptocurrency sellers that accept PayPal if you know where to look.
- First, buy Bitcoin. If you want to use PayPal to fund your Ether purchase, the best way to begin is with LocalBitcoins or Paxful. Both exchanges are cryptocurrency marketplaces that let individual Bitcoin sellers set their own terms. Some sellers offer PayPal as a buying option.
- Then, trade it in for Ether. Once you’ve used PayPal to make your Bitcoin purchase on LocalBitcoins or Paxful, you can trade in your Bitcoin for Ether through GDAX or Kraken. GDAX and Kraken are both trusted exchanges that give their customers digital wallets. Once you set up your GDAX or Kraken account, you can transfer your Bitcoin with just a few clicks.
Here’s an in-depth walkthrough of each step of the process.
Step 1: Using PayPal to buy Bitcoin
As mentioned above, LocalBitcoins and Paxful are both good options for buying Bitcoin with PayPal. Both sites are like Craigslist or eBay in that they let individual Bitcoin sellers connect with people who want to buy Bitcoin. There are no standardized rules on either system and both sites have similar fees. In addition, sellers on both platforms can decide which payment methods they’ll accept.
If you’re looking for PayPal-for-Bitcoin offers, LocalBitcoins is a good place to begin your search. Because LocalBitcoins is one of the oldest peer-to-peer cryptocurrency exchanges, it tends to have the most sellers. More competition means lower prices for Bitcoin buyers.
Even though anyone can create a LocalBitcoins account, two key features protect buyers from scams: a ratings system and escrow.
- Ratings system. LocalBitcoins buyers can rate their sellers after each purchase. In addition, LocalBitcoins displays every seller’s transaction history on their profile.
- Escrow. LocalBitcoins will hold your Bitcoin in escrow until both you and the seller are satisfied with the transaction.
The main downside of LocalBitcoins is that the interface looks somewhat out-of-date. Though LocalBitcoins is fairly easy to use, the search results pages have limited features. For example, you can’t sort the search results so that the lowest offers or highest rated sellers appear on the top of the page. On the other hand, the fees are quite low.
LocalBitcoins makes all of its money through advertisements. You have to pay a 1% fee if you want to create an offer that appears in the search results. If you don’t create a new buy offer, you don’t have to pay anything to LocalBitcoins.
If you scroll through the PayPal-for-Bitcoin offers on LocalBitcoins, you may notice that the prices are quite high. That’s because PayPal is a risky payment method for Bitcoin sellers. PayPal-for-Bitcoin sellers usually increase their selling price to cover the risk that the buyer will use PayPal’s chargeback feature to steal their money back after the sale is complete.
As mentioned above, the LocalBitcoins interface looks kind of like eBay. The search results page shows a list of sellers on the left. Next to the sellers’ usernames, you can see a number that shows how many successful sales they’ve completed along with another number that indicates their reputation score.
To see all the available PayPal-for-Bitcoin offers, just go to the site and pick a country and then choose PayPal from the drop-down menu.
Depicted below is an offer from a PayPal-for-Bitcoin seller. Under the Terms of trade section, you can get more information about how the seller wants the transaction to proceed.
This particular seller only accepts offers from PayPal buyers that are willing to submit a picture ID.
For more information about LocalBitcoins, read our full LocalBitcoins review.
Paxful is another good option for finding cryptocurrency sellers that are willing to accept PayPal. Because Paxful is newer than LocalBitcoins, it has a better looking interface. However, it also has fewer sellers. Fewer sellers typically means higher prices for PayPal-to-Bitcoin offers. However, sometimes Paxful has better offers than LocalBitcoins. It’s worth it to check both sites before you make your purchase.
The way that Paxful works is almost identical to how LocalBitcoins works. Paxful users that want to buy Bitcoin can use Paxful’s rating system to identify and avoid unreliable sellers. Once you find a seller that you want to do business with and initiate a buy, the Bitcoin goes into escrow until both you and the seller are satisfied with the transaction.
Paxful makes money the same way that LocalBitcoins makes money: through advertisements. If you want to create a buy offer that will appear on the Paxful site, you have to pay a 1% fee. Otherwise, you don’t have to pay any fees at all.
Because of the risk involved of accepting PayPal payments, Paxful sellers typically charge more for that particular payment method.
The Paxful website has a Buy Bitcoins Instantly box that you can use to pull up a list of PayPal-for-Bitcoin offers. Click PayPal on the left side of the page and then type in the amount of money you want to spend. Then, click Buy Bitcoin Now to pull up the search results page.
This is what the search results page looks like. The current Bitcoin market price is listed on the top right corner of the page. Statistics about the sellers are displayed under the Seller column. Prices for offers are listed in the Rate per bitcoin column.
It’s a good idea to click the ad to see how the Paxful seller wants to conduct the transaction before you buy. This Paxful seller requires all buyers to submit a selfie.
Find out more about Paxful in our full review.
An alternative way to buy Bitcoin with PayPal: VirWoX
An Austria-based digital exchange that caters to gamers called VirWoX also supports PayPal-for-Bitcoin purchases. However, because this exchange is expensive and confusing, we don’t recommend it.
In order to buy Bitcoin through VirWoX, you have to first buy Linden– the official currency of the virtual world game called Second Life. Then, you have to trade your Linden in for Bitcoin.
Every step of the process– from the initial PayPal-for-Liden purchase to the Linden-for-Bitcoin purchase– involves hefty fees. You even have to pay a large fee to send your Bitcoin funds to an external Bitcoin wallet.
Note: VirWoX charges all its commission fees in Linden (SLL). The price of Linden normally averages between 240 and 270 per $1 USD.
- PayPal deposit. PayPal charges a variable percentage fee for depositing funds into VirWoX. That fee can vary depending on a variety of factors including the currency involved, your location and your history with PayPal. Typical fees are 3.4%.
- USD-for-Linden. VirWoX’s USD-for-Linden fee can be as high as 3.9%, depending on the currency used, how often you trade and what type of order you place.
- Linden-for-Bitcoin. VirWoX charges another similar variable fee for exchanging Linden for Bitcoin. Fees for that can be as high as 3.9% as well.
- Bitcoin transfer fee. You have to pay yet another 0.0005 BTC fee to transfer your money to an external digital currency exchange. Currently, 0.0005 BTC equates to about $4 USD.
The first step is to register for a VirWoX account and verify your email address.
The Deposit action will bring up a list of payment options. Type in the amount you want to deposit, then click the PayPal button.
After you’ve added funds, you can buy some Lindens.
Now, select BTC/SLL to exchange Lindens for Bitcoins.
You can find out more about VirWoX in our full review.
Step 2: Trading Bitcoin for Ether
Now that you have some Bitcoin, the next thing you have to do is send your Bitcoin into an exchange that supports Bitcoin-to-Ether exchanges. There are many exchanges that support that, but GDAX and Kraken are the two best options.
GDAX is a regulation-compliant digital currency exchange with a clean security record. Though GDAX caters to advanced cryptocurrency traders, it’s not that hard to use if all you want to do is exchange Bitcoin for Ether.
Another good thing about GDAX is that it’s available in most US states, including New York. Though New York’s Bitlicense is notoriously expensive, GDAX opted to devote the resources necessary to clear all the hurdles. GDAX became Bitlicense certified in January of 2017.
GDAX charges zero to 0.3% for digital currency trades. Frequent traders can get fee discounts.
After you create and verify your GDAX account by uploading your identification documents, you can deposit Bitcoin. Click the deposit button to begin.
To find out where to send your Bitcoin, click BTC Address. You’ll see your Bitcoin address there. Select your Bitcoin address and copy it.
Next, you’ll need to log back into wherever you bought your Bitcoin and send your Bitcoin to GDAX.
If you used LocalBitcoins, click Wallet and then select Send bitcoins. Then, paste your GDAX Bitcoin address into the box that says Receiving bitcoin address and type in the amount you want to send, then click Continue to complete the transfer.
If you bought your Bitcoins with Paxful, click Wallet and then click Send Bitcoin. Then, type in your GDAX Bitcoin address, the amount you want to transfer and your password. Your screen will look like this:
After your Bitcoin funds arrive in your GDAX wallet, you’ll be able to trade your Bitcoin for Ether.
Go into GDAX, then open the Select product menu and choose ETH/BTC.
Type in the amount of Bitcoin you want to spend. The amount of Ether you’ll get will appear above the green Place Buy Order button.
For more information about GDAX, read our full review linked below.
Kraken is very similar to GDAX in that it is a well-known digital currency exchange with low fees and no publicized hacks.
Like GDAX, Kraken has pursued regulation. However, Kraken has opted out of Bitlicense. For this reason, Kraken is not available in New York state. However, Kraken is available in many other US states and it is popular in Great Britain, Europe, Canada and Japan.
Fees for trading Bitcoin for Ether start at 0.26% and go all the way down to zero, depending on the frequency of your trading activity and the order type you used.
Here’s a table that displays the Ether/Bitcoin fee breakdown:
After you go through Kraken’s verification process, you can send your Bitcoin to your Kraken account.
Click the Funding tab, then choose Deposit.
Scroll down to see your Bitcoin address. You can generate more Bitcoin addresses if you want by clicking the green button.
Next, you can trade your Bitcoin for Ether by selecting the ETH/XBT trade pair.
When you’re ready to to place your trade, click the New Order button and type in the amount of Ether that you want to buy.
You can either set your own price by pressing the limit order button, or buy at the market price by clicking the market button.
For more information about Kraken, read our full review linked below.
PayPal is an expensive payment method for buying Ether. Because you can’t buy Ether with PayPal directly, you have to first buy Bitcoin and then transfer your Bitcoin balance to an exchange that supports Bitcoin-to-Ether buys. A better way to buy is with a credit card or bank account.