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Bitcoin remains in the headlines as prices continue to drop and rally almost weekly, piquing the interest of those looking to invest for the first time.
But Bitcoin isn’t a guaranteed investment. There’s nothing to say you’ll make a profit or even recoup your investment. While the price of Bitcoin has risen by more than 4000% since 2016, a crash between 2017 and 2018 saw Bitcoin drop in price by 80%.
The crypto market went on to recover, but more recently, turmoil in early May and June saw the price collapse further, from a November high of almost $US69,000 to under $US20,000. At the time of writing, one Bitcoin was worth around $20,000.
It’s this careening volatility that has led consumer advocacy group CHOICE and the Australian Securities and Investments Commission (ASIC) to caution Australian investors to be wary of crypto.
Through its Moneysmart website, ASIC has warned Aussie investors to play it extra safe when dealing in crypto and to be aware of its unregulated nature.
But if you’re fully aware of the risks and want to invest either via PayPal or via another exchange that uses PayPal as a payment method, here’s what you need to know.
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Buying Bitcoin in Australia via PayPal
Unlike in the US or the UK, you cannot buy, hold or sell Bitcoin directly via PayPal in Australia.
There is some speculation that this may change in the future, but for the meantime, the only way to buy BTC via PayPal is by using a dedicated crypto exchange.
Some crypto exchanges, however, will allow you to deposit funds into your account from PayPal that you can then use to buy Bitcoin. In Australia, for example, eToro allows Australian users to deposit money from PayPal with no fees.
One you’ve chosen an exchange that accepts PayPal, check whether it includes a wallet to securely hold your Bitcoin. If it does, but you’d prefer to hold your Bitcoin in a wallet outside the exchange – either hot (online) or cold (offline)—check if it allows transfers and whether there are fees to pay if you withdraw your assets.
Place an Order
Once you’ve deposited your money into your account from PayPal, navigate to the Bitcoin page within your exchange and enter the amount you’d like to invest. The amount cannot be any greater than what you’ve deposited from PayPal.
Remember that with the price of Bitcoin hovering around the $US20,000 mark, you’re probably going to be buying a share of one Bitcoin. If, for example, Bitcoin was priced at $US30,000 at the time of exchange and you bought $1000 worth, you’d be purchasing 3% of a single Bitcoin.
Securely Store your Bitcoin
Bitcoin should be held in a secure wallet, whether your exchange’s integrated wallet, a third-party provider or an offline storage drive you own.
Hot (online) wallets are less secure because they’re hosted online and vulnerable to hackers, but your assets could be recovered if you forgot your passcodes.
Cold (offline) wallets are more secure because they’re not web-connected, but if you lost your access codes there would be nobody to help you recover them, which means you could lose access to your Bitcoin.
Should you Use PayPal to Buy BTC?
Before you decide to use PayPal to buy Bitcoin in Australia through an exchange, it’s worth looking at why you wish to do this. PayPal is just one of the many ways you can buy BitCoin on an exchange, and it’s worth looking at other payment options that are common on Australian exchanges, such as credit card, cryptocurrency, debit card, Osko and PayID.
These tend to be more popular options, with many Australian exchanges yet to offer PayPal as a payment option.
This article is not an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency as an investment class.
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Frequently Asked Questions (FAQs)
What is the best way to buy Bitcoin?
There are many ways to buy Bitcoin, including Australian-based exchanges, which allow users to purchase cryptocurrencies with Australian dollars, including through BPAY or even bank transfers. You cannot buy or sell BTC directly via PayPal in Australia, so dedicated crypto exhanges that offer PayPal or peer-to-peer marketplaces are your best bet.
Why don’t more exchanges offer PayPal?
The potential for crypto fraud is clearly a concern for exchanges who do not offer PayPal. Why? PayPal allows for chargebacks or refunds, while crypto transactions are not reversible. Therefore, the system allows for fraudsters to potentially allege that they never received the crypto, obtain a refund, and then keep the Bitcoin.
