Posted in: Archive
December 18, 2013 6:04 AM UTC

Why Should I use Bitcoin Vs Paypal?

The diaspora of arguments touting Bitcoin's superiority over Paypal is endless.  There are economic incentives for buyers and sellers, large and small, to use Bitcoin vs Paypal.  Simultaneously, there are still infrastructure gaps that may prevent the efficient use of Bitcoin over Paypal at this…

Paypal or Bitcoin? Or Both?

The diaspora of arguments touting Bitcoin’s superiority over Paypal is endless.  There are economic incentives for buyers and sellers, large and small, to use Bitcoin vs Paypal.  Simultaneously, there are still infrastructure gaps that may prevent the efficient use of Bitcoin over Paypal at this time.

Today, I will focus on why I (me, me, me), and by extension why you, should use Bitcoin instead of Paypal.

Centralized Vs. Decentralized

Any Paypal user, whether a buyer or a seller, will at some point run into issues with Paypal’s centralized structure.  For instance, I am on my second Paypal account currently after my first account was frozen, and all attached cards and banks were banned from future Paypal use.  I had to create an entirely new bank account just to use Paypal due to arbitrary freezing of my first account.  Bitcoin, on the other hand, is decentralized and I am completely certain that nobody has the ability to limit my access to my Bitcoin wallet, or to move funds from my Bitcoin wallet.

Your $ in Paypal is just information stored and guaranteed by Paypal; likewise, your BTC in Bitcoin is just information stored and guaranteed by the Bitcoin protocol.  The difference is that Paypal can rewrite your balance at any time, and it usually isn’t $92 Quadrillion in your favor.  Paypal is a centralized way to move money and the benefits of that are numerous: buyer and seller protection, chargebacks, etc.  However, the abuse of centralized systems such as Paypal, Visa, and Mastercard has caused the average merchant to tack on ~10% premium on their prices to deal with associated transaction fees, and exponentially increased risks of fraud.  This is the exact reason why most brick and mortar institutions will offer a cash discount, and also a Bitcoin discount should they chose to accept Bitcoin.



Paypal charges nearly 3% for transactions between people.  If you were using eBay to sell an item and had to take Paypal as payment, you also lost 9% of your final value to a final value fee.  Bitcoin transaction fees make every archaic money transfer system from the wire transfer to the Paypal transfer.  Some countries allow Paypal users to send personal amounts of money to other domestic Paypal users with no fee via a personal transfer tab.  This option/tab has been removed without notice from many Paypal services in various countries around the world including Japan and Brazil.  Essentially, Japanese and Brazilians must pay Paypal’s usury-like fees even when sending money as a gift between persons.  Paypal charges additional fees if currency conversion needs to take place, which usually happens in international transfers.

Let’s be clear, participating in the Bitcoin economy is not without fees.  On average, there is still days of waiting time for fiat deposits and withdrawals to the world’s many Bitcoin exchanges.  In addition to the time lag of moving fiat into Bitcoin, exchanges also charge trading fees usually in the less than 1% range.  For instance, Coinbase, a direct competitor to Paypal that utilizes Bitcoin instead of an archaic system, charges 1% + $0.15 for every USD–>BTC and BTC–>USD transaction for personal users with even better rates for business users.  Additionally, Coinbase users can send Bitcoins to and from each other without even paying a transaction fee.  In this way, Coinbase, a centralized layer on top of Bitcoin, can provide the exact same centralized services that we have come to expect from Paypal, with significantly less fees.  I can buy items using my Bitcoins via services such as snapCard, and if I were ever to be in Japan, I would be able to send a friend money w


Global Access

There are dozens of countries that Paypal does not support, notable among them are Iran, Afghanistan, North Korea, and Haiti.  While these countries have many other factors contributing to the lack of a stable financial system compatible with Paypal, their constituents still deserve access to a global payment structure.  Very simply, internet users in countries not supported by Paypal are largely unable to participate in “online shopping” despite the near global reach of delivery services.  The world deserves a money that can be accepted from anywhere in the world.  Paypal doesn’t deal with these countries due to political reasons mostly.  Needless to say, Bitcoin does not discriminate in such ways and all that is required for access  and inclusion is hardware and a data connection.  While services like Coinbase do not yet exist in every country in the world, Localbitcoins does and is ready to facilitate a Bitcoin economy anywhere in the world.


Bitcoin is superior to Paypal in every way; however, it won’t be until Bitcoin has the same market capitalization as Paypal that we will truly begin to see Bitcoin’s widespread use in lieu of Paypal around the world.  In the meantime, it’s always a possibility that Bitcoin will be allowed as a way for Paypal users around the world to fund their still-fiat-denominated accounts.  In fact, Paypal’s President David Marcus recently admitted to owning Bitcoin and assured the community that he was keeping a close eye on developments in the Bitcoin sphere.

Stay tuned to CryptoCoinsNews for more analyses of Bitcoin!

Last modified: February 6, 2020 5:19 PM UTC

Caleb Chen @bitxbitxbitcoin

Caleb is a graduate of the University of Virginia where he studied Economics, East Asian Studies, and Mathematics. He is currently pursuing his MSc in Digital Currency at the University of Nicosia.

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