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How to Buy Bitcoin in the UK in 2021

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With its value having appreciated by around 30,000% from October 2013 to June 2021, Bitcoin (BTC) is considered the gold standard among cryptocurrencies today. The UK is one of the leading global economies which provides a feasible environment to anyone wanting to trade or invest in cryptocurrencies, including BTC. 

People wanting to buy Bitcoin can do so through cryptocurrency exchanges, brokerage platforms, Bitcoin ATMs and peer-to-peer groups/websites, using multiple payment methods including credit/debit cards, e-Wallets, bank transfers and Paypal. In this detailed guide, we’ll discuss all possible aspects of buying Bitcoin in the UK.

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Why Trade Bitcoin instead of Buy Bitcoin?

1

No wallet needed

There’s no need for a crypto wallet during trading as you speculate on the price movements of Bitcoin, without any transfer of actual BTC ownership.

2

Use usual payment methods

The majority of crypto brokers accept a wide variety of payments including bank transfers, credit/debit cards and third-party payment facilitators like Paypal, for trading activity.

3

Easy & fast

As trading doesn’t normally involve the actual exchange of Bitcoins, it is relatively faster and enables you to more effectively exploit the rapid fluctuations in the BTC’s price. You can further ease up the activity with the help of trading bots.

How to Buy Bitcoin With the Best Broker in the UK

There are multiple reputed Bitcoin brokers in the UK that have been operating in the country for several years now. These platforms are normally backed by solid business entities and run by seasoned experts, having extensive experience in offering efficient crypto trading services to traders and investors. Most of these portals are regulated and licensed by leading global authorities, thus providing a higher degree of security to everyone involved. Below you can find more details on how to register with and use these service providers.

1. Register with a Reputable Broker

The first step in buying BTC with a broker in the UK would be locating one and then registering with it. You may choose from any of the service providers shortlisted above, based on your specific requirements, and then sign-up with it by submitting some basic details such as your name, address, email ID and phone number. You may be asked to verify your identity by uploading some government-issued documents too.

2. Verify your Identity (KYC Process)

As mentioned above, since most of the well-known Bitcoin brokerage platforms in the UK are regulated by established global authorities, you’ll be asked to verify your identity before being able to use their services. This is in compliance with their KYC (Know Your Customer) norms, and procedures mandated by the global ‘Anti-Money Laundering’ (AML) and ‘Combating the Financing of Terrorism’ (CFT) laws. It would normally involve uploading some government-issued photo identity like a driving license or passport that will serve as proof of identity. 

3. Deposit Funds with your Preferred Payment Method

The majority of the UK cryptocurrency brokers accept debit/credit cards and bank transfers as valid modes of payment. Some of them may even welcome deposits via third-party payment facilitators like Revolut, PayPal, Advcash, Webmoney and Payeer but you will need to check with the platform first before deciding to sign up. Please also bear in mind that each one of these payment methods will involve a certain transaction fee, which must be factored into the purchase decision. 

4. Open a Position to Long/Short Bitcoin

While a long position on Bitcoin involves buying and holding onto the coin, hoping for its price to appreciate, a short position is taken in anticipation of a fall in the cryptocurrency’s value, to exploit the downward price movement.

Let’s explain this with an example of the well-known eToro brokerage platform, licensed by the FCA in the UK. If you use eToro and open a long position on BTC, without the leverage option, you’d be essentially buying the ownership of Bitcoin, and book profit by selling BTC at a possibly higher price later. 

Alternatively, a short position on Bitcoin will involve using a derivative like ‘Contract for Difference’ (CFD) for placing the trade, without any actual exchange of the underlying BTC from one wallet to another. In this scenario, you’d be betting on the possibility of a drop in Bitcoin’s price. If your bet is correct, the difference between the closing and opening price of the CFD will be your profit. 

You can use different order types like stop-loss, trailing stop-loss, market order, limit order, take profit, Immediate or Cancel (IOC) and All or None, to enter and exit trades at the right time, to maximise profits and minimise losses. For instance, whereas a limit order serves as an instruction to execute the trade as soon as the target price for crypto is met, a market order is executed immediately at the current market rate. 

5. Close your position

Closing your position implies finishing the concerned trade. You can close a long position by selling the held Bitcoin. 

For example, in a long position, you can specify stop loss and take profit points, to ensure that your position is closed as soon as the pre-defined price points are reached. This way, the position will close automatically once the price has dropped to the stop loss level, preventing further loss; and close automatically when it touches the take profit point, registering timely profit. You can also close your positions manually at any time.

How to Buy Bitcoin With the Best Exchange in the UK  

Another popular option to buy Bitcoin in the UK is through a cryptocurrency exchange. As per a survey conducted by the UK’s Financial Conduct Authority (FCA) in 2020, 77% of people who invested in cryptocurrency in the UK, did so through online exchanges based outside of the country but licensed to operate in Britain.

An exchange would normally pair BTC with many different altcoins as well as with popular fiat currencies including GBP. You’ll need to use a trading pair of your choice to buy BTC, and then store the purchased coin/s in a separate crypto wallet. Let’s delve into more such details in the sections below.

1. Set up a Wallet 

Cryptocurrency wallets are basically software programs meant to secure the private keys associated with cryptocurrencies. Bitcoins purchased on an exchange portal are normally stored on a web wallet integrated into the exchange website. Though these exchange wallets are extremely convenient for online transactions, as they make your coins readily available at all times, they’re not very secure. There are two broad categories of crypto wallets offered in the market:

Software wallets – Installed and used on mobile devices or laptop/desktop computers, software wallets offer higher convenience, but since they remain online, it makes them susceptible to hacking attempts.

Hardware wallets – Available in the form of tiny physical devices that stay disconnected from the Internet, hardware wallets are the most secure of all crypto wallets in the marketplace.

2. Choose and Join an Exchange

Ideally, you should opt for one which is well-reputed and is regularly used by a large number of cryptocurrency investors/traders. It should be transparent in its fee structure and clearly specify different charges like transaction fee, deposit fee and withdrawal fee levied by it. 

Additionally, the exchange should use updated security technologies to safeguard everyone’s interests. Regulated exchanges that insist on KYC and id verification are a lot safer than unregulated platforms, as they’re bound to undertake stringent security measures to keep bad actors at bay.

3. Choose Your Payment Methods

Most of the crypto exchanges operating in the UK support multiple payment methods including debit cards, bank transfers as well as third-party payment portals like Skrill, Payeer, Advcash and Paypal. However, each one of these payment modes differ based on their convenience, speed and cost. For example, though bank transfers are the least expensive, they take longer than other payment methods for processing. Debit cards on the other hand offer a higher degree of convenience but can be expensive if you’re a regular crypto trader. 

4. Place an Order to Buy BTC

To buy Bitcoin on a cryptocurrency exchange, you’ll need to place a buy order, using a Bitcoin trading pair of your choice, for example, BTC/USD, BTC/GBP, BTC/ETH and BTC/XRP. This process remains uniform across all the online exchanges. Simply select the trading pair you need, check the current rate and click the ‘BUY’ button whenever you feel the price has reached the desired level. 

5. Safely Storing Your Bitcoin in a Wallet

People who purchase Bitcoin with a long-term investment horizon, normally transfer their purchased coin/s from the exchange wallet to an external one, for safe and long-term storage. They usually employ a cold hardware wallet for this purpose. To accomplish this, use the withdrawal option provided by the exchange and then input the address of your Bitcoin wallet to complete the transfer.

What if I want to Buy Bitcoin with Cash in my City in the UK?

Before we get to buying Bitcoin with cash in your city in the UK, we’d like to highlight the risks associated with any such cash transaction. Unless you’re using a reputed peer-to-peer (P2P) exchange where your cash can be held in an escrow account, before getting released to the seller upon BTC receipt, there will always be the risk of not receiving the promised BTC. Hence, direct cash purchases outside of such platforms are usually not encouraged.

There are 192 Bitcoin ATMs spread over the UK where you can easily deposit cash into an ATM machine and receive the corresponding amount of Bitcoin in your wallet. Of these 192 ATMs, 110 are in London alone, with Birmingham and Manchester having the next higher numbers at 25 and 12 each at the time of writing.

The UK has taken a very measured approach regarding cryptocurrency regulation, and its stance has matured after Brexit. Despite confirming in 2020 that crypto assets must be considered as property, cryptocurrencies aren’t treated as legal tender in Britain and there are no specific cryptocurrency laws in place yet. Nonetheless, starting January 10, 2021, all cryptocurrency-related service providers, including exchanges and brokers are required to register with the UK’s Financial Conduct Authority (FCA), to operate in the country. 

3 Tips to Buy Bitcoin

Let’s now look at some useful tips that can further help you make a timely, cost-effective and secure Bitcoin purchase in the UK.

1. Choose the Right Time and Do Your Own Research 

Carrying out some due diligence with regard to Bitcoin’s price movements can help you significantly in buying the coin at the right time, and maximise your profit potential. You should do some study on Bitcoin’s price history and look at the fundamental & technical factors which may impact its future prospects, to figure out an opportune time to buy the cryptocurrency.

2. Comparing Costs to Buy Bitcoin

It’s also important to pay heed to the fees and charges like deposit fee, transaction fee and withdrawal fee, levied by different platforms facilitating Bitcoin purchase. There may also be some fees associated with the mode of payment used for BTC purchase. All these must be factored into your buying decision, especially if you are a regular Bitcoin trader/investor.

3. Safety and Security

Lastly, you should make sure that the platform being used for Bitcoin purchase has leading security measures in place, to safeguard your interests. Adding extra safety layers to your account, for instance, using Two-Factor Authentication (2FA), can deliver a higher level of security. It is important to deal with secure and reputed exchanges to ensure your funds are safe. 

Can I Buy Bitcoin with GBP?

You can buy Bitcoin with British Pound Sterling (GBP) in the UK. Almost all the cryptocurrency brokers operating in the country accept deposits in well-known fiat currencies like Euro, US Dollar and British Pound. Exchanges too are receptive to deposits made in GBP. You can easily use any of the buying processes explained earlier and buy BTC with GBP.

Other Ways to Buy Bitcoin in the UK?

As briefly explained earlier, there are other ways of buying Bitcoin in the UK too. Let’s go over a few of them below.

Use a Bitcoin ATM to Buy BTC: There are many Bitcoin ATMs located throughout the UK, and you can easily locate one closest to you by visiting any of the popular crypto ATM locator websites.

Other Ways to Get Bitcoin: You can also potentially acquire Bitcoin organically through a process called mining. Bitcoin uses the Proof of Work mining system in which miners are rewarded in BTC for processing complex Bitcoin transactions, and securing its blockchain. One can even take the ETF (Exchange Traded Fund) route on an exchange platform, to indirectly invest in Bitcoin.

With billions of dollars worth of BTC traded worldwide on various platforms each day, the coin enjoys maximum liquidity globally, including in the UK. Therefore, you may not find any trouble locating reliable BTC sellers in normal market conditions. 

Frequently Asked Questions

  1. Yes. You’re unlikely to face any security issues if you buy Bitcoin in the UK through a regulated and licensed platform.

  2. Yes. All crypto-related service providers in the UK, including online brokers and exchanges are required by the UK’s Financial Conduct Authority (FCA) to verify their users’ identity, and follow certain KYC norms.

  3. Yes. Capital gains from crypto trading activity are taxable under the UK’s HMRC (Her Majesty’s Revenue and Customs). A tax-free allowance of up to £12,300 is given in this regard. Any profits over that and up to £50,001 are taxed at 10%, while earnings higher than £50,001 are taxed at 20%.

  4. Though Bitcoin ATMs offer a higher degree of convenience, they also involve a significant fee.

  5. No. There are many free software wallets available online for the safe storage of Bitcoin.

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