Why it Makes Sense to Buy Bitcoin via PayPal

In the modern world, it is quite easy to buy Bitcoin, but people should be careful when it comes to platforms. They may not actually own the Bitcoin that they are buying as in the case of PayPal. The company made a big push into the cryptocurrency industry in 2020, and the platform allows users in the U.S. to buy, sell, and checkout with cryptocurrencies. Venmo is the mobile wallet owned by PayPal, and it also lets customers buy and sell cryptocurrencies.

People can start by investing as little as $1, and they don’t have to open a special account to deal in crypto coins. However, those coins they are buying do not belong to them. Usually, when a person buys Bitcoin, he is given two things to make that ownership official: a public as well a private key pair. The public key is their wallet address and thanks to the private keys they control their wallets.

In the case of PayPal, customers have access to their public addresses, but the company controls the private keys. To be honest, not everyone wants the responsibility of protecting their cryptocurrency holdings.

PayPal and Bitcoin

There is nothing to stop the digital payments company from changing its mind about its walled garden, it created around its cryptocurrency assets. For instance, Revolut capitulated this week and now allows customers to withdraw Bitcoin.

Purchasing the world’s largest cryptocurrency via PayPal has been compared to buying a financial contract. Clients can’t remove their coins from the platform, nor can they send them anywhere. As with any options contract, the customer stands to gain or lose quite a lot of money.

The price of Bitcoin reached its all time high  above $63,000 in March. Some analysts say the cryptocurrency has the potential to reach even better results.

Surging cryptocurrency prices could also prove important to PayPal’s bottom line. In an April 19 note to customers, Deutsche Bank estimated that PayPal’s cryptocurrency trading volume will reach $20 billion in 2021, amounting to an additional $550 million in revenue.

The company makes money by taking a percentage cut each time fiat currency is exchanged for a cryptocurrency, and vice versa. Clients pay 2.3% for transactions below $100. Even though PayPal did not specifically break out income from its cryptocurrency portfolio the company surpassed expectations. It earned $1.10 billion on revenues of $6.03 billion.