If you are new to buying bitcoin and you want to do so in the UK, this might just be the article for you. Buying bitcoin is not something that is difficult as you can now easily buy it thanks to various exchanges that have been increasing. In this article, we will explore what are some steps you can take if you are interested in buying bitcoin in the UK.
Benefits of Buying Bitcoin in the UK
There are many reasons why someone would want to buy bitcoin in the UK. The main three are for speculation, hedging against inflation as well as hyberbitcoinization. Although there are many other cryptocurrencies that are also great for investment (like Ethereum), Bitcoin represents a large percentage of the entire market capitalization of the crypto market.
Speculation
Over the last decade, Bitcoin has been the fastest growing asset. Therefore, this speculative asset is bought by people all over the world, including many in the UK.
Hedging
Buying bitcoin can be said to be a hedge against the monetary policy of the Bank of England. This is because unlike the pound, Bitcoin value cannot be affected by inflation. This is because there is a fixed supply of bitcoin in circulation.
Hyperbitcoinization
A large number of investors in bitcoin believe that one day in the future, bitcoin will be the main global currency. This is known as hyperbitcoinization. Therefore, investing early in bitcoin is a smart move to make.
3 Steps to Buy Bitcoin in the UK
To get started, there are just three simple steps to be a bitcoin holder.
Step 1 – Get a bitcoin wallet
The very first step is to register for a UK bitcoin wallet so that you can store, receive and send out bitcoin. Wallets can be on your desktop, mobile device, or even on a physical hardware device.
Same as other crypto wallets, your bitcoin wallet will have both private key and public bitcoin address. The private key is what allows you to access your public bitcoin address and interface with the bitcoin network.
Put simply, the private key is likened to a pin which allows you to access your cryptocurrency wallet from anywhere. Whereas the public bitcoin address is used to send or receive bitcoin from other parties.
Mobile and Desktop Wallet (Software Wallet)
The good thing about getting a mobile or desktop wallet is that it is super accessible to users in this day and age. Most users typically carry their smartphones or laptops with them throughout the day, granting great accessibility. Furthermore, these wallets are free and really easy to set up.
To take it another step further, bitcoin mobile and desktop wallets allow you to send or receive bitcoin through just scanning a QR code. This provides ultimate convenience. The only drawback is that having your wallet on mobile and desktop means that it may not be secure enough for storing large amounts of bitcoin.
If you plan to store a substantial amount of bitcoin, it is not recommended to use a software wallet because there is a higher chance of getting hacked than a hardware one.
Physical Hardware Wallet
Hardware wallets are also known as cold storage. The good thing about this option is that hardware wallets are designed to protect the private key from virus and malware. This means that this is the most secure way for storing bitcoin.
Your hardware wallet will be able to connect to any Linux, Windows or Mac machine as an external device which makes it portable because you can use it anywhere in the world. However, this of course will not be free, and prices will vary. If you wish to hold large amounts of bitcoin, the physical hardware wallet is pretty much a necessity for security purposes.
Paper Wallet
Paper wallets are pretty much what they sound like. This is an offline wallet, which means it is protected from malware, virus and hackers. This way of storing bitcoin is completely physical meaning that it is a piece of paper which contains the private key and public address.
It will typically be printed in a QR code form. This means that you would need to take extra care and caution to protect the physical paper such as through laminating it or keeping it in a tamper-proof envelope. However, it also means that this is a very fragile option that could be seen as a hassle.
Step 2 – Buy Bitcoin
There are different ways to buy bitcoin in the UK. You can either choose to buy bitcoin from a formal UK crypto exchange, or you could choose a peer-to-peer platform. Another option is that you can even buy it through a bitcoin ATM.
Regular Exchanges
Buying bitcoin through regular exchanges is the most commonly used way to buy bitcoin. On these exchanges, an order book is used to match the buy and sell orders between users. Both buyer and seller will not know who the other party they are trading bitcoin with is.
This provides a certain level of privacy and anonymity to users. Hence, users who want to make larger purchases would typically opt for buying through exchanges.
Peer-to-Peer Exchanges
The peer-to-peer option allows you to buy bitcoin directly from the sellers. Through peer-to-peer dealers such as Coinfloor or Bitbargain, you can view the offers by different sellers and their different price orders. You can also specifically enter in the amount of bitcoin you need, and find matching offers available in the marketplace.
Once you have read the terms of the deal and agree to it, the seller will be given a time frame to accept or decline the trade. After your request is accepted, you will get the payment details of the seller whom you can then make payment to. Once the funds are transferred, and as soon as the seller confirms your payment, the bitcoin will be delivered into your wallet.
Using peer-to-peer bitcoin exchanges can provide a greater sense of trust. This is because you get to know a little more about the person you are trading with before getting into business with them.
Bitcoin ATM in UK
Another way you can buy bitcoin is through a bitcoin ATM. You can simply search for the nearest bitcoin ATM to you through Google Maps. There are currently 72 operating in the UK. You will find them all around London, and even as far as Ilford or Croydon.
To buy bitcoin by using this ATM, you will need to deposit cash, enter your wallet address then you will receive the bitcoins in your wallet just like that.
Step 3 – Secure your bitcoin
Once you have completed your purchase, the next important thing to do is to keep it secure. There are a couple of basic things you should do. Firstly, you should backup your private key. Create backup copies so that you have a contingency in the event of any unforeseen circumstances such as robbery or hard drive failure.
Secondly, you should never ever share your private key with anybody. This is equal to giving someone access to your bank account pin. Thirdly, for users of mobile or desktop wallets, make sure that your wallet is always up to date with the latest software. This will help to make sure that they are more secure.
Payment Methods When You Buy Bitcoin in the UK
The two main bitcoin payment methods are bank transfer and debit card in the UK. However, there are other ways of payment available to you as well which are through credit card, Apple Pay and others.
Bank transfer is highly recommended because we believe that it is the most efficient and easiest way to complete the payment. However, it is really a matter of your preference whether you intend to buy bitcoins using bank transfer or debit card in the end.
Credit Cards
Most banks actually do not authorize the use of credit cards for buying Bitcoin. However, mostly credit card providers that focus on offering credit are flexible to provide the service.
For those who want to use their credit card as their payment method, you will simply need to find a bitcoin exchange which accepts this method, such as Coinmama or Coinbase. Then, simply create an account and connect your credit card to your account. This will be followed by transferring your bitcoin into a secure wallet.
You may want to take note that fees on credit cards are considerably higher than other payment options, averaging at about 3.75%.
Debit Cards
For those who prefer using debit cards for transactions, the process is pretty much the same to that of credit cards. You would have to open an account with the exchange of your choice, then follow the same process but select the debit card option as your preference instead.
Typically, the fees on using debit cards are lower compared to that of credit cards. However, you would want to take note on whether your bank allows bitcoin transactions to be made via debit cards. This is because of precautions that may be adopted by the bank.
Bank Transfer
Through bank transfer, you can pay for bitcoin directly from your bank account. This makes making payments fast and efficient. There are different types of bank transfers. These are SWIFT and SEPA.
SWIFT is the global standard for making payment while SEPA is the European standard for bank transfers that are denominated in Euro. These transfers are typically the most cost effective way of transferring money which is a plus point. In fact, they are commonly the only method available for cryptocurrency transactions.
Most Popular Exchanges to Buy Bitcoin in the UK
As mentioned, it has been made increasingly easy to buy Bitcoin in the UK these days thanks to the many exchanges that have been launched. In this section of the article, we will explore the most popular exchanges for you to buy bitcoin.
Coinbase
Coinbase is headquartered in San Francisco, California. However, it is one of the most popular exchanges for digital currency even in the UK. This is because Coinbase was the first major bitcoin exchange that was granted the e-money license.
Back then, this was a huge deal because no other major exchanges were offering GBP deposits through Faster Payments. Therefore, you can now send GBP to Coinbase and have it credited within minutes in the UK. This is considered to be fast and efficient service.
Besides, Coinbase is definitely one of the cheapest and safest options for you to buy bitcoin in the UK by using bank transfer. Anyone can buy bitcoin through Coinbase at the best possible rate, as well as without incurring any high fees. Coinbase will charge a flat 3.99% fee for all purchases done through debit cards which is among the lowest for US and European customers.
The only drawback is probably that the platform can come off a little intimidating, especially for those new to cryptocurrency exchanges. However, there must be a good reason Coinbase has won the trust of over 30 million users, so we would not let that stop us from trying it out.
How To Buy Bitcoin on Coinbase
Start off by visiting the official website at coinbase.com then selecting “Get started” on the top right of the page. You will then see a signup form for you to fill up your name, email address, password of your choice and country.
Once you have created your account, you can proceed to click on your name at the top right corner of the page. This will reveal a drop-down menu by which you should click on “Settings” then “Payment Methods” so that you can add a payment method of your choice. The options include PayPal, Bank Account, Credit/Debit Card.
Once you have added the details of your chosen payment method, you will see a confirmation notification. Then, you can proceed to the buy page to “Buy Bitcoin Instantly”. You just need to enter the amount of bitcoin you want to purchase, click on the button and you will find that your coins will be delivered to your wallet instantly!
1. Luno
While it was founded in South Africa, Luno is headquartered in London, United Kingdom. Therefore, it also has a strong presence in South Africa, Singapore, Malaysia, Nigeria, and Indonesia. Luno has been in the cryptocurrency industry since 2013, having transacted over 14 billion dollars on their exchange, serving customers across 40 countries.
Luno takes their security very seriously. The security of Luno is reliable as the majority of the bitcoin funds of customers are stored in “deep freeze” storage, according to Luno. Deep freeze storage is what happens where multi signature wallets with private keys are kept in different bank vaults. Furthermore, the wallets are kept through PGP encryption. Regular financial and security audits are also carried out to make sure that the funds are always safe and secure.
How To Buy Bitcoin on Luno
Step 1 is to sign up. Luno is available on Google Play, iOS as well as on the web. To buy Bitcoin with Luno, sign up for your free wallet from the portal of your choice and set up your profile. Step 2 is to deposit money. Simply choose which method of payment you want to use for adding money into your wallet. Step 3 is to buy Bitcoin by simply keying in the amount you want to purchase on the home page.
2. CEX.io
CEX.io is a UK-based bitcoin exchange in London. It is an established and trusted exchange that has been operating since 2013. The good points about CEX.io include its low trading fee of only 0.2% which is very attractive. Besides, CEX provides a great mobile app which is very user-friendly. The only drawback is its extensive verification process. Due to the requirement of much personal info, this can take up to 30 minutes to complete.
How To Buy Bitcoin on CEX.io
Whether you want to receive bitcoin instantly through placing a market order, or if you would like to place a limit order to wait for certain conditions before executing the order, CEX.io provides a simple solution for you. To start off, you will just need to select a pre-fixed package, or enter your custom amount of bitcoin that you would like to receive. Then, register on their platform and add your card to your account. This should take only 5 minutes after which you can proceed to make payment. It is as simple as that!
3. Bittylicious
Bittylicious is an option that is well-recommended in the United Kingdom. Although their prices may be considered higher because prices are set by brokers, a plus point is that Bittylicious does not charge additional fees for deposit, withdrawal and even trading. Furthermore, Bittylicious makes placing an order simple with their website looking like an order form.
How To Buy Bitcoin on Bittylicious
Step 1 is the verification process. Unless a proper sign up and verification is done, your limits will be greatly restricted. While you might be able to buy in small amounts without having a proper account registered, these will cost you more than normal. Therefore, we greatly recommend registering. Step 2 will be to fill in information regarding your potential purchase on the main Bittylicious page.
The amount of bitcoin you want to buy at any time will be limited by the Bittylicious algorithm. Therefore, through registering your email address and performing the requirements for validation, you will be able to buy more bitcoin. Lastly, you will be directed to make payment, after which you will be provided a confirmation and receive the bitcoin in your wallet typically within an hour.
4. Coinmama
Coinmama is a famous bitcoin exchange which has been around for seven years. Seven years is considered a pretty long time so that says something about the company. Overall, the services from Coinmama are friendly with the helpful customer support and ease of use. While a few cryptocurrency exchanges can seem confusing, especially to new crypto investors, this one is not complicated.
Coinmama specializes in allowing customers to make payments via debit and credit cards. However, due to the processing fees which follows credit card payments, customers will be charged a fee of 4.9-5.9%. On the bright side, high limits are offered by Coinmama where you will be able to buy up to 5000 USD worth of bitcoin each day.
How To Buy Bitcoin on Coinmama
Start by opening your account and verifying your email address. Then, you will need to verify your identity under “My Account” by filling up your personal details and adding documents such as your personal ID. Then, you can proceed to select your payment method. Options include Credit or Debit Card, SWIFT, SEPA (Europe only) or Faster Payments (UK only).
Once all that is sorted, you can finally visit the “Buy” page to purchase bitcoin! You will then be prompted to enter your Bitcoin wallet address. Bitcoins will be sent there upon payment completion.
5. QuickBitcoin
QuickBitcoin headquarters are in London as they cater to the users in the UK. They have a good reputation for the fast process of buying or selling bitcoin. Their tagline on the official website promotes that with QuickBitcoin, you can “buy cryptocurrency lightning fast in the UK”. This is because it is said that the average transaction time only takes less than 10 minutes to complete when instant UK bank transfers are used.
How To Buy Bitcoin in UK on QuickBitcoin
Overall, QuickBitcoin has received a ton of positive reviews for their efficiency and speed. Therefore, purchasing bitcoin on this platform is also made simple and fast. Namely, select the amount of bitcoin you want to purchase, fill and submit an order form, complete a bank transfer then receive your confirmation through a receipt. Lasty, discover that the bitcoins are already in your wallet.
Frequently Asked Questions (FAQ)
Q: Is it legal for me to buy bitcoin in the UK?
Yes, to buy bitcoins in the UK is completely legal.
Q: Do I need to pay tax for buying bitcoin in the United Kingdom?
No, you do not need to pay tax upon purchasing bitcoin in the UK. However, you may need to pay tax upon selling bitcoin.
With over 10 years of experience working as a financial analyst, Eric is highly aware of the potential of cryptocurrency, particularly Bitcoin, and the impact it will bring towards the global economy. He is committed to share everything he knows about crypto here at Crypto Digest News.