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How to Invest in Bitcoin in the UK 2024

Tobi Opeyemi Amure
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How to invest in Bitcoin UK

In a nutshell, the easiest way to invest in Bitcoin in the UK is to buy it online from a crypto exchange, such as eToro, Coinbase, or Uphold. Crypto exchanges make it easy to buy and sell Bitcoin directly from your smartphone, tablet, or computer.

I remember when I first bought Bitcoin, it was overwhelming and I felt out of my depth.

If you’re feeling this way or you’re looking for where to buy Bitcoin in the UK, this guide is for you.

I will walk you through the process step-by-step, ensuring you can securely purchase this digital currency with confidence.

I’ll cover key aspects like selecting the right exchange, payment methods, and security precautions.

This article was reviewed by Tobi Opeyemi Amure, a cryptocurrency expert and writer at Investopedia and Investing.com.

Quick Steps to Invest in Bitcoin in the UK for Beginners

Here’s a quick step-by-step guide if you are short on time:

  1. Select a cryptocurrency platform: First, identify the platform where you’ll make your purchase. Evaluate aspects like user experience, transaction fees, features, compliance with regulations, and overall security. I recommend eToro.
  2. Register for an account: Navigate to your chosen platform’s website to initiate the account setup. This is a brief process—simply provide some basic personal information and confirm your identity to proceed.
  3. Determine your investment size: Decide on the amount of BTC you wish to buy. Once you have a specific amount in mind, go ahead to the next phase.
  4. Add funds to your account: Locate the ‘Deposit Funds’ option on your chosen platform. Choose your favoured payment technique and finalise the deposit.
  5. Buy Bitcoin: Type ‘BTC’ into the search field at the upper part of your screen. When it shows up, hit ‘Trade’, input your desired purchase amount, and then click on ‘Open Trade’ to finalise the transaction.
Top pick
eToro - Best place to buy crypto

eToro is trusted by over 30 million users worldwide. It's the best place to buy crypto in the UK due to its cold storage, innovative trading features, user-friendly GBP deposit options, and industry-leading fees.

Don’t invest unless you’re prepared to lose all the money you invest.

How to Invest in Bitcoin UK – Step-by-Step Guide

In case you need more detail, here’s a more comprehensive step-by-step guide on how to invest in Bitcoin in the UK:

1. Register with a cryptocurrency exchange

Choosing an Exchange: Select an exchange that is known for its security, ease of use, and Bitcoin availability. Consider factors like transaction fees, user reviews, and support services. I recommend eToro.

I’ve done a lot of testing on different exchanges, you can see my guide to the best crypto exchanges in the UK here.

Creating an Account: Go to the chosen exchange’s website or app, and initiate the sign-up process.

Verification Process: Complete the necessary identity verification, typically requiring personal details and a government-issued ID, to comply with regulatory standards.

Securing Your Account: Enable two-factor authentication (2FA) for additional security, linking it with your phone number or an authenticator app.

2. Deposit GBP into your newly created account

Linking Payment Method: Connect a preferred payment method, such as a bank account or credit/debit card, to your exchange account.

Making a Deposit: Select the deposit option, choose GBP, enter the desired amount, and confirm. Be mindful of any transaction fees.

Transaction Processing: Await the processing of your deposit, which may vary in time based on the payment method and bank policies.

3. Conduct thorough research on Bitcoin

Understanding Bitcoin: Learn about Bitcoin’s history, technology, market trends, and how it differs from other cryptocurrencies.

Market Analysis: Keep up-to-date with current market conditions, news, and analyses specific to Bitcoin.

Risk Assessment: Evaluate your risk tolerance, especially considering Bitcoin’s volatility, to make informed investment decisions.

4. Purchase Bitcoin

Navigating the Exchange: Familiarise yourself with the platform’s trading interface, focusing on Bitcoin.

Executing a Purchase: Choose Bitcoin, decide on the investment amount, check the current market price, and be aware of any transaction fees.

Finalising the Transaction: Confirm your purchase and monitor your account for the successful addition of Bitcoin.

5. Set up a secure Bitcoin wallet

Choosing a Wallet: Decide between a hardware wallet for heightened security or a software wallet for easier access. Ensure it supports Bitcoin.

Creating a Wallet: Follow the steps provided by the wallet provider, which may involve downloading software or acquiring a hardware device.

Wallet Security: Protect your wallet with a strong password, securely store the recovery phrase, and utilise any additional security features offered.

You can see my guide on the best crypto wallets in the UK here to help you with this step.

6. Store your Bitcoin securely

Evaluating Storage Options: Weigh the pros and cons of storing Bitcoin on the exchange versus transferring it to your private wallet.

Transferring to a Wallet: If opting for a wallet, generate a receiving address from your wallet and transfer your Bitcoin from the exchange.

Regular Monitoring and Management: Continuously monitor your Bitcoin investment and stay informed about market trends and security best practices.

If you plan on using or trading your Bitcoin soon, and it’s a small amount, you might be fine leaving it on the exchange. However, I recommend moving it into a more secure hardware wallet.

What Is Bitcoin?

Before diving into what exactly Bitcoin is, here are some interesting statistics that highlight its growth.

  • As of 2023, nearly 4.97 million people in the UK hold some form of crypto asset, which is nearly 10% of the population1.
  • The revenue in the cryptocurrency market in the UK is projected to reach US$1.89bn in 2023, with an annual growth rate of 18.84%2.
  • Almost 500 businesses in the UK accept cryptocurrency as a payment method3.

As you can see, crypto and Bitcoin are gaining traction in the UK and reshaping the financial scene daily4, so what exactly is it?

Bitcoin is a digital currency that operates on a decentralised network called the blockchain.

It was created in 2009 by an anonymous person or group of people using the pseudonym Satoshi Nakamoto.

Bitcoin is not controlled by any central authority, such as a government or financial institution. Instead, it relies on cryptographic technology to secure transactions and regulate the creation of new units.

Bitcoin can be used for various purposes, including online purchases, investments, and remittances. Its unique features include limited supply, transparency, and the potential for anonymity in transactions.

What Is the Bitcoin Blockchain?

The Bitcoin blockchain is a distributed and decentralised ledger that serves as the underlying technology for the Bitcoin network. It can be thought of as a digital database that records and stores all transactions made with Bitcoin.

Unlike traditional financial systems that rely on a central authority, the Bitcoin blockchain operates through a network of computers, called nodes, that work together to validate and confirm transactions.

Each transaction is bundled into a block and added to a chain of previous blocks, forming a chronological and immutable record of all Bitcoin transactions.

The blockchain ensures the integrity and security of the Bitcoin network by using advanced cryptographic techniques.

Each block contains a unique identifier, called a hash, which is generated based on the data within the block and the hash of the previous block. This interlinking of blocks makes it extremely difficult to alter past transactions, providing transparency and tamper resistance.

The decentralised nature of the Bitcoin blockchain means that no single entity has control over the entire network. Nodes across the world maintain copies of the blockchain and participate in the process of verifying and validating transactions, thereby ensuring the network’s security and reliability.

Overall, the Bitcoin blockchain is a fundamental component of the Bitcoin network, facilitating secure and transparent peer-to-peer transactions without the need for intermediaries.

Commonly Asked Questions About Bitcoin

Is Bitcoin safe?

The safety of Bitcoin depends on various factors and considerations.

Here are some key points to keep in mind:

  1. Blockchain Security: Bitcoin’s underlying technology, the blockchain, provides a high level of security. Its decentralised nature, cryptographic algorithms, and consensus mechanism make it difficult for malicious actors to tamper with transactions or manipulate the system.
  2. User Responsibility: As a user, you have a crucial role in ensuring the safety of your Bitcoin. This involves implementing proper security measures, such as using strong passwords, enabling two-factor authentication, and keeping your private keys secure. Be cautious of phishing attempts, fraudulent websites, and untrusted third-party services.
  3. Price Volatility: Bitcoin is known for its price volatility. Its value can fluctuate significantly in short periods, which can result in potential gains or losses. Understanding and accepting this volatility is essential for any Bitcoin investor.
  4. Regulatory Environment: The regulatory landscape for cryptocurrencies, including Bitcoin, varies across countries. Some governments have established regulatory frameworks to provide consumer protection and combat illicit activities. Staying informed about the legal and regulatory aspects of your jurisdiction is important for compliance and safety.
  5. Market Risks: Like any investment, Bitcoin carries market risks. The value of Bitcoin can be influenced by factors such as market demand, economic events, government regulations, and investor sentiment. It’s advisable to conduct thorough research, diversify your investment portfolio, and consider your risk tolerance before investing in Bitcoin.

While Bitcoin offers unique benefits and has gained significant popularity, it’s crucial to approach it with caution and be aware of the potential risks involved.

Educate yourself, follow best security practices, and make informed decisions to enhance the safety of your Bitcoin holdings.

What makes Bitcoin unique?

Bitcoin’s uniqueness lies in its decentralised nature, limited supply of 21 million coins, utilisation of blockchain technology for transparency and security, cryptographic algorithms for transaction verification, borderless transactions, and potential for financial inclusion.

Yes, buying Bitcoin is legal in the UK. The UK government recognises cryptocurrencies as a form of property, subject to taxation and regulatory guidelines.

However, it’s important to note that regulatory frameworks and tax obligations may apply, and it’s advisable to comply with the relevant laws and seek professional advice if needed.

How do beginners invest in Bitcoin?

For beginners looking to invest in Bitcoin, here are a few simplified steps:

  1. Set up a digital wallet to securely store your Bitcoin
  2. Choose a reputable cryptocurrency exchange and create an account
  3. Complete any required verification process
  4. Link your preferred payment method, such as a bank account or debit/credit card
  5. Deposit funds into your exchange account
  6. Select the amount of Bitcoin you want to buy and place your order
  7. Transfer the purchased Bitcoin to your digital wallet for enhanced security

Remember to research and understand the risks associated with Bitcoin investing, and only invest what you can afford to lose.

What is the minimum amount I can invest in Bitcoin?

The minimum amount you can invest in Bitcoin can vary depending on several factors, including the platform you use and the current price of Bitcoin.

While there is technically no fixed minimum investment amount for Bitcoin, some exchanges may have their own minimum requirements or trading limits.

In practice, you can generally invest any amount, even a fraction of a Bitcoin. Bitcoin is divisible up to eight decimal places, with the smallest unit being called a “Satoshi,” representing 0.00000001 Bitcoin. This divisibility allows for flexibility in investment amounts, accommodating both small and large investors.

It’s essential to note that transaction fees, both for purchasing Bitcoin and transferring it to your digital wallet, can impact the overall cost of your investment. Additionally, consider any minimum deposit requirements set by the exchange or platform you choose to use.

To determine the specific minimum investment amount, it is recommended to review the requirements and fees of the specific platform you plan to use for buying Bitcoin.

Is Bitcoin a good investment?

Deciding whether investing in Bitcoin is a good idea depends on various factors, including your risk tolerance, investment goals, and understanding of the cryptocurrency market.

Here are some points to consider:

  1. Volatility: Bitcoin is known for its price volatility, which can lead to significant fluctuations in short periods. This volatility can present both opportunities for profit and risks of potential losses.
  2. Potential Returns: Bitcoin has experienced substantial growth since its inception, attracting investors seeking high potential returns. However, past performance is not indicative of future results, and the cryptocurrency market can be unpredictable.
  3. Diversification: Bitcoin can be a part of a diversified investment portfolio. By allocating a small portion of your overall investments to Bitcoin or other cryptocurrencies, you may potentially benefit from diversification.
  4. Market Awareness: Staying informed about market trends, regulatory developments, and technological advancements in the cryptocurrency space is essential for making informed investment decisions.
  5. Risks and Security: Investing in Bitcoin carries risks, including cybersecurity threats, regulatory changes, and market manipulation. It’s important to understand these risks and take appropriate measures to secure your investments.

Ultimately, investing in Bitcoin involves a certain level of risk and uncertainty.

I recommend conducting thorough research, consulting with financial advisors, and considering your financial situation and risk tolerance before making any investment decisions.

Is Bitcoin taxed in the UK?

Yes, Bitcoin and other cryptocurrencies are subject to taxation in the UK. The UK tax authority, HM Revenue & Customs (HMRC), treats cryptocurrencies like Bitcoin as taxable assets rather than currencies.

The tax treatment can vary depending on the specific activities involving Bitcoin, such as buying, selling, mining, or receiving it as payment.

Here are some key points to consider regarding Bitcoin taxation in the UK:

  1. Capital Gains Tax: When you sell or dispose of Bitcoin, any capital gains made may be subject to Capital Gains Tax. The tax is calculated based on the difference between the acquisition cost and the disposal proceeds.
  2. Income Tax: If you receive Bitcoin as payment for goods or services or receive mining rewards, it may be subject to Income Tax. The value of Bitcoin received should be converted to the equivalent fiat currency value at the time of receipt for tax purposes.
  3. Trading and Speculative Activity: If you are actively trading Bitcoin as a business or engaging in speculative activities, profits and losses from such activities may be subject to Income Tax or Corporation Tax.
  4. Record-Keeping and Reporting: It’s important to maintain accurate records of Bitcoin transactions, including dates, values, and any associated costs. These records will be crucial for calculating tax liabilities and reporting them to HMRC.
  5. Professional Advice: Due to the complex nature of cryptocurrency taxation, it’s advisable to consult with a qualified tax professional or accountant who is knowledgeable in cryptocurrencies to ensure compliance with tax regulations.

Tax laws and regulations are subject to change, and it’s recommended to stay updated with the latest guidance from HMRC or seek professional advice to understand your specific tax obligations related to Bitcoin in the UK.

Final Thoughts

All things considered, if you’re just starting with Bitcoin, I recommend eToro for buying Bitcoin in the UK.

With low fees and an FCA-regulated status, eToro is one of the safest and easiest options for beginners as well as more experienced investors.

However, it’s important to research all the benefits and drawbacks of buying Bitcoin as well as follow the latest news.

FAQs

Can you buy less than 1 Bitcoin?

Yes, you can buy less than 1 Bitcoin with fractional trading. This enables you to purchase fractional parts of a whole coin.

How to buy Bitcoin for beginners UK?

For beginners in the UK looking to buy Bitcoin, start by choosing a safe exchange. These platforms are user-friendly and offer step-by-step guides on setting up an account, verifying your identity, and securing your wallet. Once registered, you can deposit funds using various payment methods and then proceed to purchase Bitcoin. Both platforms provide educational resources to help you understand the process and make informed decisions.

Can I legally buy Bitcoin in the UK?

Yes, it is legal to buy Bitcoin in the UK. Ensure you use a licenced exchange and comply with the platform’s identity verification procedures to buy Bitcoin legally.

How to buy Bitcoin UK with a debit card?

To buy Bitcoin in the UK with a debit card, choose a platfrom that accepts debit card payments, such as Coinbase or eToro. After creating an account and completing identity verification, go to the deposit section and select ‘Debit Card’ as your payment method to add funds in GBP. Once your account is funded, navigate to the Bitcoin trading page, enter the amount you wish to purchase, and complete the transaction.

How to buy Bitcoin UK PayPal?

To buy Bitcoin in the UK using PayPal, you can use platforms like Coinbase that support PayPal as a payment method. After creating an account and going through identity verification, navigate to the deposit funds section and choose PayPal as your funding option. Once your account is funded, go to the Bitcoin trading page, specify the amount you’d like to buy, and finalise the purchase.

What is a good amount to start with in Bitcoin?

A “good amount” to start with in Bitcoin varies depending on individual financial circumstances, risk tolerance, and investment goals. It’s often recommended to start with an amount you can afford to lose, especially given the volatile nature of cryptocurrency markets. Some investors choose to start with a small, one-time investment or a periodic buying strategy to spread out their exposure.

What is the safest way to invest in Bitcoin UK?

The safest way to invest in Bitcoin in the UK is to use a reputable, regulated exchange for buying and storing your Bitcoin. Implement strong security measures like two-factor authentication and consider transferring your Bitcoin to a hardware wallet for added security. Always perform your due diligence and possibly consult with a financial advisor to tailor your investment to your risk profile.

Can you cash out Bitcoin for real money?

Yes, you can cash out Bitcoin for real money. This is typically done through a cryptocurrency platform where you can sell your Bitcoin for fiat currency, such as US dollars or British pounds. Once sold, you can withdraw the funds to your bank account. Ensure to check the withdrawal methods and any associated fees on the platform you choose to use.

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Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as a basis for investment decisions.

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Sources:

  1. https://www.fca.org.uk/publication/research-notes/research-note-cryptoasset-consumer-research-2023-wave4.pdf ↩︎
  2. https://www.statista.com/outlook/dmo/fintech/digital-assets/cryptocurrencies/united-kingdom ↩︎
  3. https://uk.style.yahoo.com/most-popular-cryptocurrency-2021-uk-093057693.html ↩︎
  4. https://www.cam.ac.uk/research/news/study-highlights-growing-significance-of-cryptocurrencies ↩︎
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Will Fenton is the founder of Sterling Savvy. He is a personal finance expert and writes about trading, investing, budgeting, and other financial topics.

Along with his education in Economics & Finance, he has experience working in the financial services industry in London working for one of the UK’s leading financial companies, “a trustworthy and respected provider of news, education and market analysis for the everyday investor”.

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