How and where to buy bitcoin in the UK

There are many ways of buying in to the bitcoin boom. Dominic Frisby looks at the most common, and explains exactly how to buy bitcoins in the UK.

As well as being a new system of money, bitcoin is also a new technology and so, above all, I urge you to practise using the technology as much as possible. Buy some bitcoins. Get a wallet from your App store. Get a friend to do the same and practice sending each other small amounts of money. (A wallet is where you store your bitcoins – it’s a bit like an email address.) 

I also urge you to research as much as you can: read about it, listen to podcasts and so on. Explore all the different storage methods. It really won’t take more than an hour or two to get the basics; and perhaps a few days before you are really on top of “cold storage” wallets and keys and so on.

An easy place to get your first wallet is blockchain.com. Muun wallet is another simple option. It’s as easy as downloading an app. In time, and as and when you have more significant levels of capital invested, you will want to explore cold storage options. 

Buying bitcoin in the UK: be prepared for a bit of admin

The most problematic side of bitcoin, its Achilles’ heel, is the point of transfer between “fiat” (the pound, euro or dollar in your pocket) and bitcoin. Crypto is an alternative financial universe and, once you are in it, you may never come back. “Come for the gains, stay for the revolution,” is the saying.

Generally, the more you want to buy, the more paperwork you have to fill in. I’ve also found that in many cases it’s easier to set up an account on your smartphone than it is on your computer. 

Keys.casa, which is a user-friendly and secure wallet, blockchain.info and others all enable you to buy bitcoins via their platform, but the most liquid (and thus cheaper in terms of commission) tend to be the exchanges. There are so many of these now, but the best ones for UK investors are probably any of Gemini, Kraken, Bitfinex, CEX.Io, Bitstamp, SFOX, Crypto.com, Poloniex, Bittrex and eToro

They all have their pros and cons, but the net result is much of a muchness. Opening an account is a bit tiresome. There’s lots of paperwork. Make sure you set up two-factor authentication and so on.

It’s quite easy to keep your coins on most exchanges, and some offer cold storage which is a convenient solution. But be aware that exchange hacks have happened many times and are a genuine risk. Purists will recommend that you get your coins off exchanges. That said security is much better than it was.

Once you’re set up, you’ll experience the delights of sending money to your exchange via a bank. You might end up having to make a phone call at this point. So much fraud has taken place that UK banks tend to be very reluctant to allow transfers. So, on the whole, the Financial Conduct Authority (FCA) registered exchanges, such as Gemini, tend to be easier. I had few problems with Gemini, Kraken, and Bitfinex, but, for some reason, HSBC hated Bitstamp, which is frustrating as it has lower commission rates. 

Most exchanges offer crypto-trading facilities and often, by the way, you’ll pay a much lower rate of commission if you use these (and leave limit orders under the market), rather than purchase off the front page. Gemini’s commissions off the front page are eye-watering, whereas inside its trading app they are much lower.

Easier options for small amounts include Bittylicious and LocalBitcoins, or even bitcoin ATMs. Revolut makes it easy, but you can’t then move your bitcoins elsewhere. You can only sell back to Revolut, which is somewhat besides the point. Plus its commission and spreads are not the cheapest.

Buying bitcoin in the UK: where to store your bitcoin

As I say, you can keep your bitcoins at an exchange – some offer cold storage, similar to the way that bullion dealers often offer gold storage. But longer term, you might want to take charge of your bitcoins yourself. If the exchange goes out of business or gets hacked, you’ll be in trouble. 

Other long-term storage options include electrum plus a multisig (multi-signature) hardware wallet. A slightly more user-friendly option is bitcoin storage specialist keys.casa. This will all start making sense once you start playing around with the tech.

The FCA recently banned the sale of crypto-derivatives to retail investors, which means that getting exposure to crypto via traditional markets has become very difficult. So my advice is to go down the rabbit hole, and buy and hold actual bitcoin as it was meant to be bought, and hold. 

If you’d still prefer some sort of listed option, then you could buy Microstrategy (Nasdaq: MSTR), which has become something of a proxy for bitcoin, and there is London-listed bitcoin miner Argo Blockchain (LSE: ARB). Perhaps easiest of all is the Vaneck Vectors Digital Assets ETF (LSE:DAGB), through which you are gaining exposure to a basket of all the listed bitcoin companies. It’s not the same as owning bitcoin, but it’s a start.

Recommended

Made money in cryptocurrencies? Don’t forget to pay your taxes – in sterling
Bitcoin & crypto

Made money in cryptocurrencies? Don’t forget to pay your taxes – in sterling

Speculating on cryptocurrencies is akin to gambling in all but one respect, says Merryn Somerset Webb: you must pay tax on any gains, and you must pay…
18 Jan 2022
Cryptocurrency roundup: bitcoin continues to slide as Lords say no need for a digital pound
Bitcoin & crypto

Cryptocurrency roundup: bitcoin continues to slide as Lords say no need for a digital pound

Saloni Sardana looks at the cryptocurrency stories that caught our eye this week.
14 Jan 2022
Bitcoin’s new year is off to a bad start – what does the rest of 2022 hold?
Bitcoin & crypto

Bitcoin’s new year is off to a bad start – what does the rest of 2022 hold?

Bitcoin has had its worst-ever start to a year. But it remains the “future of money”, says Dominic Frisby. Here, he looks at what might come next for …
12 Jan 2022
Cryptocurrency roundup: bitcoin crashes to lowest in three months
Bitcoin & crypto

Cryptocurrency roundup: bitcoin crashes to lowest in three months

Bitcoin and cryptocurrencies joined in the wider market crash this week. Saloni Sardana explains what's going on, and looks at the rest of the stories…
7 Jan 2022

Most Popular

Five unexpected events that could shock the markets in 2022
Stockmarkets

Five unexpected events that could shock the markets in 2022

Forget Covid-19 – it’s the unexpected twists that will rattle markets in 2022, says Matthew Lynn. Here are five possibilities
31 Dec 2021
US inflation is at its highest since 1982. Why aren’t markets panicking?
Inflation

US inflation is at its highest since 1982. Why aren’t markets panicking?

US inflation is at 7% – the last time it was this high interest rates were at 14%. But instead of panicking, markets just shrugged. John Stepek explai…
13 Jan 2022
Tech stocks teeter as US Treasury bond yields rise
Tech stocks

Tech stocks teeter as US Treasury bond yields rise

The realisation that central banks are about to tighten their monetary policies caused a sell-off in the tech-heavy Nasdaq stock index and the biggest…
14 Jan 2022