I still didnt get why people are buying crypto on paypal if you cant withdraw it from there
Simple. Because the value of BTC there is same with the real BTC so if you want to invest in BTC, they can simply buy and flip there without moving it outside paypal. PayPal user do not used to store there funds in there so it's same on BTC. Most of people that buying BTC in PayPal are just want to get profit on Bitcoin volatility since they are not a bitcoin enthusiasts.
Does paypal offers some kind of protection for hacking or such though? If the user can't even withdraw their bitcoin then they should get compensated by additional security features like for example reimbursement in case hacking accident occurs right?
But if people are willing to buy coin from like PayPal might aswell buy from coinbase or such since the process is more or less the same, that's what makes me confused. Paypal could like cancel their cryptocurrency service anytime IMO.