The idea of paying for goods and services with a cryptocurrency wallet would have sounded bizarre twenty years ago. Today, cryptocurrencies provide an attention-grabbing, volatile trading market. While the UK Bitcoin market is not as liquid as other markets, it still provides ample opportunities. In fact, the UK tax structure even supports speculation, gambling, and trading in cryptocurrencies, although the capital gains taxes continue to be assessed.
Plus, one does not even require a wallet or an exchange account to open an account with an online broker to trade cryptocurrency CFDs since you will never actually take possession of the cryptocurrencies. In addition to a number of well-known cryptocurrency exchanges available, UK cryptocurrency traders can choose to buy bitcoins through peer-to-peer websites and groups or via the nearest bitcoin ATMs. If you do decide to go into the trading route, you can find that many online brokerages in the UK offer cryptocurrency CFDs and futures trading.
Though trading cryptocurrencies may be a little intimidating to some, Bitcoin is not as complicated as it seems. It can be a pretty easy process provided you know when and where to invest your funds to make the right Bitcoin Purchase. In today’s guide, we’ve put together a simple step-by-step to get you started on buying Bitcoin safely and securely.
What is Bitcoin?
Bitcoin is the oldest and most popular digital currency in terms of market cap. Bitcoin was created back in 2009 by an unknown person under the alias Satoshi Nakamoto with an aim to create decentralized electronic cash designed to provide a viable alternative to traditional fiat currency.
Bitcoin holders have the option to transfer their coins directly to another holder’s wallet via a peer-to-peer network instead of having to deal with a centralized authority such as a bank to process the transactions. If you’re worried about security, you ought to know that all Bitcoin transactions are tracked on a public ledger known as the blockchain where there are people working as miners to verify transactions and update the blockchain.
The maximum coin supply of Bitcoin is 12 million, but it’s possible to buy a small fraction of a coin. Each individual coin can even be divided down to 0.00000001 BTC.
How to Buy Bitcoin in the UK
You can buy Bitcoin in the UK with three simple steps discussed below:
Step 1: Choose a Bitcoin Wallet
Before you start buying any Bitcoin, you need to first set up a digital wallet to safely store your coins. Bitcoin wallets don’t actually hold any coins, but instead, they store the private keys you need in order to access your public Bitcoin address and sign transactions.
Withdrawing cryptocurrency from the exchange, ATM, or peer-to-peer group to a personal crypto wallet and subsequently backing it up to protect your wallet’s private key is the best way for you to maintain full control over your bitcoins and other digital assets. The wallet’s main function consists of notifying the exchange or other source that you wish to send and receive cryptocurrency transactions.
Cryptocurrency wallets share some of the same characteristics as email accounts where it offers a public key that lets you receive payments and gifts as well as a private key that gives you the ability to make purchases with your cryptocurrency and is important that it remains confidential.
There are dozens of digital wallet options for you to choose from, including the following:
- Hardware wallets, such as Ledger Nano S and TREZOR. This is a good choice for security as it provides offline storage for your private keys.
- Desktop wallets, such as Electrum and Exodus. These can be downloaded to your computer and used to store private keys on your own computer’s hard drive.
- Mobile wallets, such as Jaxx and Coinomi lets you manage your BTC from your Android or iOS devices anywhere, anytime.
- Web wallets, such as Blockchain Wallet and GreenAddress. These are more convenient options that let you access your Bitcoin online from any device.
- Paper wallets let you print out your Bitcoin public and private keys on a piece of paper as your wallet.
Bitcoin wallets can be installed on your desktop computer or laptop. Some can even be installed on your Android or iOS smartphone or tablet. In addition to the wallets mentioned above, a web-based wallet does not require a download and gives you access to your bitcoins anywhere with an internet connection.
For added security, you can opt for a hardware wallet that consists of a peripheral device that plugs into a computer much like a USB memory stick. Once you have a wallet, you can make a backup by either saving it to a USB drive or have the keys printed on a piece of paper and storing it in a safe place. Make note that this type of “cold storage” can also have its own drawbacks as you run the risk of losing your USB drive or the paper wallet and consequently, the contents of your wallet.
Below are a few popular cryptocurrency wallets used by United Kingdom cryptocurrency traders and investors.
Bitcoin Core Wallet
Bitcoin Core Wallet offers one of the highest levels of stability, privacy, and security. This wallet is like the backbone of the entire Bitcoin network by taking up a large amount of space and memory. If you do choose to use this wallet, you will need to download the entire bitcoin blockchain.
This is an Android mobile app with several intuitive features designed for ease of use in addition to being fast and secure. The company’s vision consists of decentralization and zero trusts. This translates to zero reliance on a central service for Bitcoin-related transactions. This app is a good choice for people with a little technical background as it could be a little complicated to use.
Ledger Nano S
The Ledger Nano S is a very popular hardware wallet that supports over 40 different cryptocurrencies including Bitcoin (BTC aka XBT), Ethereum (ETH), and Ripple (XRP). The wallet was designed around a chip similar to those used in credit cards and passports for the highest security and protects your assets via a PIN code.
Coinomi is available in both mobile and desktop wallet versions that offer a single platform to support over 500 cryptocurrency wallets and tokens. The wallet also provides native support for as many as 125 blockchains plus 382 tokens for a total of 507 digital assets. The main advantage of using this wallet is its ability to exchange cryptocurrencies at no cost.
Coinpayments.net is a merchant-specific wallet platform that consists of an integrated payment gateway that allows you to accept 1,165 supported coins and tokens for payments. The cryptocurrency wallet supports more than 230,000 vendors across 182 different countries. It also supports popular shopping carts used by many eCommerce stores such as Opencart, Magento, and WooCommerce.
Step 2: Choose a Cryptocurrency Exchange
Bitcoin can be purchased at virtually all cryptocurrency exchanges since it’s the most common cryptocurrency used to purchase other cryptocurrencies. The United Kingdom hosts a number of first-rate cryptocurrency exchanges that offer bitcoins for sale on top of cryptocurrency gambling and spread-betting brokers that let you gamble on the movement of a cryptocurrency pair.
After you’ve chosen your preferred Bitcoin wallet, you need to then decide how and where to buy Bitcoin. There are hundreds of platforms designed for this purpose for you to choose from, and they can be mainly separated into three categories:
Bitcoin Brokers offer the quickest and easiest way for you to buy Bitcoin by allowing you to pay for your digital coins using fiat currency such as GBP or USD. The currency they accept will also depend on each company and where they’re based at. Brokers offer user-friendly platforms and allow you to buy Bitcoin using familiar payment options like a credit card or a bank transfer. However, engaging a broker will have a downside which is that they often charge higher fees compared to other options.
Cryptocurrency Trading Platforms
These cryptocurrency trading platforms let you buy Bitcoin using other cryptocurrencies. This trading method tends to offer lower fees compared to brokers and even provides you access to a more diverse range of coins. However, in order to actually use this type of exchange, you’re going to already own another cryptocurrency. So, this method is not suitable for beginners or those who are just only stepping into the world of cryptocurrency.
Peer-to-Peer (P2P) Crypto Exchanges
Peer-to-peer exchanges will let you eliminate the middleman (as well as their charges) as it lets users trade directly with one another. The seller has the freedom to specify the price they want in this method and their accepted payment methods. This method also lets you trade with increased privacy since you’re not required to reveal any personal information to register an account. However, you may just have to settle for a higher price than the market exchange rate. Examples of peer-to-peer exchanges include LocalBitcoins and Paxful.
Below are a few popular United Kingdom crypto exchanges:
BC Bitcoin places a large emphasis on customer service and faster deposits and withdrawals. In addition to Bitcoin (BTC or XBT), BC Bitcoin also supports other cryptocurrencies such as Ethereum (ETC), Litecoin (LTC), Ripple (XRP), Monero (XRM), and others. However, to start trading in the cryptocurrency exchange, you’re going to have to deposit a minimum amount of £500, which can be made through a sepa credit or bank transfer.
CEX.io is a UK-based cryptocurrency exchange that offers BTC and other cryptocurrencies that you can purchase with EUR, USD, and GBP. CEX.io also offers a very competitive fee structure and leverage of up to 3:1 on certain cryptocurrencies. Users have access to trade nine forex currency pairs. In terms of payment options, CEX.io accepts Crypto Capital, Visa, and MasterCard credit cards, SEPA credit transfers, and bank transfers. However, the company does impose an instant trade fee of 7% and 3.5% + $0.25 for Visa transactions.
Coindirect is an international peer-to-peer marketplace that works a bit like localbitcoins.com. The exchange publishes buyers and sellers of bitcoin and other cryptocurrencies in real-time and makes note of your IP address to match you up with buyers and sellers in your area. Along with the buyer and seller, the exchange also publishes the price and payment method, which in most cases consists of bank transfers. Coindirect supports Bitcoin (BTC or XBT), Ripple (XRP), Ethereum (ETH), EOS.io (EOS), Stellar Lumens (XLM), and Tether (USDT).
Coinfloor is another popular United Kingdom exchange that gives its clients the option of trading cryptocurrencies against several national currencies besides the pound sterling. Coinfloor offers LTC/GBP, ETC/GBP, XRP/GBP, XBT/GBP, XBT/EUR, XBT/USD, BCH/GBP, and ETH/GBP currency pairs and asks for a minimum deposit of £5,000 for an account at the exchange. Deposits into the exchange can be made with Bitcoin (BTC or XBT), Bitcoin Cash (BTH), or through bank transfers in EUR, USD, or GBP.
Bitcoin ATM Automatic Tellers
In addition to peer-to-peer groups and cryptocurrency exchanges, you can also get Bitcoin through a Bitcoin ATM. There are a total of 213 bitcoin ATMs found in selected cities in the UK. London metropolitan area itself hosts a total of 134 bitcoin ATM locations, as well as Bitcoin Cash (BTH), Ethereum (ETH), Dash (DASH), Litecoin (LTC), Zcash (ZEC), Monero (XMR), and Dogecoin (DOGE).
Step 3: Buy Bitcoin
The final step is to submit an order through your chosen platform. For first-timers, we would recommend using a crypto broker as it’s the easiest and most convenient option.
No matter which type of cryptocurrency exchange you plan on using, you’ll usually need to sign up for an account first. And depending on the exchange you use and the regulatory requirements it is subjected to, you may also be able to sign up simply by providing your email address or you may be required to provide your full name, contact information, proof of photo ID before you can begin to trade cryptocurrency.
Once your account has been verified, you’ll need to decide and enter the amount of BTC you want to buy. Then you can choose your payment method, review the fees and total cost of the transaction before finalizing your purchase. The exact steps to follow will vary depending on your chosen payment method as well as the type of platform you choose.
How Can I Pay for my Bitcoin?
As mentioned earlier, you will need to pick your preferred payment methods. There are many different ways for you to pay for your Bitcoin, each of which has its own set of pros and cons to consider.
Buy Bitcoin with Cash
You can turn your cash into cryptocurrency to buy Bitcoin in the UK with the following methods:
- Use a peer-to-peer exchange to find a seller who accepts cash.
- Load a prepaid card with cash and use it to buy Bitcoin on a platform that accepts prepaid cards, such as Bitit.
- Find the nearest Bitcoin ATM and deposit cash to convert into BTC.
- Use a crypto broker that accepts cash deposits.
Use an exchange that lets you deposit funds into your account via money transfer services like Western Union or MoneyGram, and pay for your transaction with cash. One such platform that lets you do this is Cryptex 24.
While buying Bitcoin with cash is quick and convenient, this method is usually more expensive than the other options.
Buy Bitcoin with a Credit Card or Debit Card
Many Bitcoin brokers and exchanges now allow you to buy Bitcoin using a credit card. Platforms such as Coinbase and Coinmama lets you use credit cards to make quick and convenient purchases.
One thing to note about credit card transactions is that they do tend to attract higher fees and come banks may even block customers from buying crypto with plastic. Debit cards are nowhere near as widely accepted as credit cards but they still can be used to buy cryptocurrency on selected platforms.
Buy Bitcoin with PayPal
Have a PayPal account and want to use it to buy Bitcoin? Good news! You can do this, but you will be limited to the number of platforms that accept this payment method. The biggest advantage of using PayPal to buy Bitcoin is that it is very quick and easy to do so as you’ll no doubt be aware if you’ve used PayPal to purchase anything online before.
However, given the limited number of exchanges available that accepts PayPal, you may need to hunt around to find the right platform. And if the platform doesn’t accept GBP, you will need to be aware of the conversion fee that applies. VirWox and Paxful are two of the better-known platforms that accept PayPal as a form of payment.
Buy Bitcoin with your Bank Account
Another way for you to buy Bitcoin with GBP is to choose a platform that lets you do bank transfer deposits. Fortunately, the list of platforms that let you transfer funds from your bank account is an extensive one and invoices sites like Independent Reserve, BTC Markets, Cointree, and more.
Depositing funds using your bank account usually doesn’t attract any fees, but you may have to be prepared to wait one or two business days until the funds are cleared into your exchange account. Regardless of which bank account payment method you select, make sure you do consider the following:
Any transaction limits that apply
The fees charged by the Bitcoin exchange or broker
How long it will take for your funds to arrive
Buy Bitcoin with Another Crypto
If you already have another cryptocurrency and would like to exchange it for Bitcoin, then you’ll be pleased to learn that BTC is listed in a huge range of trading pairs on a wide variety of crypto exchanges. The key is to find the right exchange that offers the features you want at the right fees for you.
You’ll first need to search for cryptocurrency exchanges that list your desired trading pair, for example, BTC/DASH, and then compare the pros and cons of each platform. Once you’ve found a suitable exchange, you can begin buying Bitcoin following a few simple steps. Take note that different exchanges have different trading processes and below is just a general guide.
- Register for an account with a cryptocurrency exchange.
- Verify your account.
- Go to the deposits section.
- Select your preferred payment method and confirm.
- Go to the by section and select the cryptocurrency you want to buy.
- Enter how much you want to buy, or how much you want to spend.
- Double-check the details and confirm your purchase.
Buy Bitcoin Anonymously
If you want to buy Bitcoin in the UK, most exchanges available will require you to verify your identity. However, if you’re one of those who place a large emphasis on privacy, then you’ll be pleased to know that there are still ways for you to buy Bitcoin and other cryptocurrencies anonymously. The following are some of the available options for you to consider:
- Using a peer-to-peer platform like LocalBitcoins to trade directly with a Bitcoin seller.
- Using a Bitcoin ATM to anonymously deposit cash and have it converted to BTC and then transferred to your Bitcoin wallet.
- Buying Bitcoin with a prepaid credit card or cash via a platform that does not require ID.
- Trading altcoins for Bitcoin on an exchange that doesn’t require proof of ID.
How to Choose a Bitcoin Exchange
With hundreds of platforms to choose from, we understand that finding the best Bitcoin exchange for your needs can be a challenging task. To make your choice easier and ensure a more informed decision, you can consider the following key factors when comparing exchanges:
Where the exchange is based and how is it regulated?
While the regulatory environment surrounding digital currency exchanges is becoming clearer and clearer, the same cannot be said for certain overseas-based exchanges. Do the necessary research to find out where the exchange is based as well as the regulatory requirements that apply in that country. This will help you work out if you’re dealing with a reputable platform.
Look at the security features offered by the platform. Do they have 2-factor authentication and PGP encrypted emails? Has the platform been hacked or linked to any suspicious activity?
Check the fine print to find out exactly how much your transaction will cost. These could include trading fees and transaction fees as well as deposit and withdrawal charges, depending on the platform you choose.
Does the platform have any minimum or maximum limits on the amount of Bitcoin you can purchase? Does the exchange restrict the number of funds you can withdraw from your account in one transaction or 24-hour period?
Bitcoin is the biggest digital currency in the world by some margin and it can be easily bought and sold on a huge range of platforms. However, if you’re looking to acquire other cryptocurrencies as well as Bitcoin, you should check to see what other coins you can buy through the platform.
Check if the platform has a reliable customer support team that you can quickly and easily get in touch with in case you ever have a problem with a transaction. Check what contact methods are available on the platform and find out how quickly the team is able to respond to enquiries.
Make the necessary research on Bitcoin forums and online reviews to find out what sort of experience other users have had with the platform.
Pros and Cons of Buying Cryptocurrency from a UK Bitcoin Exchange
There are plenty of choices when selecting a Bitcoin exchange and users get to choose from platforms based here at home or in countries all around the world. To help you decide on whether you should buy Bitcoin from a local exchange or from a foreign platform, here are a few pros and cons of buying on a homegrown exchange.
- You can buy Bitcoin with GBP.
- You can access local customer support.
- You get better consumer protection in case your funds go missing.
- You’ll need to provide your personal details and proof of ID – may not be preferred by those who want to trade anonymously.
- The registration process can take longer on platforms that don’t require ID verification.
- Some bigger platforms based overseas offer much better liquidity.
Regardless of whether you choose the UK or an overseas-based crypto exchange, make sure you do the necessary and compare a range of options before deciding which platform to use.
Risk of Buying Bitcoin
You shouldn’t invest in shares without doing proper research first, so do make sure you understand the following essentials facts about Bitcoin before you begin buying or trading:
Bitcoin is very volatile.
If you take a look at the graph charting the price history of Bitcoin, you’ll be able to quickly see the value is capable of rising and falling sharply in a relatively short space of time. Not only is Bitcoin very volatile, but it’s also a new asset class that’s highly unpredictable. Both this means that there’s a high level of risk associated with buying Bitcoin.
Security is vital.
Have you ever heard the saying that if you don’t own your private key, you don’t own your Bitcoin? You ought to understand the difference between your public and private key as well as the importance of safely storing your private key to secure your BTC.
Bitcoin transactions cannot be canceled.
Once you’ve submitted a transaction to the Bitcoin network, it cannot be canceled. With this in mind, you need to always make sure and double-check the receiving address before sending a Bitcoin payment.
Bitcoin is not anonymous.
There’s a widespread misconception that all Bitcoin transactions are anonymous. However, this isn’t the case as your public address and details of your transactions are visible to everyone. If anonymous transactions are important to you, then it may be worth researching privacy-focused coins, such as Monero.
There are tax implications.
If you hold Bitcoin as an investment, do take note that you’ll be taxed on any capital gains made when you sell it for GBP or another cryptocurrency. Tax obligations also apply to Bitcoin mining, professional Bitcoin traders, and a range of other scenarios, so make sure you’re fully aware of what you need to report to HMRC.
Finally, it’s also worth remembering that Bitcoin is far from the only fish in the cryptocurrency sea. While Bitcoin may be the biggest and best-known cryptocurrency, there are more than 1,600 other cryptocurrencies available. The value of some of these coins is questionable but there are still plenty of other digital currencies worth considering as alternatives to Bitcoin.
Other Ways to Invest in Bitcoin
Want to get your hands on some Bitcoin without actually buying it? Then there are a few options available below:
Charge Bitcoin for goods and services. You can request payment in Bitcoin instead of GBP for merchants who have this option.
Mine Bitcoin. It’s not extremely hard for any individual to make much money from mining Bitcoin. However, if you’re still interested, there are websites available that talk about how to mine Bitcoins.
Earn free Bitcoin. This is a time-consuming method and there are a handful of legitimate ways to earn small amounts of free Bitcoin through certain online games and Bitcoin faucets.
Buying Bitcoin OTC. If you want to buy a large amount of Bitcoin, like in the range of £20,000 and more, you may want to think twice before placing your trade on a traditional exchange as you will risk exposing yourself to slippage. This can substantially increase the cost of your trade. Not only that, but you’ll also need to accept the risks of hacking and theft associated with traditional exchanges.
Over-the-counter (OTC) brokers can offer better prices, increased transaction limits, and faster processing times for large-volume traders.
If you want to buy Bitcoin, you should start comparing a range of cryptocurrency brokers and exchanges to facilitate the trade. Be sure to look at their features, fees, security, and overall reputation before deciding which cryptocurrency trading platform is the right fit for you.
Once you’ve decided, you can then sign up for an account and get ready to start trading cryptocurrency. However, you still ought to make sure you research your purchase thoroughly and are fully aware of the risks involved before you buy.
As the world’s premier cryptocurrency, Bitcoin is the most liquid and accessible digital currency both in the UK and around the world. Therefore, traders and investors buying bitcoins in the UK will generally have no trouble finding sellers.
Other than buying them from an exchange or peer-to-peer platform, you can also source bitcoins through bitcoin ATMs. Knowing your intentions for getting into the crypto market will determine if your best option will involve buying a wallet and opening an account at a crypto exchange or opening a brokerage or gambling firm account. Though buying bitcoins is easy, what matters most is the exchange or broker you choose. Nonetheless, we hope today’s guide and article on how to purchase bitcoin in the UK has given you enough information and insight into the best way to buy Bitcoin.
Frequently Asked Questions
What’s the best place to buy Bitcoin?
The best place for you to buy Bitcoin in the UK will depend on what you’re looking for. Here are some of the best cryptocurrency exchanges in the UK that we’ve reviewed to help make the decision easier.
Is it a good time to buy Bitcoin?
While it’s possible that Bitcoin prices could skyrocket in the near future, you still need to remember that their value is very volatile and is also possible to plunge at any time. No one is entirely certain what Bitcoin prices will do, so it’s impossible for one to say whether now is a good time to buy or not.
Can I buy an amount less than 1 Bitcoin?
Yes, you can buy less than 1 bitcoin. In fact, each individual Bitcoin is divisible to 0.00000001 BTC. So it’s definitely possible for you to buy a small fraction of a coin.
Can I store my Bitcoin on an exchange?
While you can store your Bitcoin on an exchange, this is a generally not recommended step. Not only are crypto exchanges a popular target for hackers, but storing your coins on an exchange means you do not have control of your private keys. As a result, the safest option is to transfer all your coins to a secure, private wallet to reduce the risk of losing your bitcoins to hackers.
What’s the fastest way to buy Bitcoin?
The fastest way for one to buy Bitcoin is probably through a Bitcoin ATM. If there’s a Bitcoin ATM near you, the process of depositing cash and having it converted to BTC is actually quite quick.
If there aren’t any Bitcoin ATMs close to you, then the quickest way will probably be going through a service that does not require any ID verification. Sites like Bitcoin UK allow users to buy BTC by depositing cash at their local bank branch without the need to go through a lengthy verification process.
What’s the easiest way to buy Bitcoin?
The easiest way to buy Bitcoin in the UK is through a trusted Bitcoin broker. These broker services are created to make it as simple as possible for you to get your hands on some BTC. Not only are their platforms easy to use, but you can even pay with GBP using everyday payment methods like credit cards or bank transfers. The transactions are even generally processed quite quickly.
What determines the price of Bitcoin?
Just like many things in the world, Bitcoin’s price is determined by supply and demand. There is a limited supply of BTC in circulation and new coins are generated at a predictable rate, but there are also several other factors that can influence demand for Bitcoins.
Can I buy Bitcoin online?
Yes, Bitcoin is a purely digital currency that lives entirely online. As such, most Bitcoin trading is done over the internet.
Can I buy Bitcoin stock?
No, you cannot buy Bitcoin stock. Unfortunately, Bitcoin isn’t a company, so it’s not possible to buy shares or Bitcoin stock. However, there are some Bitcoin-related businesses that allow for public trades. For example, it is possible for you to buy shares in Bitcoin mining companies. Historically, the share prices of publicly traded Bitcoin-related companies tend to rise and fall with Bitcoin prices.
Is there a Bitcoin supply limit?
Yes, the maximum supply of Bitcoin is limited to 21 million coins.
How long does it take to buy Bitcoin?
The time it takes for one to buy and get Bitcoin will vary depending on the payment method and platform you use. For example, credit card purchases may be processed instantly while bank transfers may take up to one or two business days to clear.
Do check the terms and conditions of your broker or cryptocurrency exchange for more details on the average processing times. You should also remember that the amount of activity on the Bitcoin network can also have an effect on how long it takes to process your transaction.
How can I sell Bitcoin?
If you want to sell Bitcoin, you can once again choose from a wide variety of platforms to do so. This includes brokers and a long list of cryptocurrency exchanges. You even have the flexibility to exchange your Bitcoin for the pound sterling or sell it for an extensive range of cryptocurrencies.
Where can I find information about Bitcoin’s price history?
You can track Bitcoin’s price history on sites like CoinMarketCap.