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You don’t really own the Bitcoin on Paypal

You don’t really own your Bitcoin on PayPal

When you buy or sell bitcoin on PayPal, you are not actually buying or selling the underlying asset of bitcoin. Instead, you are buying or selling a contract for difference (CFD) that tracks the price of bitcoin. This means that you do not own the bitcoin itself, but rather a financial instrument that allows you to speculate on the price of bitcoin.

One of the main benefits of buying a CFD is that it allows you to trade bitcoin without having to go through the process of setting up a digital wallet and purchasing the cryptocurrency directly. This can be a simpler and faster option for those who are new to trading bitcoin or who don’t want to deal with the technical aspects of buying and storing the digital currency.

Another benefit of buying a CFD is that it offers a degree of flexibility that purchasing bitcoin directly does not. With a CFD, you can trade on margin, meaning that you can open a position with less capital than would be required if you were buying bitcoin directly. This allows you to potentially make bigger profits (or losses) than you would with a smaller investment.

However, it’s also important to be aware of the risks associated with trading CFDs. Because you don’t own the underlying asset, you are exposed to the risk of the counterparty defaulting on the contract. Additionally, because you are trading on margin, you are also exposed to the risk of margin calls, where you may be required to deposit more capital to maintain your position.

Additionally, CFD trading can be more expensive than buying bitcoin directly. CFD trading typically involves higher fees and wider bid-ask spreads, which can eat into your profits.

In conclusion, buying or selling bitcoin on PayPal is not the same as owning the bitcoin itself. Instead, you are buying or selling a contract for difference that tracks the price of bitcoin. While this can be a simpler and more flexible option for some traders, it also comes with its own set of risks and additional costs that must be taken into account.

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