Ripple and Bitcoin are very different cryptocurrencies. Bitcoin was meant to be a replacement for traditional money, especially for retail purchases. Ripple, on the other hand, was designed to improve the efficiency of the global financial system. The centrally-managed project promises to save the global economy trillions of dollars — assuming financial institutions adopt it.
With a large market cap and high trading volumes, many cryptocurrency exchanges support Ripple trading. None of them, however, support PayPal. This guide will show you the roundabout ways that will let you buy Ripple with PayPal.
Best options for most people
The peer-to-peer matching services LocalBitcoins and Paxful will let you use PayPal to buy Bitcoin. You can then move those Bitcoins to exchanges like Kraken that let you trade those Bitcoins for Ripple.
Ripple’s founders designed their cryptocurrency as a means for banks and other financial institutions to transfer money amongst themselves.
The financial industry takes Ripple seriously because of how much faster and more efficient it is over the existing settlement system. Traditionally, money flows from one bank to another through several intermediate institutions.
The whole process takes several days to complete. By comparison, the miners running Bitcoin’s blockchain process transactions in a matter of hours. Ripple’s blockchain, however, completes transactions within seconds.
Ripple is much more scalable, able to handle transaction volumes thousands of times higher than Bitcoin. The proof-of-work algorithm is also more efficient, which means its energy consumption is not comparable to that of a small country the way it is for Bitcoin.
Where Ripple stands
Ripple’s token, XRP, now has a market cap above $95 billion and thirty-day trading volumes of more than $12 billion. More than 75 institutions are developing commercial Ripple-based applications, most prominently the Spanish bank Santander. In April 2018, Santander unveiled its global payments app One Pay FX. The app lets millions of Santander’s retail customers transfer euros and dollars across borders within a fraction of the time wire transfers take.
“One Pay FX uses blockchain-based technology to provide a fast, simple and secure way to transfer money internationally,” Santander executive chairman Ana Botín said in the announcement. “Transfers to Europe can be made on the same day and we are aiming to deliver instant transfers across several markets by the summer.”
Why invest in XRP?
Long-term cryptocurrency investors see the potential for Ripple to become the standard process for cross-border settlements. They are attracted by the potential upside, even though XRP trades for less than a dollar at the time of this writing.
As MIT Technology Review recently pointed out, however, “widespread adoption is far from a reality, and may never be one.” That’s because financial institutions can use Ripple’s blockchain technology without using XRP itself, as was the case with Santander’s One Pay FX app.
Whether you see XRP as a short-term trading opportunity or a long-term investment, there are several indirect ways you can use PayPal to buy Ripple.
Why Can’t I buy Ripple with PayPal Directly?
Most exchanges stopped accepting PayPal transactions because fraud made it too expensive. Those costs are driven by the very different nature of blockchain transactions and PayPal transactions. When a cryptocurrency is transferred from one wallet to another, there is no way to reverse the transaction.
When someone uses PayPal to make a payment, however, all that person has to do is claim they never received their Bitcoins. PayPal gives its own customers the benefit of the doubt and reverses the charge. The exchange is forced to absorb that cost.
Buying Bitcoin with PayPal First
The handful of companies who do provide ways to use PayPal do not deal in Ripple. You must go through a more roundabout process of using PayPal to buy Bitcoins and then trade those Bitcoins for Ripple.
The best way to do this is through the peer-to-peer matching services like LocalBitcoins or Paxful. These companies list ads from Bitcoin sellers, including those that accept PayPal. You deal with those sellers directly to buy the Bitcoins you need.
There are two centralized exchanges, VirWoX and Wirex, that let you buy Bitcoin with PayPal. Neither one of them lets you make that transaction through an easy one-or-two-click process. Each requires intermediate steps that make them more of a hassle. If you don’t have another option, though, VirWoX and Wirex can get you the Bitcoins you need.
LocalBitcoins got its start in 2012, only three years after the first Bitcoin was mined. LocalBitcoins founders sought to provide a more community-based alternative to the centralized exchanges like Coinbase and Mt Gox.
Operating a lot like eBay, LocalBitcoin lists advertisements from Bitcoin sellers. Buyers search the ads for offers that match their preferred amounts and payment methods.
LocalBitcoins originally expected the buyers and sellers to meet locally to complete the exchange. The buyer would hand over the cash and the seller would release the Bitcoins. LocalBitcoins provided additional security by holding the Bitcoins in escrow so neither side could cheat the other.
That original system is still in place today, but buyers and sellers can complete the transaction online without a face-to-face meeting.
The only fee LocalBitcoins charges is the listing fee for the seller’s advertisement.
The seller will charge fees based on the amount of the transaction and how the buyer plans to make the payment. That fee will usually appear in the exchange rate the seller quotes.
After setting up your LocalBitcoins account, simply search for ads that offer Bitcoin in exchange for PayPal payments.
A recent search found fifteen results for US dollar purchases with PayPal. The lowest quoted price of $10,659 per Bitcoin was much higher to the $9444 price that Bitstamp listed at the time. In effect, you are paying a 12.8% premium for using PayPal.
The seller’s terms require the buyer to absorb the PayPal fees.
As long as you follow the seller’s instructions precisely, the transaction will go through and Local Bitcoins will release your Bitcoins from escrow.
You can find out more about LocalBitcoins in our full review.
Like LocalBitcoins, Paxful is a peer-to-peer matching service for buying and selling Bitcoins. A reputation system and escrow policy foster trust between the two parties and help prevent fraud.
Paxful promotes the fact that its sellers support more than 300 different payment methods, including PayPal.
Paxful does not charge any fees for the transactions, making its revenue from the ad listing fees the service charges sellers.
The sellers will apply fees of their own to the transactions, just as they do at LocalBitcoins.
Assuming you have a Paxful account, all you have to do is search for listings. The search box only asks for the dollar (or other fiat currency) amount of the transaction.
Filter the search results for PayPal and you’ll get the offers you need. The search in this screenshot shows nine offers for PayPal transactions.
The best one lists a $10,992-per-Bitcoin exchange rate which was 16% higher than the price on Bitstamp. Although a more expensive rate than on LocalBitcoins, this seller assumes the PayPal fees.
You can find out more about Paxful in our full review.
VirWoX is an exchange that specializes in the virtual currencies used in online games and the virtual world of Second Life. Bitcoin is the only cryptocurrency available on the exchange.
Unfortunately, you cannot buy Bitcoin directly. You must go through a roundabout process of buying Lindens, the currency of Second Life, and then buy Bitcoins.
VirWoX will pass on any PayPal charges it incurs for accepting your deposit. Those fees vary based on your location, the size of the transaction, your history with PayPal and other factors — none of which VirWoX knows before the transaction completes. According to the help site, the current PayPal fee for EU customers making euro deposits is €0.35 plus 3.4% of the transaction amount.
Another fee applies when you use your fiat balance to purchase Lindens. The fiat-to-Linden fee is 50 Lindens plus 2.9% for euro transactions or 3.9% for US dollar, British pound or Swiss franc transactions. The same applies for the Linden-to-Bitcoin exchange.
You will also pay a withdrawal fee of 0.0005 Bitcoins for each Bitcoin you transfer out of VirWoX.
The first step is to register for a VirWoX account and verify your email address.
Clicking on the Deposit action will bring up a list of payment options, including PayPal.
Now you go to the exchange and select one of the Linden purchase options like USD/SLL or EUR/SLL.
After you have your Lindens, you now select BTC/SLL to offer Lindens in exchange for Bitcoins.
You can find out more about VirWoX in our full review.
Wirex calls itself a “hybrid personal banking system” because it connects the blockchain-based world of digital currencies with the ubiquity of fiat currencies.
On the one hand, Wirex is a Bitcoin exchange. You can use Wirex to buy and sell Bitcoins. On the other hand, Wirex is a credit card company.
Until recently, Wirex also issued its own credit cards. Visa suspended the company Wirex chose to provide those cards, WaveCrest, for failing to comply with Visa’s policies. Wirex will replace its existing customers’ cards and begin issuing new cards once it signs up with a new provider. You can still use other locally-issued credit cards to top off your Wirex fiat balance.
Wirex charges its customers a monthly management fee. If you make transactions in US dollars, then you will also pay fees for each transaction.
You do not pay any fees, not even network fees, for Bitcoin trades made on the Wirex exchange. That’s because the trading and accounting are handled internally. The only time you must pay the blockchain network fee is when you transfer Bitcoins out of Wirex to another digital wallet.
Topping off your account with fiat currency does not incur any fees from Wirex. The credit card processor, however, will charge 2.82% if you live in the European Economic Area or 4.32% if you live outside the EEA.
Using PayPal to fund your purchases on Wirex is a multi-step process that can take several weeks to complete. Keep in mind that you won’t be able to follow these steps until Wirex resumes issuing credit cards.
The first step, of course, is to create a Wirex account.
Next, you must go through Wirex’s verification process. This requires uploading scans of a government-issued proof of identity and a proof of residency. Wirex warns that the verification process can take up to ten business days to complete.
Before you can do anything else, you must apply for a Wirex Visa card. Once you have your Wirex Visa card, you can link it to your PayPal account.
Now you are ready to fund your Wirex purchases with PayPal. Go to your PayPal account, withdraw funds from your current balance and deposit them into your Wirex Visa. Note that PayPal may charge a transfer fee.
It could take as long as seven days for the transaction to complete, but once it does you can use the funds to buy Bitcoins. Then you will need to transfer those Bitcoins to an exchange that offers Ripple.
You can find out more about Wirex in our full review.
Trading Bitcoin for Ripple
Once you have your Bitcoins, you need to trade them for Ripple on one of the exchanges. Here are the ten largest exchanges that support Bitcoin-to-Ripple trades:
- Abra (website, CoinIQ Review)
- Binance (website, CoinIQ Review)
- Bitfinex (website, CoinIQ Review)
- BitMEX (website, CoinIQ Review)
- Bitstamp (website, CoinIQ Review)
- Bittrex (website, CoinIQ Review)
- CEX.io (website, CoinIQ Review)
- Changelly (website, CoinIQ Review)
- eToro (website, CoinIQ Review)
- Kraken (website, CoinIQ Review)
Once you’ve set up your account you will probably need to complete the exchange’s verification process. Next, you will need to transfer your Bitcoins from the PayPal-accepting service you used into the Ripple-supporting exchange you’ve picked. Then it’s just a simple matter of placing an order for Ripple using your Bitcoin balance.
Each exchange has its own way of doing business. Some target experienced traders with sophisticated trading tools while others serve more mainstream investors with easy-to-use interfaces. Check out our reviews and take a look at the exchange websites to decide which approach is best for you.
There are much easier and cheaper ways for most people to buy Ripple than through PayPal. Because you have to set up an account on exchanges like Bitstamp anyway, you might as well fund those accounts with bank transfers or other payment methods those exchanges support. PayPal and Bitcoin-to-Ripple trades are really the last resort for people who have no other choice.