The PayPal application on an Apple iPhone.
Andrew Harrer | Bloomberg | Getty Images
It is easier than ever to buy bitcoin. But be careful which platform you choose, because you may not actually own the bitcoin that you are buying.
Just take PayPal.
The digital payments company made a big push into crypto last year, and the platform now allows users in the U.S. to buy, sell, hold, and checkout with cryptocurrencies, including bitcoin, ethereum, bitcoin cash, and litecoin. Venmo, the mobile wallet owned by PayPal, also lets customers buy and sell cryptocurrencies.
Sounds pretty great, right?
But those coins you’re buying are not technically yours.
“PayPal manages the wallets, which means that you don’t necessarily hold your own bitcoin,” said Mike Bucella, general partner at BlockTower Capital.
Holding the keys
Typically, when you purchase bitcoin, you are given two things to make that ownership official: A public and a private key pair. The public key is your wallet address, and the private key gives you control of that wallet.
With PayPal, you have access to your public address, but the company controls the private key.
In the “Crypto on PayPal FAQ” section of the app, the company explains that “the crypto in your account cannot be transferred to other accounts on or off