xCoins Review: Can You Really Buy Bitcoin with PayPal?

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xCoins isn’t your typical Bitcoin exchange. It’s an exchange that focuses on connecting lenders to buyers. That’s right, lenders.

Lenders fund their account with Bitcoin, then select their interest rate. On the other end of the transaction, buyers select from an array of loans, choose the one with the terms they like (alternatively, they can be auto-matched with a loan), then pay with their preferred payment method (credit card, PayPal, or ACH transfer).

They call the process of using money as collateral a secured loan. According to their FAQ, you can pay back the Bitcoin loan with Bitcoin at any point in the future, then receive your money back minus any less fees.

Anyone interested in xCoins might be asking themselves a few questions. The most burning question we’ve received is whether or not the site is actually a legitimate way to buy and sell Bitcoin.

The answer: xCoins is far from a perfect service for buying and selling Bitcoin, but it gets the job done.

xCoins Key Information

xcoins homepage

Key Information xcoins review
Site Type Bitcoin Exchange
Beginner Friendly
Mobile App
Company Location Santa Monica, CA
Company Launch 2016
Deposit Methods Bitcoin (for lending)
Withdrawal Methods Bitcoin (for buying), PayPal
Available Cryptocurrencies Bitcoin
Community Trust Not Too Good
Security Unknown
Fees Variable, typically high
Customer Support Not Too Good
Site Visit Xcoins

There is surprisingly little information available about the company on the site. They don’t have an ‘About’ page, nor is there any publicly available information about them. Fortunately, they do list a legitimate address on their website. However, they lack a phone number.

While not complex, I would not suggest xCoins for complete beginners to the world of Bitcoin. Consider using CoinBase to buy your Bitcoin instead.

Public Opinion of xCoins

xCoins does not have the best of reputations in the Bitcoin community. Over the course of the past year that they’ve been in operation, they have received their fair share of complaints. Keep in mind that virtually every exchange site usually has a substantial set of negative reviews, but each review is usually reflective of the overall platform or service.

Almost every complaint about xCoins comes from the lending side of their business. Common complaints found on Bittrust and the BitcoinTalk Forums are:

  • PayPal account suspended. The most common complaint from lenders is that their PayPal account was frozen for 180 days due to potential fraudulent activity. You see, lenders are paid through PayPal, regardless of the payment method selected by the buyers. If you are doing a high volume of loans, this results in an influx of activity on your account. PayPal sees this and suspects fraud.

    This complaint is common enough to dissuade many from using this service as a lender. It has gone unmentioned by xCoins, as far as I could find, and there likely is not a solution for it. It’s a fundamental flaw of the xCoins platform that the xCoins team should visit in the near future.
  • No answer from customer service. When the service first opened, xCoins was severely understaffed. They received a fair amount of publicity, which naturally made business boom. When people had problems, they reached out to customer support. Some received no answer, so they headed to Bittrust and BitcoinTalk to vent their frustration.

    By all accounts, this problem has been solved by hiring more customer service representatives. There are also responses on review sites and the forums from xCoins staff, showing that they have tried to remedy the problem.
  • Unable to withdraw funds. While not the most common complaint, some buyers have complained that they cannot withdraw their Bitcoin. Fortunately, these complaints were addressed by xCoins staff and remedied.

xCoins has a long way to go in establishing a stellar reputation in the Bitcoin community. They will need to find a way to prevent PayPal from freezing accounts, if such a thing is even possible. Additionally, they’ll need to focus on customer service.

What is the xCoins Process?

xcoins process

There are two sides to xCoins: buying and lending. Both sides have their own process.

The buying process:

  1. Set up an account.
  2. Specify how much Bitcoin you’d like to buy and make a payment with your preferred method (credit card, debit card, ACH, echeck, PayPal).
  3. Receive Bitcoin to your xCoins wallet, which you can then (and should) transfer to your own wallet.

There is an ID verification process when signing up, so it’s best to sign up during business hours on weekdays so their staff can verify you.

The lending process:

  1. Set up an account. You’ll also need a PayPal account.
  2. Deposit the amount of Bitcoin you’d like to lend into your xCoins wallet. The minimum amount is $20 worth of Bitcoin.
  3. Create your listing. You dictate the interest rate on the loan.
  4. Wait for buyers, then receive payment to your PayPal account.

Be warned, your PayPal account may be frozen due to the number and nature of deposits.

Even though the entire process is called a secured loan, this is technically buying and selling. There are a number of possible reasons for calling it a loan instead of a sale, one of which is allowing PayPal as a payment method.

It does not appear as though people are paying back their Bitcoin loans with Bitcoin at a future date. However, that is an option that all buyers have. In this situation, they would contact the lender to return the Bitcoin and receive their money back. This gives me pause, as I think there should at least be a built-in system for repayment.

What Are the Fees for Buying and Lending?

Buyers are able to browse through different rates, which are set by the lender. Rates are between 15%-30% of the total loan amount. This is unusually high in the Bitcoin world.

xcoins steps

Lenders set their own interest rate, and xCoins takes an undisclosed amount of the interest rate. So, lenders don’t pay any fees, but they do have fees deducted when their Bitcoin is loaned.

Final Thoughts on xCoins

xCoins is a great idea in theory, but in practice, it leaves plenty to be desired.

Primarily, the fact that PayPal freezes lenders accounts with surprising regularity. This is enough of a problem to prevent me from lending my Bitcoin on their platform – I value my PayPal account.

However,  xCoins is a pretty good platform for buying Bitcoin with PayPal. There are only a handful of services that offer this, and calling the sale a loan is one of the reasons why they’re able to accept PayPal.

That being said, there are several factors you should be aware of on both sides of the transaction in order before using xCoins with confidence.

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Legal Disclaimer

CoinCentral’s owners, writers, and/or guest post authors may or may not have a vested interest in any of the above projects and businesses. None of the content on CoinCentral is investment advice nor is it a replacement for advice from a certified financial planner.