How to Invest in Bitcoin in the UK | Step-by-Step

While the prospect of investing in Bitcoin might appear overwhelming at first, it’s really not. With the right cryptocurrency exchange, a secure storage method, and a well-researched investment strategy, even those fresh on the scene can confidently navigate the world of Bitcoin investing. Below, we lay out a step-by-step approach for how to buy Bitcoin in the UK, the advantages and disadvantages of investing in this cryptocurrency, practical tips for successful investing, and recommendations on the best exchanges to use.

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What is Bitcoin?

Bitcoin (BTC) is a decentralized digital currency operating outside the oversight of banks and governments. Bitcoin is generated through mining, the process of verifying Bitcoin transactions and maintaining the complete historical record of these transactions in a distributed ledger or database, known as the blockchain.

Launched in 2009 by an anonymous developer or group of blockchain developers using the pseudonym Satoshi Nakamoto, Bitcoin is the first-ever cryptocurrency. 

While its creator envisioned it as a type of payment system meant to facilitate electronic payments “be sent directly from one party to another without going through a financial institution,” Bitcoin has morphed into an investment asset. Now, many investors perceive BTC as a store of value, which has led to it being colloquially termed “digital gold.”

Now, let’s explore the process of purchasing Bitcoin directly in detail.

How to buy Bitcoin in the UK: Step-by-step process

Here’s a step-by-step guide to buying Bitcoin in the UK through an online crypto exchange.  

Step 1: Choose a crypto exchange

Selecting a suitable crypto exchange is the first step to buying Bitcoin in the UK. Although numerous platforms are available, the right one will hinge on your investment strategy and needs. Here are some key factors to consider when assessing online trading platforms:

• Security: Ensure the exchange utilizes stringent security measures, such as two-factor authentication (2FA), secure warm and cold storage facilities, and SSL technology;
• Fees: Unlike several online brokers offering commission-free stock and ETF trading, cryptocurrency trading still involves fees for deposits, trades, and withdrawals. These fees can vary from 0% to 5% per transaction, depending on your payment method and the type of transaction;
• Supported cryptocurrencies: Make sure the exchange offers Bitcoin;
• User interface and experience: Choose an exchange with an intuitive, user-friendly interface, particularly if you’re new to crypto trading. At this point, consider the quality of customer service by going through user reviews and discussions on online forums;
• Regulatory compliance: Check if the exchange complies with the FCA regulations;
• Mobile app availability: If you enjoy trading while on the move, ensure the exchange provides a mobile app with all the necessary bells and whistles;
• Liquidity: Opt for an exchange with high liquidity, i.e., the ability to quickly turn your cash into coins and vice versa. To gauge liquidity, look at the trading volume of an exchange; a higher volume will generally signify better liquidity;
• Funding method: Verify the exchange accepts your preferred deposit method;
• Advanced financial products: Investors working with limited capital may find margin trading beneficial, as it can amplify purchasing power and potentially enhance earnings. However, it’s important to note that complex, high-risk financial instruments like CFDs may not be suitable for those with a conservative investment approach or a low tolerance for risk due to the leverage involved.

Where to buy Bitcoin in the UK?

Given Bitcoin’s immense popularity, it can be traded on nearly every exchange. However, for beginners, selecting a crypto exchange that combines ease of use with minimal fees and robust security measures is essential.

To securely buy Bitcoin in the UK, make sure to use an FCA-regulated exchange such as eToro, which offers:

• 1% fees for cryptocurrency;
• No account minimums;
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• Copy-trading: Ability to match the moves of top-performing traders.

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• eToro USA is registered with FINRA for securities trading.

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eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

Step 2: Create an account

Now that you’ve settled on a cryptocurrency exchange, it’s time to open an account. To finalize the registration process, you must undergo an identity verification procedure. You’ll typically be asked to provide proof of identity, e.g., a driving license or any other government-issued ID, and proof of address, such as a bank statement, electricity bill, or council tax bill. 

Step 3: Fund your account

You have to fund your account before you can buy Bitcoin. Various deposit methods will typically be available to you, including linking your bank account, using a debit, credit, or prepaid card, or utilizing third-party payment methods like PayPal.

Depending on the exchange and your chosen funding method, it can sometimes take a few days for the money to reach your account.

Step 4: Decide how much you want to invest

The amount you invest will depend on the price of the coin and the number of coins you aim to purchase. 

As the most established and expensive cryptocurrency, one Bitcoin will set you back tens of thousands of pounds. Fortunately, you don’t have to buy the whole coin. In fact, you can buy Bitcoin for less than ten pounds.

Cryptocurrency exchanges facilitate the purchase of any amount of cryptocurrency you desire. All you need to do is specify the cash value of your transaction, and the exchange will use the current market prices to calculate the equivalent amount of crypto.

The ability to buy a fraction of a Bitcoin means you don’t have to resort to low-priced coins to invest in cryptocurrency. Indeed, investing in low-priced cryptocurrencies tends to be riskier than investing in more established coins with solid business models and lengthy track records. 

Step 4: Execute your order

To execute your order, simply sign in to your account, enter the ticker BTC in the search bar, specify the cash amount you want to spend, and click buy. You can typically choose from two order types, including: 

1. Market order: An order to buy or sell an asset at the best current price available. When you click “Open Trade,” the order is executed immediately (depending on the market’s liquidity). Additionally, there is a sub-type of market order, out-of-hours order, which is placed when the market is closed and executed as soon as the market reopens;
2. Limit order: An order executed when the specified price is reached, allowing you to capitalize on market price fluctuations.

Step 5: Keep your Bitcoin safe

How you store your Bitcoin is primarily determined by your intended use. For example, if you plan to trade your Bitcoin, leaving them with the cryptocurrency exchange may be most practical, especially if you engage in day-or swing-trading strategies. 

Alternatively, you may opt for a cryptocurrency wallet if you anticipate spending it or want to store it for safekeeping. However, if you choose to take custody of your assets, it falls entirely upon you to protect them, i.e., keep track of your account details, seed phrases, etc., and careless handling could lead to the loss of your cryptocurrency.

In short, BTC can be stored in several ways, whether with online or offline storage, including: 

• Keep the crypto on the exchange: When you buy cryptocurrency, it’s generally stored in a crypto wallet associated with the exchange. If you’re not satisfied with the provider your exchange partners with or want to move it to a more secure location, you can transfer it off the exchange to a separate hot or cold wallet. This transfer may incur a small fee, depending on the exchange and the transfer amount;
• Hot wallets: These are online crypto wallets that run on internet-connected devices like tablets, computers, or phones. Hot wallets offer convenience but come with a higher risk of theft since they remain connected to the internet;
• Cold wallets: Cold crypto wallets are not connected to the internet, making them the most secure option for holding cryptocurrency. They are available as external devices, such as USB or hard drives. You need to be cautious with cold wallets: if you lose the associated key code or malfunctions, you may never recover your cryptocurrency. Although this can happen with hot wallets, certain custodians can help you regain access to your coins if you get locked out.

Step 6: Monitor your investment

It’s crucial to routinely evaluate and adjust your cryptocurrency portfolio to ensure it aligns with your investment objectives and risk tolerance. 

To make informed decisions about your investments and identify potential risks or opportunities, stay on top of news and advancements in the cryptocurrency and blockchain sector, as well as regulatory developments.

Social media platforms like Twitter, Reddit, and Medium are invaluable for staying up-to-date with the rapid developments in the cryptocurrency industry. On Reddit, you should join the relevant boards, and on Twitter, search for pertinent hashtags (like #BTC and #bitcoin) and follow informed commentators on the topic.

How to start investing in Bitcoin in the UK? 

Investors have several alternatives for gaining direct or indirect exposure to Bitcoin, including:

• Buying Bitcoin directly: You can buy Bitcoin directly through various providers, including crypto exchanges, online investment brokers, and money transfer services such as PayPal, Skrill, and Neteller;
• Bitcoin-focused funds: Bitcoin exchange-traded funds (ETFs) are pools of Bitcoin-related assets listed on traditional exchanges. Bitcoin ETFs allow investors to tap into the potential of Bitcoin without having to own or securely store it directly. Currently, Bitcoin ETFs contain Bitcoin futures contracts or the shares of companies and other ETFs exposed to cryptocurrency. Examples of Bitcoin ETFs include ProShares Bitcoin Strategy ETF (BITO), Grayscale Bitcoin Trust (GBTC), and ProShares Short Bitcoin Strategy ETF (BITI);
• Bitcoin derivative products: derivative instruments: Trading Bitcoin futures, options, CFDs, or other derivative products, allows investors to speculate on Bitcoin’s price fluctuations without having ownership of the underlying asset;
• Investing in cryptocurrency stocks: You can purchase shares in companies with substantial cryptocurrency or blockchain technology exposure. These stocks include well-known crypto exchanges, cryptocurrency miners, blockchain technology specialists, digital currency exchange and payment providers, and businesses with significant cryptocurrency holdings in their balance sheets. Examples include PayPal (NASDAQ: PYPL), Coinbase (COIN), Hut 8 Mining Corp. (NASDAQ: HUT), and Meta Platforms (NASDAQ: META);  
• Bitcoin mining: Bitcoin mining refers to the process of authenticating transactions on a blockchain by solving cryptographic puzzles, for which successful miners are awarded Bitcoin. However, it’s worth noting that Bitcoin mining is an expensive endeavor with no guaranteed outcomes. Indeed, to remain competitive in a space dominated by large mining corporations, you’ll need to invest in several high-priced machines, operate them 24/7, and handle hefty electricity bills. In fact, Bitcoin mining is estimated to have an energy consumption comparable to entire countries. 

Is Bitcoin a good investment?

The inherently high-risk nature of Bitcoin renders it an unsuitable asset class for numerous investors. Yet, for those who recognize the risks and can tolerate the volatility, Bitcoin might just be their kind of thrill. 

Ask yourself these questions before getting involved:

• Do I understand how Bitcoin works? Bitcoin and other cryptocurrencies are built upon complex technologies such as blockchain. It’s crucial to at least have a fundamental understanding of these systems before investing;
• What is my risk tolerance? Bitcoin’s price is notoriously volatile, often fluctuating by thousands of pounds within a single day. Not understanding your risk tolerance might see you succumb to panic in the face of market downturns, leading to impulsive decisions that could result in selling your investments at a loss;
• What is my investment goal? The motivations behind your cryptocurrency investment are crucial. Is it because you believe in the technology and anticipate great things for the future? Or were you swayed by the hype?
• Can I afford to lose this money? Before investing in cryptocurrency, it is advised to establish an emergency fund that can cover up to six months of expenses. This measure will save you from liquidating your assets at a loss in the face of an emergency. A good rule of thumb, too, is to invest only the money you can afford to lose. Remember, Bitcoin is a highly volatile asset, and there’s a risk of losing your entire investment;
• What are the legal and tax implications in my country? Be aware of the potential tax implications of cryptocurrency investing and ensure compliance with all applicable laws and regulations;
• What is my exit strategy? Determine beforehand when you intend to sell, whether at a specific price point or on a particular date. 

If these questions leave you uncertain, it’s likely unwise to proceed with investing. Should you opt to purchase Bitcoin anyway, at the minimum, ensure you’re not putting money you cannot afford to lose on the line. 

For those just starting their investing journey, it’s advisable to first gain proficiency in traditional investment vehicles like stocks and bonds before plunging into cryptocurrencies.

How to sell Bitcoin?

When you’re ready to sell your Bitcoin, you can set up a sell order via your exchange, similar to how you initially bought it. The majority of exchanges provide various order options, which means you have the flexibility to create an order that gets executed immediately (market order) or sell once Bitcoin hits the prespecified price point (stop-loss order). 

You can sell your entire holding or an exact amount. After the sale is complete, the funds can be moved to your bank account. 

Pros and cons of investing in Bitcoin in the UK

Investing in Bitcoin has its pros and cons. Here’s a rundown of some key points to consider:

Pros

• Potential for astronomical gains: As a highly volatile asset, crypto investments can produce serious returns. In fact, over the last decade, Bitcoin has been the best-performing asset class in 7 out of 10 years. However, this extreme volatility also comes with a downside; in the years when it didn’t outperform, Bitcoin was the worst-performing asset class;
• Decentralization: The Bitcoin network is spread out over numerous computers called nodes. The significance of decentralization lies in its ability to eliminate a singular point of vulnerability, making it virtually impossible for any entity or government to dismantle the network;
• Portfolio diversification: Including Bitcoin in your investment portfolio can add diversification, as it may not correlate directly with traditional assets like stocks and bonds;
• Global accessibility and inclusivity: Cryptocurrencies can be bought, sold, and traded by anyone with internet access, providing opportunities for investors worldwide. In addition, unlike traditional financial markets, Bitcoin doesn’t adhere to the usual business hours or take weekends off. It’s available for trading round the clock, every day of the year.

Cons

• Complexity: Bitcoin’s intricacies present a considerable learning curve, particularly for those unfamiliar with digital technologies;
• Extreme volatility: Although high volatility is on par for relatively new, rapidly evolving assets, the swings can be unsettling for long-term investors. As with any market, risk management is vital in navigating such volatility;
• Competition: Despite Bitcoin’s supremacy in the cryptocurrency space, new coins are emerging daily. While Bitcoin holds a leading position, rivals like Ethereum (ETH) are tailoring their monetary policies to compete more effectively;
• Security: The cryptocurrency realm is notorious for hacks. Even though some exchanges offer private insurance, investors may not have a way to recoup their investments if their crypto assets are compromised in a hack;
• Regulatory pressures: Governments are cracking down on cryptocurrencies in response to an increasing number of scams, fraud, and money laundering cases. Some nations have even outright banned these digital assets. In the UK, however, cryptocurrencies remain unregulated. Naturally, any shift in regulatory frameworks can impact Bitcoin’s price and stability;
• Environmental impact: Bitcoin mining was estimated to account for 0.1% of global greenhouse gas emissions as of 2022. On top of the enormous carbon footprint caused by coal-fired electricity generation, Bitcoin mining generates considerable electronic waste due to the short lifespan of mining equipment, comparable to the “small IT and telecommunication equipment waste” produced by a country like the Netherlands. 
• Difficulties with deposits/withdrawals: Note that not all banks are crypto-friendly and may pose limitations or even prohibit cryptocurrency-related activities. For more information on how to buy Bitcoin through various banks (as well as third-party payment systems), please refer to our banking guides.

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eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

In conclusion 

Bitcoin carries significant risks, making it unsuitable for most investors, particularly those leaning towards a more hands-off approach or those who cannot risk losing the money they invest. 

Nevertheless, incorporating a measure of Bitcoin into your portfolio can boost its diversification. So, if you foresee a future (backed by relevant research, of course) where Bitcoin enjoys broader acceptance, it may be reasonable to consider it an element of a diversified investment portfolio.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

FAQs about how to buy Bitcoin in the UK

Best Crypto Exchange for Intermediate Traders and Investors

• Invest in 70+ cryptocurrencies and 3,000+ other assets including stocks and precious metals.

• 0% commission on stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.

• Copy top-performing traders in real time, automatically.

• eToro USA is registered with FINRA for securities trading.

30+ million Users

Get Started

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.