How to Purchase Bitcoin (BTC) using PayPal
Ok, so the problem is that there aren’t many exchanges that allow you to purchase Bitcoin(BTC), the current undisputed King of Cryptocurrency using your PayPal account.
Why is that?
The reason, as far as I can tell, is that PayPal transactions are reversible, Bitcoin is not. It’s very easy for a buyer to use PayPal to buy Bitcoin then claim they never received the Bitcoin. In most cases, PayPal will then reverse the transaction, taking the buyer’s PayPal money back from the seller and returning it to the buyer. The buyer then gets his money back and also has the seller’s Bitcoin. If I owned an exchange, I’d never accept this risk. It’s too easy for people selling Bitcoin via PayPal to get scammed, so they don’t accept it.
Use an intermediary to prevent the risk of reversal, at least from the perspective of the seller. In this case, the intermediary is VirWox. As you might expect, the risk now falls upon the intermediary VirWox. To compensate for the risk, VirVox charges a higher fee than what you might normally see on other exchanges when purchasing BTC.
Who is VirWox?
VirWoX is run by the company Virtual World Services GmbH, which is located in Austria. The service is available in five languages (English, German, French, Spanish, Italian). They are a solid, proven company with strong roots in the online virtual world.
VirWoX is the leading independent exchange for trading virtual currencies, both in terms number of users (about 800,000), and trading volume (2012: 29 million Euro / 38 million US$) and has been in business since 2007.
OK, that’s great, but how can I buy Bitcoin (BTC) with Paypal?
The process is relatively simple. You need to first buy Linden Dollars (SSL) using real-world currency on VirWox and then buy BTC using your newly purchased Linden Dollars. It is not necessary to open a Second Life account to do this (although the virtual world is highly addictive and fun to explore — check it out when you have a chance. Click this link to begin your exploration of this virtual online world!)
Below are the 7 Steps to Purchasing Bitcoin using PayPal (and Second Life Linden Dollars)
- Open an Account
Use this link to connect to VirWox and open your free account.
Click on the “not registered yet” on the top of the left sidebar to open up a new account as shown here:
2. Fill out Basic and Personal Information Sections
Fill out your username and email address. If you do not have a Second Life account, leave the Avatar Name field as “No Avatar.” If you choose later to become a resident of Second Life, you can always revisit and change this setting with your real Avatar Name.
Once complete, click on “Register.”
3. Activate your account
Click on the link sent to your registration. VirWox will send you send you an email confirmation with your password. Open the email, copy the password and log in using the provided password.
4. REMEMBER TO CHANGE YOUR PASSWORD
For security, click on Change Settings to change your password. I suggest you do so immediately.
5. Fund your account using PayPal
After you have opened an account, deposit money into your VirWoX account (on the “Deposit” page) using PayPal or one of the other payment methods in the table below:
To fund your account, click on “Deposit” on the left side and choose PayPal Express.
Important message on Fees:
For each transaction you will make, there will involve a fee. Please make sure you are aware of the following deposit and withdrawal fees:
VirWoX charges 50 SLL (currently about $0.20) plus 2.9% for BTC/SLL market orders. The fee for limit orders depends on the previous trading volume of the account, and varies between 0.78% and 3.9%.
VirWoX charges 0.01 BTC for BTC withdrawals. Deposits in BTC are free.
Additionally, the following Limits and Restrictions apply:
VirWoX restricts deposits via PayPal and Credit/Debit Cards depending on the age of the account. These limits were imposed for security reasons. Once your account is set up, your deposit limit will be capped at 90$. The trading limits for PayPal are as follows:
Level 0 (immediately) — $90
Level 1 (after 10 days) — $120
Level 2 (after 45 days) — $200
Level 3 (after 90 days) — $400
Level 4 (on request) —$ 1,000
There are no current withdrawal limitations in place
For security reasons some Bitcoin withdrawals (in particular of new accounts) are subject to a delay and manual review. Specifically, the first withdrawal of Bitcoins paid for using PayPal, or credit card is delayed by 48 hours.
It’s important to understand that when you buy Bitcoins through VirWoX you are actually conducting two transactions. USD to SLL and SLL to BTC. This means you’ll need to pay a fee for each of these transactions.
6. Buy Linden Dollars (SSL) with US Dollars (USD$)
You need to enter an order to sell your money (USD$) for SLL (Linden Dollars), on the “Exchange USD/SLL” page.
Go to Exchange- USD/SLL on the left side. You can also select any other currency you’d like. Select Buy SLL. As mentioned earlier, you will later on exchange these SLL to Bitcoins.
7. Buy Bitcoin (BTC) with SSL
Now that you have SSL in your account, you can buy BTC on the “Exchange BTC/SLL” page. Depending on the type of order (Market or Limit), this will convert the Linden Dollars to BTC immediately or at some later time.
*Reminder: Sometimes a manual review will be required by VirWoX after this step. This can take up to 48 hours but usually takes around 6 hours.
8. Transfer your Bitcoins to your Wallet
Finally use the “Withdraw” page to send the BTC to a Bitcoin address (Wallet). You can also use VirWox as a temporary Wallet and keep your BTC there for later use. We highly recommend you store your Bitcoin in a hardware wallet, such as provided by Ledger. The Ledger Nano S is one of the best on the market and perfect for this use case.
Safety & Security
VirWox states that they’ll never share your personal information (name, payment specifics…) with third parties, except in cases when they’re ordered to by public authorities. They also don’t store any information regarding your credit card. The non-disclosure clause doesn’t apply, however, to anonymous data collected for statistical purposes.
As a part of Virtual World Services GmbH, VirWox employs a HTTPS Protocol, meaning your passwords and other information shared through your communication with the site will be safe and well protected. The company also has a pretty strict and relentless red flag policy, which often results in many blocked and suspended accounts. A portion of user outrage also comes from that fact.
The bottom line: VirWox allows its customers to turn their Second Life earnings into Bitcoin without much hassle. It can also serve as a Bitcoin exchange, especially using PayPal. Even still, VirWox is niche service and certainly not something for the majority of cryptocurrency investors.