If you are a newcomer to bitcoin and blockchain technology, we need you to do as much research as you can possibly do. Read about it, listen to bitcoin podcasts and, above all, try out its technology. Buy small amounts of bitcoin if you have the money, practise transacting in it with a friend, practise storing it too! Get on top of the relatively “new” tech before you risk any important capital. It will take you maybe a few days. However, it’s worth allocating the time. Before anything else though, you will want to set up your UK bitcoin wallet first or you will not be able to take full advantage when the time is right.
The most difficult part of bitcoin is the point of transfer between the fiat money (for example, the GBP currency in your pocket) and bitcoin. The most accessible place to buy it is from an exchange. Options can include Gemini, Kraken, and many others.
Typically, in simple words, the more you want to buy, the more paperwork you will have to fill in. After researching around, we have also found that in many cases it’s easier to set up an account on your smartphone than it is on your PC. Especially if you decide to go with Binance and Crypto.com.
Then, as soon as you’re set up, you’ll experience the convenience and fun of sending money to your exchange from a bank. You may end up having to make a phone call at this point.
Easier choices for small amounts include Bittylicious and LocalBitcoins, or even bitcoin ATMs (available at certain locations within the UK only). Revolut makes it easy, however you can’t then move your bitcoins elsewhere. You can only sell back to Revolut, however, which is somewhat beside the point.
You can store your bitcoins at an exchange – some even offer cold storage, which is similar to the way that bullion dealers often offer gold storage. However, longer term (and unlike with bullion dealers) we will advise against this. This is because if the exchange goes out of business, you’ll be in major trouble. Other long-term storage choices include electrum that comes with a multi-signature hardware wallet. Or you can opt to go with a slightly more user-friendly choice, a bitcoin storage specialist keys.casa. This will all start making sense as soon as you start playing around with the tech.
If You Do Get into Bitcoin in the UK
Remember that bitcoin yields nothing, and its main source of value is its scarcity. Most bitcoin activity is trading and not investing. Do a little bit of research on coin wallets, the digital vaults where cryptocurrency is held. At the same time, you should also consider security carefully. Bitcoins have been stolen before (not news), so that means you should understand how this happened.
You should also be prepared for extreme volatility. The price can move by 20% in a single day and you can easily lose a substantial amount of your cash in a far quicker time that investing in the stock market. Consider how you are able to cash in any gains. There are feedbacks that this has proved hard for some groups of people. A time of market stress can lead to people being locked in and unable to trade.
Where Do You Buy Bitcoin in the UK?
The most common place to buy bitcoin (and similar cryptocurrencies) is known as a cryptocurrency exchange. These are platforms, mobile apps and websites that allow investors to buy bitcoin with government, or fiat, money or with another cryptocurrency.
According to study and exploration by the Financial Conduct Authority published earlier this year, 77% of people surveyed who had bought cryptocurrency in the UK did so through an online exchange.
Most did so via exchanges that are not based in the UK. And the some of the most popular exchanges among consumers: Coinbase, Binance, and Bitfinex, which are all based overseas. While many supporters of cryptocurrencies like bitcoin applaud the privacy and anonymity they can offer holders and buyers, it is worth seeing that exchanges will ask investors to provide personal information and identity documents before they can fund their accounts with authentic deposits.
Many crypto exchanges state this is to prevent fraud and protect their investors, as well as to adhere with anti-money laundering and customer familairity regulations. They also have to include official documentation, exchanges may levy a variety of fees depending on the payment method investors settle for.
Bitcoin is towards the very high-risk end of the investment spectrum. The price of cryptocurrencies is unstable. Sometimes, it can go bust, others could be scams, and at times one may increase in value and produce some kind of return for investors.
As like any investment, do your due diligence and don’t put all your hopes on one company or one cryptocurrency. Spread your money around so you can divide the risk.