An introduction to Bitcoin
It’s important that you understand what Bitcoin actually is. To put it simply, bitcoin is an ‘encrypted digital online cryptocurrency’ and has been around since 2008, created by the mysterious Satoshi Nakamoto. Bitcoin refers to the network used and bitcoin (small b) refers to the currency itself.
The difference between bitcoin and traditional currency such as UK Pound Sterling (GBP) is that bitcoin is a virtual currency, whereas GBP is something you can physically possess. Instead, you keep the codes (the private keys) to your bitcoins in a specialised crypto-wallet. Of course, GBP is just a fiat currency, i.e., one with no intrinsic value (as opposed to something like gold), which relies on the promise by the government and financial organisations to pay the bearer the value of the currency. In essence, all currency, crypto or fiat, is virtual when you think about it!
Bitcoin is actually a very safe and transparent currency, with all transactions publically viewable in the online record, the Bitcoin ledger. The keepers of this public record are Bitcoin miners, who verify all transactions and add them to the ledger. Crypto-mining UK is a big business, although not part of what we’re covering here.
The most important thing to consider with bitcoin is that it should be thought of as just another currency, just like GBP or US Dollars. And as such, there are plenty of opportunities to buy and sell bitcoin in UK at various cryptocurrency exchanges and to trade bitcoins at the various bitcoin trading platform UK that are available.
Bitcoin trading explained
You can think of bitcoin trading UK as two things. First, there’s the bitcoin exchange side, where you buy and sell bitcoin and secondly, there’s the bitcoin trading platform UK, where you trade in bitcoins and other cryptocurrencies much as you would currencies or shares. A bitcoin trading platform UK allows you to buy, sell, and trade, whereas a bitcoin exchange really only lets you buy and sell. However, the two terms tend to be used interchangeably and most bitcoin exchanges are actually trading platforms. So you can just as easily use an exchange or trading platform.
A bitcoin exchange is a service just like any currency exchange; you can convert your GBP to bitcoin and back just as you’d convert GBP to USD. Bitcoin trading UK is more complicated, where you are trading in bitcoins or other cryptocurrencies. In crypto-trading uk, buyers and sellers set prices for the trades, with the obvious result of making money from your trading.
We’ll cover the basics shortly, as well as deliver our verdict on the best bitcoin trading app in UK.
Bitcoin trading in the UK
Bitcoin trading UK is still a little vague in terms of official regulations. Whilst cryptocurrencies are not technically considered legal tender in the UK, there are tax issues through HMRC to consider and the Financial Conduct Authority in the UK treats bitcoin as ‘exchange tokens’ which are not regulated but are subject to anti-money-laundering regulations and fall under the FCA’s official remit. However, more and more bitcoin trading exchanges and trading platforms are being granted e-money licenses by the FCA. However, bitcoin trading is readily available in the UK and has been for many years, so as long as you keep to the available regulation and tax rules.
Getting a secure & fair experience with bitcoin trading
As with anything financial related, whether you’re looking to find the best Bitcoin trading platform UK, looking at how to buy Bitcoin in UK, the security for all of your financial and personal information must be paramount.
You need to be aware of the security offered by any bitcoin exchange or trading app. They need to be offering a secure and encrypted site alongside very strong account and identity verification processes and 2-factor authentication on your account is an absolute must. And in addition, it’s down to you to ensure you keep your passwords strong and private.
One way you can ensure you are being as secure as possible is your choice of a bitcoin wallet to store those essential private keys to your bitcoins. Any crypto-wallet UK must be as secure as possible – lose access to the keys and you’ve lost access to your bitcoins. Online software wallets from exchanges or trading platforms are not as secure as a separate software wallet, such as Electrum for desktop or BRD for mobile. However, for the highest level of security, we recommend a dedicated hardware wallet. These are separate bits of hardware (similar to a USB drive in size) where your keys are encrypted and stored and must be connected to a computer to use – and here we’d say go for an up to date Ledger or Trezor wallet. And of course, always back up your keys securely as well!
Editor’s recommendation – the best trading platform for Bitcoin in UK
We’re going to recommend two different platforms/exchanges for the UK – Coinbase and CEX.io.
Firstly, we’re going with Coinbase as our recommendation for the best way to buy bitcoin in UK. It’s a wonderfully simple and easy exchange, with intuitive layouts, great customer service, and plenty of guides to help you when you’re wondering just how to buy bitcoin in UK. For those of you a little worried about taking first steps, it’s ideal! It was also the first exchange to be granted an e-money licence by the UK’s Financial Conduct Authority back in 2018.
Once you’re ready to go further and begin bitcoin trading UK, you could use Coinbase Pro, the Coinbase trading platform. But we think you would be far better served with CEX.io, an established crypto trading platform that offers you the wide range of buying options you want for your bitcoin trading UK, including trading on margins. Once you go through verification, there are no limits for verified users, a great number of different deposit and withdrawal methods and a great low 0.2% trading fee.
This is how our experts test trading platforms
When we’re looking at platforms, whether it’s for the best way to buy Bitcoin in UK or for the best bitcoin trading platform for more experienced traders, we always have strict criteria of what we’re looking for when testing. Primarily, we want to see that the exchange or trading platform is safe, secure and legit, with comprehensive verification and ID checks, encryption, and security in place for you.
But additionally, we always look at fees charged for trading, the ease of use for using the platform, and the speed of the transactions. When looking at platforms and exchanges for newbies wanting to know how to buy Bitcoin in UK, we’re looking primarily for an intuitive, simple, yet effective experience. We expect to see any and all fees clearly laid out for buyers, sellers, and traders, no matter their experience and, of course, we’re always looking for sites offering not just lowest fees but also best value for your money! And finally, we’re looking at the speed of doing business at these exchanges and platforms.
Expert tips for bitcoin buying, selling, and trading in the UK
When you’re first thinking about how to buy bitcoin in UK, it all seems very complicated. But follow our guide to dealing with bitcoin and you’ll be well on your way to getting started with buying, selling, and trading. However, when it comes to bitcoin trading uk, there are a few expert tips we’re going to share with you – things we wished someone would have told us along the way to gaining expertise!
Understand what you’re trading in!
This one should be obvious – don’t risk any money on something you don’t truly understand! And bitcoin is absolutely no exception to that. The fact you’re here is a good indicator that you’re aware of this one, but always remember that you’re never too smart to learn something new! It also applies when you’re looking at any aspect of a bitcoin or cryptocurrency trading exchange or trading platform. Read up, be smart, and check things out!
The value of investments can go down as well as up – and that definitely applies to bitcoin!
Bitcoin is a very volatile currency. We cannot emphasise that enough. Over the history of Bitcoin, the value of this cryptocurrency has risen rapidly, but it’s also experienced extreme volatility with large gains and large losses. This is a hugely unpredictable currency with a high level of risk and you should always be very careful about trading and consider just what level of risk you wish to expose yourself to. Just as with stocks and shares, the past performance is absolutely no indication of future performance.
Be security aware at all times and beware of scams!
Security is as vital with bitcoin or other cryptocurrencies as it is with any other financial transaction. Make sure your chosen exchange or trading platform is secure and security conscious. But remember that so much financial fraud that occurs is down to user error. Be aware of the phishing scams and other security risks that surround bitcoin. Because bitcoin trading is new, there’s a growing number of bitcoin scams circulating. Don’t get caught out, be security aware, research well, and trade wisely.
Your private keys are the key to your bitcoin trading – protect them well!
Private keys are the codes that allow you to access your bitcoins. No private key, no bitcoins! So it makes sense to protect these keys as well as possible. Having access to a secure, encrypted, private wallet is vital in securing your private keys. Make sure you look at investing in hardware keys!
Carefully consider your bitcoin trading strategy
Any trading is complicated, but how you approach it can really help you get the most out of any trading, including your bitcoin and cryptocurrency trading. Make sure that you read up on trading, make sure you spend time working out the best possible trading strategy for you. Work out your position and entry & exit strategies. And remember that a strategy should evolve to allow you to take best advantage of changing markets. And of course, keep doing that research! Use all the online tools, all the guides, everything you can to learn more and more – every drop of knowledge will help you stay abreast of developments in bitcoin markets and allow you to make the best from the markets!
Finally, just because bitcoin isn’t yet fully UK regulated doesn’t mean the tax man isn’t interested!
Yes, bitcoin trading in the UK is largely unregulated by the government, but that doesn’t mean that HMRC isn’t well aware of bitcoin and cryptocurrencies! Just as with any other investment or trading profit, you must declare it to the tax man!
With our guide to the basics of both bitcoin trading UK and how to buy bitcoin in UK, we’ve shown you that there’s little to be fearful of when it comes to bitcoins. It’s a market that could be very rewarding for your financial dealings, provided you keep three things uppermost in your mind…
- Bitcoin is a hugely volatile currency and is likely to continue to be so for many years to come.
- If you’re new to bitcoin and simply want to know how to buy bitcoin in UK, go for a simple trading exchange app such as Coinbase to hold your hand first! Once you’re confident and know what it involves, graduate to a trading platform such as CEX.io to get the most reward from bitcoin trading uk.
- Finally – remember that security of your private keys is the fundamental thing with bitcoin – use hardware wallets and keep your security tight.