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Luis Clark
Luis Clark
Luis is a personal finance expert who has been passionate and writing about crypto for more than five years.
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    How to Buy Bitcoin UK: Tips and More

    how to buy bitcoin uk

    There has been an ongoing surge in the popularity of cryptocurrency, and Bitcoin is amongst the top choices of UK investors looking to diversify their portfolio.

    Buying Bitcoin has become a popular way to get involved in the world of cryptocurrency as Bitcoin is known as the first and currently most widely-adopted cryptocurrency today and has become a popular asset for investors and speculators alike. Buying and selling Bitcoin can be a great way to diversify your portfolio and increase your potential returns. There are many benefits of buying Bitcoin, including its potential for capital gains, decentralization, and security.

    To be able to invest in digital assets in the UK you will have to open an account with a cryptocurrency exchange or connect with a DEX. Like any typical financial exchange, centralized exchanges facilitate the exchange of GBP or cryptocurrencies for Bitcoin, etc. depending on the current exchange rate. The following cryptocurrency exchanges can be used to buy Bitcoin in the UK:

    • Gemini
    • Gate.io
    • Coinbase

    What is Bitcoin?

    When you hear people talking about Bitcoin, you are bound to find the conversation confusing and slightly overwhelming. Let’s break it down for you and explain Bitcoin in simple terms without using all that technical jargon. We hope by the end of this blog, you will have a better grasp of what Bitcoin is and how it works.

    Fiat Currencies

    Understanding FIAT Currencies

    To understand Bitcoin – a cryptocurrency – you need to have a basic idea of what fiat currency is. Fiat currency, that is, paper money like British Pound or US Dollar, is a form of money on which the government has bestowed value. Paper notes or coins do not have any real value, per se, but since the government has issued them to be of value, they are generally accepted as a medium of exchange and an acceptable method of payment in any transaction. In a nutshell, we can say that you are trusting someone, like a government or a central bank, who issues the currency you are using.

    Problems with FIAT currencies

    Fiat currencies or paper money, however, come with some drawbacks.

    • Firstly, they are monitored by someone else, like the government or a central bank, that prints them.
    • The second reason, perhaps a more concerning one, is that there is no limit to how much money can be printed and introduced into the economy.

    This means that they can go down in value due to inflation at any time of the day. This has previously caused a lot of mayhem and loss to investors and the general public alike. This also means that people’s interest lies in the hands of someone else, whose own interests may not necessarily align with those of the users and investors.

    With the rise of the digitization of fiat currency, there have been many attempts to create fake money, scams, and even outright fraud – and these activities have led us to seriously reconsider how secure and liable are the centralized authorities in governing the issuance and circulation of money in the economy. The double spending problem, which refers to the money being promised to two parties but only delivered to one, is perhaps the most notorious of all challenges with digital fiat currency today.

     

    Bitcoin - the Solution to it all?

    The Creation of Bitcoin

    what is bitcoin uk

    In October 2008, a person or entity under the pseudonym of Satoshi Nakamoto published a paper called: Bitcoin: A Peer-to-Peer Electronic Cash System. It contained the ultimate solution to the problems inherent in the money supply and traditional financial setup: the creation of a decentralized money system called Bitcoin. Thus, many describe Bitcoin as a “Transparent Ledger with a Decentralized System.”

    But what does that mean? Let us simplify that for you.

    The Creation of Bitcoin

    Bitcoin is based on blockchain technology, with many computers working in tandem on the network. To understand Bitcoin, we will compare it to standard fiat currency. Each bank keeps track of how much money everyone has, and this is called the bank’s ledger. This ledger is kept confidential and is not available to the public. Only the bank has access to it, and no one else knows how much money is in your bank account.

    Bitcoin works very differently than this kind of system. Every transaction made using Bitcoin is publicly available for anyone to see, under a specific address. What’s kept secret is the identity of the people who performed that transaction. The transaction, thus, appears as a public wallet address that anyone can see. However, one cannot directly link anyone with this address. This means no one can lie about having Bitcoin they do not own, as everyone keeps a track of every Bitcoin block in the network. Bitcoin can only be accessed and used if you have the right private keys to your wallet.

    Secondly, since the bank is the only one with access to the ledger that keeps track of everyone’s bank account, it means it’s “centralized“; that is, only one party has access to it, and no one else can view it. With Bitcoin, this ledger is “decentralized” since all the computers on the network have a copy of this ledger, and are even constantly updating it every time a new transaction is made. So if anyone wishes harm to the system, they will have to take down every computer on the blockchain network.

    Simply put, it means that every Bitcoin in existence today has a track record that is known by everyone else on the network and can, therefore, not be changed, since changing it on one computer will not affect the ledger on other computers on the network. If you wish to learn more about Bitcoin, this article will help.

    The Benefits of Using Bitcoin in the UK

    Often referred to as the Internet of Money, Bitcoin’s decentralization means that the currency is not dependent on any single entity that can manipulate it.

    • Bitcoin Gives You Complete Autonomy: Only you can access your Bitcoin account, and no foreign body – such as a bank or government – can alter, freeze, or monitor your account.
    • Almost Impenetrable Security Checks: Due to operating on blockchain networks, Bitcoin is highly secure and its ledger is considered immutable.
    • Decentralized: Since no one controls Bitcoin, it is resistant to monopoly and corruption and can be relied on better.
    • More Platforms Accept Bitcoin than Before: With more and more people buying Bitcoin on Bitcoin exchanges, it is becoming a popular payment option in many places.

    The Drawbacks of Using Bitcoin in the UK

    • Illicit purchases with Bitcoin transactions and illegal trade can occur under the anonymity of a Bitcoin wallet address, which the government cannot monitor and control.
    • Volatility is another drawback of cryptocurrency transactions. Bitcoin has seen its recent ups and downs in value and has been highly inconsistent in its exchange rate. Thus, when you invest in Bitcoin, keep in mind there is a real risk of losing your money.
    • Even though the government does not monitor the currency, you must still report your annual gains in Bitcoin funds in your tax report to the UK government, called capital gains tax.
    • Once you lose your private keys, you lose all your Bitcoin in the crypto wallet. So even though it’s highly secure, any data loss can be detrimental to your finances.
    • No revocation is possible in transactions. Once you send your money, either by accident or you change your mind about the transaction later, there is no turning back.

    How Do I Purchase Bitcoin in the UK

    Buying Bitcoin in the UK is relatively simple but there are some important things to keep in mind. Let us direct you step by step to give you straightforward guidelines on how to legally buy Bitcoin in the UK.

    Set up Your Bank Account

    Many banks are skeptical about crypto exchanges and will reject your credit or debit card payment to purchase Bitcoin in the UK. So we suggest you make an intermediary account with Revolut, Monzo, or Starling Bank.

    These banks can act as arbitrators between your primary bank and the crypto exchanges from where you will buy Bitcoin. Additionally, your bank transfers will only appear like you have wired money into a savings account rather than a crypto wallet. Thus, we advise you to use Coinbase to convert your GBP into BTC.

    Pick a Crypto Wallet

    While there are many options for a Bitcoin wallet, like eToro, Uphold, or Coinbase, we will only focus on and suggest Coinbase. We recommend the Coinbase wallet because it is quite simple to use. We assume you are here to learn about Bitcoin and are relatively new to it. So Coinbase seems to be a good choice for beginner crypto traders.

    Furthermore, Coinbase is based in the US, and the US has the highest regulations when it comes to crypto exchanges and transactions. Therefore, it is more trustworthy and reputable for people looking at it from an angle of security concerns.

    Sign Up on Coinbase or Any Other Cryptocurrency Exchange Wallet

    Head over to the official website of Coinbase or whichever exchange you have chosen and sign up on the website by entering your details. You will have to provide documentation to complete the sign-up process. This is done to scrutinize who is buying Bitcoin from the exchange and is called KYC – Know Your Customer.

    Transfer GBP to Your Wallet

    Once you have signed up, you should be able to buy Bitcoin via your bank. Go to your account settings and click on payment method. You can choose from a credit or debit card, but we suggest you use a bank transfer.

    After picking your payment method, you can transfer money from your bank account to your wallet. The process varies slightly from wallet to wallet, but generally, you would need to click on “Add Cash.” On the next page, fill in the required information to complete payment.

    Transferring funds will only take a few seconds to minutes, and you will be good to go. You can see the money present in your wallet when you log in.

    Converting Your GBP into BTC

    On the main page, you will be able to trade Bitcoin for the funds present in your account. To do this, click on the “Bitcoin” option, and go through the buying process. You may notice a small fee to be charged for buying Bitcoin from the exchange.

    Every crypto exchange has its own rates at which it will charge you for buying Bitcoin in the UK. The rates for Coinbase Pro are one of the most reasonable, and signing up and using it as a trading account is very easy. Those who wish to invest in Bitcoin, but are new to the Bitcoin world can even use it as a safe learning tool.

    This whole process will take very little time as the financial markets from where Bitcoin is bought are readily supplied with the currency. Congratulations on finally purchasing Bitcoin in the UK!

    Start Using your Bitcoin in the UK!

    Now that you have finally purchased your Bitcoin, we will discuss some useful ways you can use your Bitcoin in the UK. You can do many things with it, from complex investment plans to using Bitcoin like plain old money!

    What Can I Do with My Bitcoin Holdings?

    holding bitcoin

    Since you now have quite a grasp on the Bitcoin blockchain, let us address the possible ways you can make use of your newly acquired crypto assets.

    Inexpensive, Safe, and Swift Money Transfers

    A UK bank transfer would cost you a substantial sum in “transfer fees” when you transfer money to anyone outside your bank. Not only is this unfair, but a burden on users. You can bypass these hefty fees by using Bitcoin, though there are certainly other cryptocurrencies which have even lower fees than the current top dog crypto.

    With Bitcoin, you can evade all the extra transfer fees, while also benefitting from the luxury of fast and highly secure payments.

    Interest on Your Bitcoin

    Just like you earn money when you deposit funds in your bank due to interest, you can do the same with your Bitcoin. Several platforms offer to take and keep your Bitcoin for a specified duration of time with the promise of a fixed return. This is potentially a good way of earning for people who do not have the time or expertise to actively trade Bitcoin. Some of these well-known platforms include:

    Aqru: As of 2023, this platform is perhaps the best one out there since it allows you to make profits on your holdings daily. This is excellent for the growth of your money and minimizes the margin for error. The platform also acts like other crypto exchanges, so even if you do not own Bitcoin already, you can deposit funds in your default currency, like GBP, USD, CAD, etc.

    Nexo: Here, you can earn interest on your Bitcoin, up to an APY of 8%. However, this platform is notable for its high interest in other stable cryptocurrencies as well. But due to Bitcoin’s general price stability, it’s an excellent place to invest in Bitcoin.

    Crypto.com: Known for more than just being a Bitcoin investment platform, crypto.com has an extensive portfolio regarding what you can do with your Bitcoin. While interest in Bitcoin can go up to an APY of 6%, it only pays you back after three months. The platform gives you accessibility to many more things, like an NFT marketplace, credit cards, DeFi Wallet, and crypto loans.

    BlockFi: Not as popular or lucrative as other platforms on this list, but it’s still an option for people who want to keep things flexible.

    Please note that this is not investment advice; it’s just for knowledge and understanding purposes. Several of these platforms have gone bankrupt in the past and lost their clients’ money. And since no regulatory bodies are monitoring them, some risk is still involved.

    Fund Your Finances Without Intervention

    All it takes is some fraudulent case or getting involved with the wrong type of people to get your bank and finances frozen. Your finances are constantly monitored and privacy is somewhat negated in the regular banking system.

    With Bitcoin, no one can monitor your activity, but most importantly, no authority can ever freeze your Bitcoin Wallet. So you can be sure of the safety of your assets and freely use your investment funds where needed.

    Private Transactions

    Generally speaking, any transaction you make would be closely scrutinized in the traditional financial system, especially those involving large sums. Not only will you be charged a hefty fee for that transfer, but your privacy also stands at risk of breach. Bitcoin transactions, on the other hand, can be used in this situation to counter any privacy-related concerns you may have, as no other body will be able to track your financial movements.

    Travel the world!

    With the rise of Bitcoin, some airlines have started to accept it and are now letting people buy tickets with Bitcoin. CheapAir and Destinia are among those who accept Bitcoin as a valid payment option. On top of that, you can pay for your hotel, essentials, traveling, and luxuries with Bitcoin. Bitcoin might be the only thing you need when you go on vacation!

    Bitcoin Luxury Marketplace

    De Louvois is where the rich Bitcoin holders can head to cash out their investment in Bitcoin. The platform offers to sell luxury items such as expensive cars, artworks, real estate, jewelry, and much more.

    Invest in Bitcoin UK

    Being one of the most lucrative new sectors, Bitcoin investment is a popular emerging asset class for trading and earning profits. The crypto market is staggering, and its profit margins are phenomenal. While it takes a lot of experience to start making money off your Bitcoin investment consistently, the process is quite simple, and anyone can learn it with some practice and time.

    Coinbase Pro is one of the most popular platforms that lets users invest in Bitcoin. It allows users to visualize the market capitalization and make sound decisions based on valid charts of the cryptocurrency exchange rates.

    The minimum Bitcoin investment can be quite low, and most platforms permit you to exchange 5-10 pounds in a single exchange. However, whatever you do will come at risk as many people have lost thousands of pounds in their investments due to miscalculations, overleveraging or overestimations.

    We suggest you consider taking professional investment advice from people with a history and knowledge of blockchain technology, which can, to some degree, predict Bitcoin’s future. This will help ensure that you do not lose your crypto holdings in some insane investment scheme.

    Although the UK is no longer a part of the EU, the changes in its policies dealing with cryptocurrency investments are unclear. There are some services still available for investors. The EU investor protection allows you to sustain some damage in case things go D-Day, however, they are not going to ever compensate your losses entirely.

    What are Crypto Exchanges?

    When you go to another country, you visit a bank to convert your local or default currency to the one accepted there. A crypto exchange works exactly like this. They function as a medium of exchange for cryptocurrencies and fiat currencies.

    Generally speaking, when you look at a crypto exchange, you should examine its exchange rates, where it is based, how its business activity takes place, whether it is secure, whether it has any history of fraudulent activity, or is under any legal investigations. These are some questions you must know the answers to if you wish to use a crypto exchange to buy Bitcoin in the UK.

    Most of these exchanges will accept your credit and debit cards as payment methods. Every exchange works a little differently and has its own features. These platforms are categorized into three types, centralized, decentralized, and hybrid.

    1. Centralized crypto exchanges are those that involve a third-party service provider. While the whole idea of cryptocurrency was to give users a direct and third-party-free experience, centralized exchanges work because they are more reliable. Some centralized crypto exchanges include Kraken, Coinbase, and Gemini.

    2. A decentralized crypto exchange is the entire opposite of a centralized one. These platforms operate on a peer-to-peer crypto exchange basis. While these are not always as reliable and swift as a centralized platform, they are still popular and somewhat follow Bitcoin’s ideology, keeping it anonymous. You will only be tracked as far as your debit card goes, and your Bitcoin purchase will be totally anonymous. UniSwap, PancakeSwap, and Kyber are among many to offer this type of service.

    3. A hybrid crypto exchange works in both ways. They are like a merger between the centralized and decentralized platforms and users can adopt either method. Bitfloor and Poloniex are examples of this type of exchange.

    While in the past, they were subject to controversy due to their involvement in money laundering, now they are regulated and are NOT a tool for people to evade paying taxes. They must obtain a license under the EU Payment Services Directive and E-Money Directive to function legally.

    How to Sell Bitcoin

    After you buy Bitcoin, you may expect it to grow in value. Once that happens, you might opt for selling it for a profit. Here’s how you can sell your Bitcoin in different ways.

    Sell Bitcoin for other cryptocurrencies: Many wallets allow you to sell Bitcoin for other cryptocurrencies. If you wish to invest in other cryptocurrencies, you check your wallet and see if it provides the feature of exchanging cryptocurrencies.

    Use a Bitcoin ATM: Like a regular ATM, you can cash out Bitcoin here and convert your Bitcoin into regular money instead of selling it online. However, there are some drawbacks, like the high transaction fees or the controversy regarding their existence.

    Use a crypto exchange: Just like you bought Bitcoin, you can also sell it. The cryptocurrency exchanges you used to buy Bitcoin in the first place also serve as the platforms to sell it. This is the most widely-used method of all to cash out profits from the sale of Bitcoin.

    FAQ

    Most frequent questions and answers

    There are many options to choose from when purchasing a wallet for your digital currencies. The best option, we think, is Coinbase Pro or Coinbase. This is because Coinbase is now the most straightforward wallet to use and has many features. Plus, the low fees for Coinbase Pro are a significant positive point if you are looking to make recurring purchases. Besides these two, you have many other reliable options like eToro or Uphold.

    Many options are available if you wish to use a mobile app to buy Bitcoin, including Robinhood, eToro, and Coinbase. These apps allow you to buy Bitcoin anonymously and trade them on the go! You do not need to be plugged in to work on these apps; you can work from anywhere.

    Yes! Bitcoin UK is one of the safest payment methods out there, and it is 100% legal. Although there are some aspects of Bitcoin that you need to be cautious of, besides that, everything is super legal. The only real issue many people may face is when they fail to report their capital gains tax. Your Bitcoin investment is not a reason for you to evade taxes. So, Bitcoin is 100% legal, as long as you pay capital gains tax.

    Yes, there are some Bitcoin ATMs in the UK. And although they are suspected to be controversial and have faced some issues in the past, there are still many functional Bitcoin ATMs in the UK. However, their numbers are not nearly as much and, thus, are not a viable source to cash out your crypto holdings.

    Beginners can sign up on a crypto wallet, find an exchange, and use their debit card to buy Bitcoin. The steps are straightforward and self-explanatory, and anyone with access to internet banking and a smartphone or PC can buy Bitcoin or any other crypto assets this way.

    A cryptocurrency exchange that is legal and licensed in the UK is easy to find. There are many of them out there and are easy to use. These include Kraken, Coinbase, Gemini, UniSwap, PancakeSwap, and Kyber. The procedure to buy Bitcoin is also simple; anyone with an internet connection can do that.

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    Skrumble.com provides all its content for informational purposes only, and this should not be taken as financial advice to buy, trade, or sell any investment instruments or products, including but not limited to cryptocurrencies, or use any specific exchange. Please do not use this website as investment advice, financial advice, or legal advice, and each individual’s needs may vary from that of the author. Investing in financial instruments, including cryptocurrencies, carries a high risk and is not suitable for all investors. It is possible to lose the entire initial investment, so do not invest what you cannot afford to lose. We strongly advise conducting your own research before making any investment decisions. This post includes affiliate links with our partners who may compensate us.

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