If you’re buying Bitcoin using PayPal, check your anonymity at the door. Not only do you ante up with money, but with an uncomfortable amount of personal identifiable information (PII). Oh, and then it broke.
There is no doubt that cryptocurrency has traction in the financial world. As of the moment I’m writing this, Bitcoin alone has a market cap of nearly a trillion dollars. But crypto has also been encumbered with a steep learning curve. In addition to making an informed financial investment, crypto participants have needed to learn how to manage their crypto wallets, how to secure their currency holdings, and more.
But despite the wild volatility of the crypto market, mainstream financial players have felt compelled to participate in what’s either a gold rush or a modern-day example of tulip mania.
When PayPal decided to start offering Bitcoin to its users, it became clear that crypto was here to stay (although at what valuation is anyone’s guess). In any case, to celebrate the new year, and because it seemed like a fun exercise, I decided to buy some Bitcoin via PayPal.
I placed my buy order on January 1, 2022. My plan (assuming I actually remember) is to check back in on my purchase at the beginning of 2023 and share with you any learnings and observations that come from holding a stash of the world’s most popular cryptocurrency.
So let’s dig in.
TLDR: It was easy but not exactly comforting.
Getting started on PayPal
I started by logging into my personal PayPal account . I don’t buy much using PayPal, but I did have $64 in the account to play with. The first step was hitting the Crypto button.
That brought me to the main PayPal crypto page:
I found the FAQ to be interesting but pretty light on tangible details. We’ll discuss those as we go through the process.
Okay, properly informed, it was time to begin my purchase. I hit the Bitcoin button, and… entered the future.
That brought me to PayPal’s purchase page for Bitcoin. It was no surprise that the price was volatile, even in the previous 24-hour period. Even on New Year’s Eve. In any case, I hit the Buy button. And that’s when things started to get ugly.
Uh oh. I had a baaaaad feeling about this. Even so, I’d made myself the promise I was going to finish this experiment. Remember, I’m doing this for you.
Fees. Fees. Glorious fees.
PayPal kindly warns you that you could lose your shirt. Before doing this, I discussed the purchase with my wife. She was concerned that we could lose more than our original investment and cost more than we originally spent. That is not the case. This isn’t like puts and calls on the stock market. Worst case, you lose the amount you put in. In my case, the worst I’d lose was the ability to buy about 10 Venti Caffe Mocha. Still, one never wants to risk one’s coffee funds.
So now we go into PayPal’s ginormous discussion of fees. I want you to pay special note to the red arrow on the next screen because first, PayPal says there is a $0 fee to use most services. But just wait…
$0 fee on most features? I think not:
Fees. Fees. Oh, glorious fees. There are fees for everything:
To be fair, most crypto exchanges have fees. But still, to say there are $0 fees for most features and then launch into pages of fees is, well, it’s not even the worst part of this experience. That’s still to come.
Anonymity? What anonymity?
So, you know how the whole spiel of Bitcoin is that participation is generally anonymous? Well, not so much if you buy it through PayPal.
Oh, Holy Disclosure, Batman! PayPal will not allow you to buy Bitcoin until you provide them with your street address, your date of birth, and your social security number. Seriously? Because I committed to this article, I went ahead and gave them that information, but it does give me a queasy feeling in the pit of my stomach. To be fair, everyone ranging from my banks to my doctors, have all that information, so why not PayPal? After all, it’s not like any of them are going to secure it sufficiently to prevent some hacker from stealing it. Just read ZDNet for a few days, and you can be sure we’re doomed cybersecurity-wise.
But. Then. It. Got. Worse.
Oh, PayPal. You cannot possibly be doing this to me. This is the screen I got right after giving them my PII. It sure inspires confidence (he says with dripping sarcasm).
Actually buying Bitcoin
My original plan was to buy $100 in Bitcoin. I had $64 in my PayPal account, and I was going to add forty bucks or so to that from my credit card. But after the big “Something went wrong” screen, I decided to just go with what I had in my PayPal account. So, being the big spender that I am, I bought a whole $50 in Bitcoin. I pressed the $50 button.
Before we move on, I want to point something out. Note the two numbers pointed to by the big red arrows:
Those two values were taken about ten minutes apart. It took me about ten minutes to go through PayPal’s process, and in that time period, the value of Bitcoin changed. This is not a stable currency. Just keep that in mind. Okay, here we go…
As you can see, I put $50 into Bitcoin from my PayPal balance. I had to pay $1.15 for the privilege of doing so. That netted me 0.00105027 BTC, or barely one-thousandth of a Bitcoin. I clicked Buy Now. — The things I do for my readers!
And there we go. I now own 0.00105027 BTC. Exciting.
The rest of the story
Speaking of how volatile this currency is, as soon as I was returned back to the crypto dashboard, I was informed that my Bitcoin holdings were now valued at $0.25 less than they were half a minute before.
And today (one day later), as I’m writing this, my holdings are valued at $49.68, so I lost another seven cents overnight.
So, stay tuned. I’ll be checking back with you about this investment from time to time. But what about you? Have you bought or mined cryptocurrency? What currency have you been working with? Did you make or lose any money? Any learnings you’d like to share? Let us know in the comments below.
And, Happy 2022. Hopefully, this year will be better than 2021. With the dumpster fire that 2021 was, that shouldn’t be so hard, right? Right?