PayPal users in the UK will soon be able to buy and sell crypto currencies.
The payment platform has announced plans to allow its UK customers the option of using four types of crypto currencies through its app or website.
Cryptocurrency - a digital coin or token kept in an online digital wallet - isn’t linked to any banks, financial institutions or governments and is not regulated.
Crypto has been seen as a ‘people’s currency’ which has experienced big jumps in value in 2021 amid an established volatile market which sees prices fluctuate regularly.
The announcement from PayPal could be seen as a boost to the legitimacy of crypto currencies, with the market experiencing a 1.85% boost following the news breaking.
Here’s all you need to know about crypto currencies, which cryptos will become available to PayPal UK customers, when and how to buy and sell the digital tokens via the firm’s app.
What are crypto currencies?
Crypto currencies have been around for over 10 years following the creation of Bitcoin in 2009.
Since then, thousands of other digital tokens have followed suit as people look to find a cheaper way to move money around the world without transaction fees or delay.
Cryptos like Bitcoin are mined - a way of introducing more tokens into the crypto eco system - by complicated procedures and in some cases energy guzzling computers.
The transaction of cryptos takes place on a public ledger known as a blockchain, which records every coin’s history to stop fraudulent activity and is updated by its users.
Crypto currency holders can buy and sell coins with other users and trade their tokens for goods and services with participating businesses like more mainstream and physical currencies.
Which crypto currencies are available through PayPal?
Four types of cryptocurrency will be made available through the PayPal app and website to users in the UK.
Bitcoin, Ethereum, Litecoin and Bitcoin Cash will be the first digital tokens available to buy, hold and sell on the payment platform.
Responding to the news on Twitter, there were calls for Dogecoin and XRP to follow suit and become an option for PayPal UK users.
However, it is purely speculation at the moment and no additional cryptocurrency tokens have been confirmed by PayPal for use in the UK.
Are crypto currencies only available to UK users through PayPal?
It is the first time PayPal users in the UK will be able to buy, sell or hold crypto currencies through the financial platform’s app or website.
PayPal has allowed its users in the US to do the same since 2020.
Unlike some rival exchange platforms, UK PayPal users’ crypto tokens will be held by a third party firm Paxos to only allow the coins to be spent or transferred through PayPal.
How to buy and sell crypto currencies on PayPal?
After logging in to the PayPal account, a new crypto tab will be visible through the app or website which shows real time currency prices and trends.
Customers can buy from as little as £1 and choose pre-determined amounts or enter in a different value before working through the following prompts to confirm purchase.
Initial purchases can be made through bank account or debit card.
PayPal has confirmed that there will be access to educational content to help answer common questions and learn more about cryptocurrencies, including the risks involved.
There is no fee to hold cryptos but there are transaction fees and currency conversion fees for buying and selling crypto currencies, PayPal also confirmed.
Is it safe to buy and sell crypto currencies on PayPal?
PayPal, founded in 1998, is a long established digital payments service.
Yet it’s decision to keep the crypto currencies in Patox and limit the use of those cryptos bought to that platform has received some criticism in the US.
The recommended line of thought in terms of security is to move any crypto you buy to your own crypto wallets so that you are the one in possession of your assets.
Generally, this is to give the holder an extra layer of protection if the platform your crypto on is hacked, the platform freezes your account if someone else gets access to your account.
What have PayPal said about introducing crypto currencies?
Jose Fernandez da Ponte, vice president and general manager for blockchain, crypto and digital currencies at PayPal, said the firm’s new service could help introduce more people to the technology and how it works, helping to better shape the role the currencies could play in the future.
“The pandemic has accelerated digital change and innovation across all aspects of our lives, including the digitisation of money and greater consumer adoption of digital financial services,” he said.
“Our global reach, digital payments expertise, and knowledge of consumer and businesses, combined with rigorous security and compliance controls provides us the unique opportunity, and the responsibility, to help people in the UK to explore cryptocurrency.
“We are committed to continue working closely with regulators in the UK, and around the world, to offer our support and meaningfully contribute to shaping the role digital currencies will play in the future of global finance and commerce.”
When will crypto currencies be available through PayPal?
Soon. The service will begin to be available this week and all eligible UK users should be able to access it through a new cryptocurrency tab within the next few weeks, said PayPal.
It is not clear if and when the company will allow consumers in the UK to pay merchants using cryptocurrency.