How to Buy Cryptocurrency in the UK?
Last Updated: March 30, 2023
Cryptocurrencies are gaining worldwide acceptance, with Bitcoin arguably being one of the most recognised and valuable digital assets. But how does someone with little to no trading experience begin dealing with crypto?
If you’re looking for the answer, this comprehensive guide will show you how to buy cryptocurrency in the UK! First, we’ll explain what cryptocurrencies are and list the best platforms and wallets for buying and storing crypto. We’ll then outline the pros and cons of trading crypto and share some tips to jumpstart your crypto journey. So, let’s dive right into the topic! Here’s what we’ll discuss:
Crypto 101: What Is Cryptocurrency?
Cryptocurrency is a digital or virtual asset that uses cryptography to secure and verify its transactions and control the creation of additional units. Cryptocurrencies are decentralised assets, meaning they aren’t subject to government or financial institution control.
Bitcoin, the first and most popular cryptocurrency, was created in 2009. Since then, over 19 million Bitcoins have been mined, and the Bitcoin network is currently processing around 330,000 transactions per day.
Other popular cryptocurrencies are Ethereum, Litecoin, Bitcoin Cash and Ripple. These are often called altcoins or alternative coins to Bitcoin. There are now over 18,000 different cryptocurrencies, with a total market capitalisation of over $2 trillion (£1.51 trillion).
Now that you know a little bit about crypto, it’s time to learn how to buy it.
How to Buy Cryptocurrency in the UK? — The Ultimate Guide
To buy crypto in the UK hassle-free, follow these steps:
1. Find a dependable broker or crypto exchange
2. Create an account
3. Deposit funds to your account
4. Place your crypto order
Below, we will describe each of the steps in more detail.
Finding a Dependable Broker or Crypto Exchange
To purchase cryptocurrency, you must first choose a broker or a crypto exchange. While both allow you to buy cryptocurrency, there is an important difference to be aware of. Brokers usually offer trading on derivatives, meaning you don’t actually own the crypto coins you’ve paid for. Cryptocurrency exchanges, on the other hand, allow you to hold your crypto, sometimes offering additional benefits such as access to a crypto wallet.
So, which option should you choose?
Well, it depends on a few factors. If you’re just starting out and want to buy a small amount of cryptocurrency, using a broker is probably the best option. Brokers are usually more user-friendly than exchanges, and they often have lower fees.
However, if you’re planning on buying large amounts of crypto or trading frequently, an exchange is probably a better choice. That is because exchanges offer better features, such as margin trading and advanced charting tools.
Best Crypto Exchanges in the UK
It’s no secret that the popularity of crypto has reached a new all-time high in 2022. As a result, people can now create accounts on hundreds of crypto exchanges worldwide and trade digital assets safely. However, keep in mind that some platforms are more dependable than others. Here’s the list of some of the best crypto exchanges in the UK:
Coinbase is undoubtedly the first option for new investors. It enables buying and selling over 100 crypto assets, including Bitcoin, Ethereum, and Cardano. What’s more, Coinbase even allows you to send crypto to friends straight from your Coinbase account.
The Coinbase cryptocurrency exchange is a user-friendly platform with various features. However, Coinbase is pricey, so it’s advisable to switch to the Coinbase Pro platform. The Pro version offers more digital currencies and drastically lower fees for active traders.
Kraken is one of the largest and most popular UK crypto exchanges. It supports dealing with over 110 digital currencies, and its trading fees range from 0%-0.26%. It’s suitable for beginners and experienced investors, and it offers excellent customer support and tight security measures.
To say that trading on Binance is a sophisticated experience would be an understatement. The Binance platform features a range of advanced trading options and tools to help clients improve strategies and learn to trade cryptocurrencies fast. Although Binance has a steep learning curve for beginners, you should give it a chance if you want to become involved in crypto fast.
Gemini is a regulated exchange and a decent option for both beginners and seasoned pros alike. On this user-friendly platform, you can trade with over 80 cryptocurrencies and enjoy its suite of valuable features.
These four crypto exchanges are just a few of the many available in the UK. So, before choosing an exchange, be sure to explore the market. Also, keep in mind that many traders hold accounts on several platforms to minimise the risk of losing their investments.
Creating an Account
Once you’ve chosen an exchange, you’ll need to create and verify your account. The process for this varies depending on the exchange. Usually, it involves providing personal information — such as your name and email address — and verifying your identity with a passport or ID card.
You may also be required to set up two-factor authentication (2FA) for your account. The 2FA is a safety measure that requires you to enter a code from your mobile phone when logging in or making a transaction. In other words, it’s an extra layer of security to make your account more resistant to hacks.
Most exchanges will require you to deposit money into your account before you can start buying cryptocurrency. Additionally, you can choose between several payment methods, including bank transfer, credit/debit card, and PayPal.
The easiest way to deposit funds is usually via bank transfer. However, this can take a few days to process, so you may want to use an alternative if you’re looking to buy crypto immediately.
In the table below, we’ve listed which payment methods are available on popular crypto exchanges. Some platforms charge deposit fees, so take this into account when looking for a crypto exchange.
|SWIFT||/||£3||Free (USD only)||/|
|Debit-credit cards||2%||3.75% + €0.25||Free||3.49%|
It’s noteworthy that most exchanges allow crypto deposits. Charges may vary depending on which crypto you want to deposit, so be sure to check the fee structure on the official website of your preferred exchange.
Placing Your First Crypto Order
Once you’ve deposited funds into your account, it’s time to place your first order. The process of buying crypto varies depending on the exchange, but the basic steps are:
1. Log into your account2. Select a market pair (crypto/crypto or crypto/fiat)
3. Click on the Buy button
4. Type in the currency you want to buy
5. Specify how many coins you want to purchase
6. Enter your payment method
7. Review and confirm your order
After completing these steps, the exchange will match you with a seller and complete the transaction. Depending on the payment method you use, this can take a few seconds to a few hours.
And that’s it! You’ve now bought your first cryptocurrency.
Alternative Ways to Buy Crypto
If you don’t want to trade crypto through a broker or exchange, you can try some alternative methods and get the desired amount of crypto instantly. Some digital payment platforms such as PayPal, CashApp, and Venmo allow users to purchase crypto. Although that seems like an incredible opportunity to get your hands on some crypto assets, it’s advisable to think twice before using these services.
PayPal, for example, doesn’t allow users to transfer purchased cryptocurrency to other accounts or platforms. So, if your long-term strategy is to transfer your crypto to a cold storage system, avoid buying with PayPal at all costs.
Additionally, you can use a Bitcoin ATM to buy cryptocurrency. These are becoming more common but aren’t available in all areas.
Crypto ATMs usually complete transactions in less than a few minutes. So if you live in an area where these kiosks are available and need to buy crypto immediately and safely, this option would be more convenient than trading on an exchange.
Finally, you can try your luck with a peer-to-peer exchange (P2P) like LocalBitcoins or Paxful to buy crypto from another person. P2P exchange is a good option if you want to pay with cash or don’t have access to a credit/debit card.
Cryptocurrency transactions on peer-to-peer marketplaces rarely require identification, allowing users to protect their privacy. But as you’re trading directly with other users, there’s always a possibility you’ll encounter a few bad apples here and there.
Now that you’ve bought some crypto, what do you do with it? It’s not uncommon for traders to keep their crypto on the exchange. However, this isn’t the most secure method of storing your digital assets. Advanced hackers view exchanges as lucrative targets, which means you can say goodbye to your investments if data breaches take place.
So, most traders would agree that the best way to store your cryptocurrency is in a digital wallet. A digital wallet is like a bank account for your crypto, and it’s where you’ll receive, store, and send your currency.
There are two main types of crypto wallets — hot wallets and cold wallets. Hot wallets are connected to the internet and can be used for day trading. Conversely, cold storage solutions are offline and more secure, but they’re not as convenient for day-to-day use.
Most exchanges offer a hot wallet as part of their account services. Nevertheless, if you’re planning on holding onto your currency for a longer period of time, you should consider transferring it to a cold wallet.
Best Cold Crypto Storage Solutions
If you are looking for reliable cold crypto storage, check out the following hardware wallets:
- Ledger Nano X
Ledger Nano X is one of the most popular cryptocurrency hardware wallets on the market. It is an attractive upgrade to the previous model, Nano S, and supports over 1,800 coins and tokens. On top of that, Ledger Nano X features a large storage capacity and secure Bluetooth connectivity.
Unlike the Ledger Nano X, KeepKey supports seven leading cryptocurrencies and 46ERC-20 tokens only. Still, its tight security measures make it a valuable solution for those who trade with Bitcoin, Ethereum, Dash, and other in-demand cryptocurrencies.
KeepKey doesn’t have an OS, meaning the layers often affected by viruses do not exist on this wallet. So, if you’re looking for a virus and malware proof digital wallet, KeepKey is an excellent choice.
- CoolWallet Pro
The CoolWallet Pro is the size of a credit card, allowing you to keep it within reach at all times. It features a battery life of 2–3 weeks and an encrypted Bluetooth connection to iOS and Android devices. In addition, CoolWallet Pro is a multi-currency wallet that enables staking rewards on Cosmos, Tron, and Polkadot, allowing you to make extra money.
- Trezor Model T
Similarly to Ledger Nano X, Trezor Model T supports a wide array of cryptocurrencies. Consequently, users of the Trezor Model T can store over 1,200 coins in this wallet.
Keep in mind that this wallet is a higher-end product, which may not be for everyone. Still, if you’re ready to pay €226.8 (roughly £189) for crypto storage, you should know that the Trezor Model T is undoubtedly worth the hype.
How to Keep Your Crypto Safe?
Many traders assume their crypto is always safe. Although data breaches rarely happen, it’s critical to take complete control over your assets and ensure nobody but you knows how to access them. Here are a few tips to help you with that:
- Never share your pin or recovery phrase with anyone. Pins and recovery phrases are the key to your wallet and should be kept secret.
- Enable two-factor authentication on your accounts. The 2FA adds an extra layer of security in case your account is ever compromised.
- Keep your software up to date. Remember, this includes your operating system, browser, and any wallets or exchanges.
- Avoid storing your currency on an exchange. Exchanges are a prime target for hackers, so it’s best to keep your currency in a wallet where you have full control over it.
- Don’t forget to backup your wallet. Regular backups will allow you to access your currency if something happens to your device.
- Buy crypto wallets from official websites. Scammers who sell wallets on Amazon for a lower price keep the recovery phrase and empty your wallet as soon as you start using the storage.
Is Crypto Trading Legal in the UK?
Yes, crypto trading is legal in the UK. You can trade any crypto available on the market without facing any legal consequences. However, you should consider the following issues before investing in cryptocurrency:
1. Cryptocurrency trading isn’t regulated by the FCA. So, if you hold your crypto within an exchange, there’s a risk you might lose your money if the company goes bankrupt or suffers from a data breach.
2. Those who trade crypto in the UK are liable to pay tax on their profits. If you don’t want the HMRC to investigate your tax affairs, it’s essential to pay your taxes on time.
The Pros and Cons of Trading Crypto
Like any investment, there are both risks and rewards to trading cryptocurrency. The crypto market is unpredictable, often allowing investors to make a fortune trading crypto. However, significant losses are also inevitable due to a highly volatile market.
Researching the market or price predictions and investing only what you can afford to lose is a decent trading tactic for beginners. Also, make sure to look at some of the pros and cons of dealing with cryptocurrency before placing your first trade.
Crypto trading advantages:
- The crypto market is open 24/hours a day, seven days a week.
- Market unpredictability can lead to high profits.
- Crypto trading is accessible to anyone with an internet connection.
- The Crypto market is global, allowing you to trade with anyone.
Crypto trading disadvantages:
- Due to its volatility, the crypto market can backfire on you as easy as it can bring immense profit.
- The crypto market is complex and takes time to tackle.
- Crypto trading isn’t regulated by the FCA.
So, is crypto trading a good decision? That depends on your cryptocurrency investment goals and risk tolerance. If you’re willing to take on the risks, it could be a great way to make some profits. But, if the idea of potentially losing some of your savings bothers you, talk to a financial advisor or find other investment opportunities that match your current goals.
Which Crypto Should You Buy?
In this guide on how to buy cryptocurrency in the UK, we’ve covered everything from popular crypto exchanges and wallets to regulatory issues and the pros and cons of crypto trading. Before we wrap it up, we’ll lay out the best cryptocurrencies to buy now.
As you probably know, Bitcoin is still the king of crypto, but many other coins have gained ground in recent years. Ethereum is one of the top altcoins and is often used for building decentralised applications. Litecoin is also in-demand, especially among those looking for a cheaper alternative to Bitcoin.
Finally, Ripple and Cardano also have potential, so you might consider buying them while their value is still low. There are hundreds of other cryptocurrencies to choose from, so take your time to learn about crypto before investing. Once you’ve decided on a coin, you can use one of the aforementioned methods to buy it.
Most traders would advise you to invest in several cryptocurrencies. So, instead of spending all your savings on Bitcoin or Ethereum only, consider giving other cryptocurrencies a try.
Hopefully, this guide has helped you understand how to buy cryptocurrency in the UK. Although you can acquire digital currencies through several different platforms, we’d still recommend you to stick to exchanges and brokers. After all, they offer the most reliable security features and a range of coins.
Buying crypto can be a great addition to your long-term financial plan, as it has the potential for high returns. So, if you want to get started in cryptocurrency, go ahead and give it a try. Who knows, you might just end up making a fortune!
Coinbase is the best exchange, and eToro is the best broker for beginners looking to get their hands on cryptocurrency in the UK. However, while Coinbase is a user-friendly cryptocurrency trading platform for newbies, eToro might be a better choice because it’s more cost-effective.
Currently, the best cryptocurrencies to invest in are Bitcoin, Ethereum, Tether, Cardano, Solana, and XRP.
If you want to cash out your crypto holdings, you should check the current market conditions to see whether selling your assets could be profitable. If you can profit from selling crypto, you must create a new order and specify how much you want to sell. After your order has been executed, you can transfer the acquired funds to your bank account.