At the end of March this year PayPal pulled a surprise when it announced that US PayPal account holders could now buy Bitcoin, Litecoin and Ethereum right from their dashboards. This seemed like an experiment and if it was it seems to be going well too. Now PayPal has just extended this feature to PayPal users in the UK too.
According to the announcement from PayPal UK users now have, with immediate effect, the following cryptocurrency features added to their PayPal accounts:
- They can buy the following cryptocurrencies from their PayPal dashboards:
- Litecoin and
- Bitcoin Cash
- The minimum purchase value is £1 currently about US$1.37
- There is a transaction limit of £15 000 that is $20 000. This is the buy and sell cap which means you cannot buy or sell crypto worth more than this in one go
- Dissapointingly there is also a yearly limit of £35 000 per year that is under $50 000 i.e. about the current value of a single Bitcoin right now.
- This is an automated market that runs 24/7 and 365 days a year. This means you should be able to buy or sell at any given time of the day. That is unless there is system downtime or a disruption of some sort.
NB. PayPal’s unveiling of this feature comes with the usual disclaimer and warning about the volatility of cryptos. The gains and losses of cryptos are enduringly ephemeral. The value is constantly changing and it’s sometimes hard to plot the likely trend things are going to take. All it takes to bring the whole thing crumbling down is a mistimed Elon Mask Tweet.
A cheap entry point with shortcomings
Allowing PayPal users to easily buy, hold and sell cryptos simplifies things for a lot of users out there. A lot of people have always wanted to be a part of the action but the traditional way of buying, holding and selling cryptocurrencies on exchanges might just be too much for them.
With PayPal, all a user has to do is click a few buttons. Once they have purchased a given cryptocurrency they are presented with an additional balance from within their dashboard. The balance keeps track of the current value of each crypto asset. So if you buy Bitcoin and Litecoin you will have additional balances for each.
This all sounds so tempting but it’s important to note that there are some restrictions here compared to the traditional way of doing things. The crypto you buy via PayPal cannot be sold directly to third parties. Instead, it’s automatically converted back to a monetary balance during the checkout process. This is because as I pointed out in an early article you are not really buying Bitcoin the currency. You are buying an asset.
This is PayPal’s way of trying to protect itself from potential pitfalls that the anonymity of cryptos brings to the table. Their method means that they can always keep track of things. This is especially important given the precarious regulation environment in the UK when it comes to cryptos. Recently the Financial Conduct Authority in the UK banned Binance exchange.
Even in this weak form, it would be fun if we could get this too. It’s an easy and safer way to invest in cryptos. So will this ever come to Zimbabwe? Don’t hold your breath, really, but one can always hope against hope-right?