Alex MunkachyThere’s no way to buy Litecoin with PayPal directly. However, once you have Bitcoin, you can trade it in for Litecoin via one of several different digital currency exchanges. Read on to learn more about how to buy Litecoin with PayPal via the Bitcoin method.
The best way to buy Litecoin for PayPal users
- First, buy Bitcoin. If you want to use PayPal to fund your Litecoin purchase, the best way to begin is by buying Bitcoin through a decentralized cryptocurrency exchange like LocalBitcoins or Paxful. Both are available everywhere and have sellers that offer PayPal as a buying option.
- Then, trade it in for Litecoin. Once you’ve used PayPal to make your Bitcoin purchase, you can trade in your Bitcoin for Litecoin through GDAX or Kraken. GDAX and Kraken both offer built-in digital wallets to their customers, so you can transfer your Bitcoin into both exchanges with minimal effort.
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 decentralized exchanges. Decentralized exchanges are marketplaces that let individuals from around the world trade almost any type of currency. Here’s a quick look at how they work and what they look like.
LocalBitcoins
LocalBitcoins is one of the oldest digital currency exchanges.
In an interview with Juan Galt Crypto TV, LocalBitcoins founder and CEO Jeremias Kangas explained that he started the exchange in 2012 because Bitcoin enthusiasts had few other options.
“All the websites that I was looking at, they were quite bad.”
The top Bitcoin exchange at the time was Mt. Gox– a badly managed site that was originally designed to be a gamer-oriented site. The site’s name was an acronym that stood for: “Magic The Gathering Online eXchange.” In early 2014, Mt. Gox was hit with a high profile hack and in April it began liquidation proceedings.
Unlike Mt. Gox and other centralized exchanges, LocalBitcoins does not have a standard set of rules and prices for trading cryptocurrencies or a central place where assets are stored. Individual sellers can set their own prices and decide how they will accept payment.
Fees
Only LocalBitcoins “advertisers” (users who place buy or sell ads on the site) have to pay a 1% fee to LocalBitcoins. If you don’t create an ad, there are no fees. However, sellers usually charge more for PayPal purchases and other risky purchase types.
Scammers are known to use PayPal’s chargeback feature to get their money back after they get their Bitcoin deposit. As a result of this added risk, the price of Bitcoin is usually higher for sellers offering PayPal as an option.
Getting started
The look and feel of the site is very similar to eBay and Craigslist. After setting up your LocalBitcoins account, you can search for sellers that offer Bitcoin in exchange for PayPal payments.
You can see if there are any Bitcoin sellers that accept PayPal without creating a LocalBitcoins account. Just go to the site, choose your country from the dropdown list and choose PayPal as your payment option.
At publication, there were 15 United States Bitcoin sellers accepting PayPal payments on LocalBitcoins. The lowest offer available was $10,333.86.
The market price for Bitcoin was $9,159.19 according to Google. The chargeback risk associated with PayPal is built into the seller’s price.
If you click on a LocalBitcoin seller’s ad, you can find more details about how the seller wants to conduct the transaction. For example, this particular seller only accepts offers from PayPal buyers with at least 30 successful trades.
After you sign up for LocalBitcoins, you can go to a LocalBitcoins ad and type in the amount of Bitcoin that you want to buy. If the seller accepts your offer, the Bitcoin funds will go into escrow. Once you and the seller both agree that the sale is complete, LocalBitcoins will allow the seller to collect his or her funds.
For more information, read our full LocalBitcoins review.
Related: LocalBitcoins Review: No Frills Peer-to-Peer Bitcoin Trading
Paxful
Another way to purchase Bitcoin with PayPal is via Paxful. Like LocalBitcoins, Paxful is a decentralized exchange that lets buyers and sellers work out their own deals. Another similarity between the two sites is that both use an escrow system and a user ratings feature to make it hard for scammers to operate on the site.
Fees
Paxful charges a 1% fee to sellers that use the Paxful site to advertise their offer.
As is the case with LocalBitcoins, the PayPal offers that you’ll find on Paxful are more expensive due to the risk involved in accepting PayPal as payment.
Getting started
You don’t need a Paxful account if all you want to do is search for offers. Just click the PayPal option into the box on the left part of the page and then type in the amount of fiat money you want to spend on the right. The Buy Bitcoin Now button will take you to the search results page.
At publication, the lowest offer for PayPal-for-Bitcoin was $11,216.43. Seven different offers were available.
If you click the individual ads, you can read more about how the seller wants to conduct the transaction. Some Paxful sellers require identification, for example.
Find out more about Paxful in our full review.
Related: Paxful Review: Bitcoin Buying for the World’s Unbanked
An alternative option: VirWoX
VirWoX is a digital currency exchange service that caters to fans of Second Life and other virtual world games. Though its trading interface is very clunky and out-of-date, it is one of the few ways to get Bitcoin through PayPal using a centralized exchange.
In order to get Bitcoin, you first have to buy Linden– the official digital currency of Second Life. After you purchase Linden using PayPal, you can exchange your Linden for Bitcoin.
Fees
VirWoX charges all its commission fees in Linden (SLL). According to Investopedia, the price of Linden averaged between 240 and 270 per $1 USD over the past decade.
Every time you use your PayPal account to buy Linden, you have to pay 50 Lindens plus a percentage fee. That fee can be as high as 3.9%, depending on which order type and fiat currency you use.
After you pay for exchanging dollars for Linden, you have to pay yet another percentage fee to turn your Linden in to Bitcoin. The maximum charge for that is also 3.9%.
In addition to commission fees, VirWoX also passes all PayPal fees along to its users. The amount PayPal charges for Linden purchases varies depending on a number of factors including location, size of transaction and your PayPal account history.
On top of the high fees required to purchase Bitcoin, there are also high fees for Bitcoin withdrawals. You have to pay 0.0005 BTC (approximately $4 USD) to send your Bitcoin to a Bitcoin address.
Getting started
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.
Related: VirWox Review: Still Relevant Because of PayPal Funding Option
Step 2: Trading Bitcoin for Litecoin
Now that you have some Bitcoin, the next thing you have to do is send your Bitcoin into an exchange that supports Bitcoin-to-Litecoin exchanges. There are many exchanges that support that, but GDAX and Kraken are the two best options.
GDAX
GDAX is the advanced version of a popular beginner-friendly digital currency exchange called Coinbase.
In 2016, Coinbase split into two different interfaces. The company rebranded its core exchange as GDAX. Then, it debuted a more user-friendly interface, which is now known as Coinbase.
Along with reasonable fees, GDAX also has a clean security record. No hacker has ever stolen money from the exchange.
Because GDAX is registered with the US Treasury’s FinCEN (Financial Crimes Enforcement Network), it is able to operate in most US states. The exchange has a list of all of its US state licenses on its website. In January of 2017, GDAX became one of the first cryptocurrency exchanges to earn a Bitlicense certification.
Fees
Transaction fees for digital currency exchanges range from zero to 0.3%, depending on what kind of transaction you want to place and how often you trade on GDAX.
Getting started
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. (The process for sending Bitcoin out of Paxful is almost identical.)
After your Bitcoin funds arrive in your GDAX wallet, you’ll be able to trade your Bitcoin for Litecoin.
Go back into GDAX, then open the Select product menu and choose LTC/BTC.
Type in the amount of Bitcoin you want to spend. The amount of Litecoin you’ll get will appear above the green Place Buy Order button.
For more information about GDAX, read our full review linked below.
Related: GDAX Review: Coinbase for Advanced Traders
Kraken
Like GDAX, Kraken is another high profile digital currency exchange with a clean security track record that has actively sought out regulation.
Kraken operates in many US states (New York is a notable exception) as well as Great Britain, Europe, Canada and Japan. On the Kraken blog, the exchange explained that it has not obtained a Bitlicense because it views the regulatory process as overly expensive and burdensome.
“We would be happy to work with the NYAG and the NYDFS (again) on a strategy for replacing the BitLicense with something rational.” – Kraken blog
Fees
As is the case with GDAX, Kraken’s fees are extremely low. Here’s a table that displays the Litecoin/Bitcoin fee breakdown:
Getting started
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 Litecoin by selecting the LTC/XBT trade pair.
Note: There are two standard abbreviations for Bitcoin: BTC and XBT. Both are valid.
When you’re ready to to place your trade, click the New Order button and type in the amount of Litecoin that you want to buy.
For more information, read our full review linked below.
Related: Kraken Review: High Liquidity Markets for Advanced Traders
Litecoin vs. Bitcoin
Litecoin has two main advantages over Bitcoin: it’s faster and easier for ordinary people to mine.
Faster transaction times
Every 10 minutes, a new “block” of transactions gets written into Bitcoin’s public ledger– that’s why every Bitcoin transaction takes around 10 minutes or less to complete. Because Litecoin writes new blocks every 2.5 minutes, it is much quicker. This speed difference gives Litecoin a significant advantage over Bitcoin for everyday purchases. Large merchants need to process large numbers of small value transactions quickly.
Lower barriers for becoming a Litecoin miner
Professional Bitcoin miners chain together expensive computers that are equipped with special chips called ASICs (Application Specific Integrated Circuits). ASIC-powered data centers have made it nearly impossible for ordinary PCs to compete for mining rewards. But because Litecoin uses a different hashing algorithm called scrypt, ASIC computers don’t have much of an advantage over ordinary PCs. PC gamers can use their GPUs (Graphic Processing Units) on their home computers to generate rewards for processing Litecoin transactions.
The state of the Litecoin market
Like Bitcoin, the price of Litecoin skyrocketed last year. In December of 2017, Litecoin was trading for $360.94– a 8200% rise compared to the previous year.
At the time of publication, the price of Litecoin was $145.85.
Final Thoughts
Though you can technically turn your PayPal funds into Litecoin, you have to do so using a multi-step process involving multiple fees along the way. Because of this, PayPal isn’t a very good option for buying cryptocurrency. A better way to buy is to sign up with a cryptocurrency exchange and fund it using a credit card or bank account.
Martin Venter
