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How to Buy Bitcoin (BTC) – Forbes Advisor UK

Bitcoin has experienced meteoric growth in recent years. In May 2016, you could buy a bitcoin for around £400. As of April 2022, a single bitcoin was worth over £30,160. That’s a growth of more than 7,000%.

Some analysts believe that as cryptocurrency and blockchain technology become a bigger part of people’s daily lives, Bitcoin’s price could increase even further. But buying bitcoin comes with great risks. Along with impressive gains, Bitcoin has also seen devastating declines. For example, after nearly hitting nearly £16,000 in value in 2017, Bitcoin’s value plummeted to around £2,400 just about a year later.

Bitcoin remains a highly volatile asset. If you’re looking to buy Bitcoin, experts recommend investing no more than a small percentage of your net worth in the leading cryptocurrency.

How to buy Bitcoin (BTC) in 4 steps

1. Choose a crypto exchange

To buy Bitcoin (BTC) or any other cryptocurrency, you need a crypto exchange where buyers and sellers meet to exchange pounds for coins.

There are hundreds of exchanges out there, but as a beginner, you should choose one that balances ease of use with low fees and strong security. Be sure to check out our top picks for the best crypto exchanges like eToro, Binance.com, or Coinbase if you’re not already thinking of an exchange.

Make sure you check if your exchange has a bitcoin wallet integrated into their platform; If not, you’ll have to find one yourself. You can also buy your crypto on a platform like Robinhood or Paypal, although buying crypto this way often means you can’t withdraw your coins and move them to another platform. If you want to store your crypto in a different wallet, you will need to sell your holdings and then buy them again on a different exchange.

Cryptocurrencies available for trading

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Cryptoassets are highly volatile and unregulated in the UK. No consumer protection. A profit tax may apply.

2. Decide on a payment option

After choosing an exchange, you need to fund your account before you can start investing in Bitcoin. Depending on the exchange, you can fund your account through wire transfers from a checking or savings account, PayPal, bank transfers, a cryptocurrency wallet, or even a credit or debit card.

Note, however, that platforms may charge higher transaction fees for certain funding options. For example, Coinbase does not charge a fee when you make an electronic transfer from a bank account. However, there is a fee of 3.99% of the value of your transaction if you pay with a debit card or through PayPal.

Credit card transaction fees on other platforms are often at least as high.

Because fees reduce how much money you can invest (and therefore how much money you have to grow and earn interest), it makes more sense to use wire transfers from a bank account than other methods. Additionally, when you use a credit card to purchase cryptocurrency, it generally qualifies as a cash advance and is subject to a higher interest rate than you pay for normal fees. Additionally, borrowing to buy volatile assets is extremely risky.

3. Place an order

Once your account is funded, you can place your first order to buy bitcoin. Depending on which platform you’re using, you might be able to buy it by tapping a button, or you might have to type in Bitcoin’s ticker symbol (BTC). You then need to enter the amount you wish to invest.

When the transaction is complete, you own part of a bitcoin. That’s because it takes a large upfront investment to buy a single bitcoin right now. For example, if the current price of bitcoin is £30,000, that’s how much you would have to invest to buy one bitcoin. If you invest less, say £1,000, you get a percentage, in this case 3.33%, of a bitcoin.

4. Choose a secure storage option

Many crypto exchanges have a built-in bitcoin wallet or at least a preferred partner where you can safely store your bitcoin. However, some people are not comfortable with keeping their crypto connected to the internet where it can be more easily stolen by hackers.

Most major exchanges have private insurance to compensate customers in this event, and increasingly they also store the majority of customer assets in so-called “cold storages” that are offline.

If you want ultimate security, you can store your bitcoins in your choice of online or offline bitcoin wallet. However, keep in mind that if you move crypto from an exchange, you may have to pay a small withdrawal fee. Additionally, if you use a third-party crypto wallet custodian, you may be permanently unable to access your coins if you lose the private key that serves as your wallet password.

sell bitcoin

If you decide to sell your bitcoin, you can place a sell order through your exchange, similar to the initial purchase. Most exchanges offer multiple order types, so you can choose to only sell when bitcoin reaches a certain price, or you can place an order that will be filled immediately.

You can choose to sell your entire Bitcoin holdings or just a certain amount. Once the sale is complete, you can transfer the money to your bank account. However, your exchange may have a hold period before you can issue a refund to your bank account. This is nothing to worry about; It just takes some time to make sure transactions are clear.

If you sell your bitcoins, you can make a profit. If your profits exceed a certain threshold, you will have to pay capital gains tax, so be sure to keep an eye on your profits.

Should You Buy Bitcoin?

When Bitcoin’s price skyrockets, it can be tempting to invest in the popular cryptocurrency. But while it has the potential to be a lucrative investment, you should be careful. Even if you decide to go ahead, the volatility has led many experts to recommend that you don’t use a large percentage of your funds to buy.

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Cryptocurrencies available for trading

60+

Cryptoassets are highly volatile and unregulated in the UK. No consumer protection. A profit tax may apply.

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