Have you heard about a wonderful investment called Bitcoin? Are you interested in investing in Bitcoin in the UK, but don’t know?
This article will cover everything you need to know about investing in Bitcoin. It might sound difficult, but it’s really not difficult these days.
In fact, Bitcoin is one of the easiest investments you can make in 2020. You can likely have an investment secured within an hour without ever having to leave your computer.
Yes, it’s really that easy to invest in Bitcoin.
Anyway, here is exactly how to invest in Bitcoin while in the UK.
Step 1: Open an Account on a Cryptocurrency Exchange
The first step to investing in cryptocurrency is to open an account on a cryptocurrency exchange. There are a lot of cryptocurrency exchanges for you to choose.
However, not all cryptocurrency exchanges are created equal. Some have high fees while others don’t even allow you to purchase Bitcoin with GBP!
Here’s our top two cryptocurrency exchanges for investing in Bitcoin in the UK. One of the exchanges is beginner friendly while the other has low fees.
CoinJar is our recommendation if you are new to investing in Bitcoin.
It’s easy to use and the fees aren’t that high. The fees are only 0.26% per transaction, which is extremely competitive.
CoinJar is great because it’s so easy to use. It really is as simple as entering the dollar amount of Bitcoin you want to purchase and placing your order.
Binance is the most popular cryptocurrency exchange in the world for one reason:
They have the lowest fees. How low are the fees?
Binance has fees that range from 0.02% to 0.1% per transaction.
Unfortunately, the interface on Binance is a little clunky and it’s difficult to use, but it’s worth using Binance if you are making a large purchase.
Step 1A: ID is Required to Open an Account
To answer a common question, identification is required to open an account on a cryptocurrency exchange if you plan on depositing money from your bank account.
This is often an aggravating process, but it’s required. There isn’t a way around this unless you plan on purchasing Bitcoin locally with cash (not recommended) or through a friend.
Step 2: Time Your Investment
We recommend timing your investment of Bitcoin up with a downturn in the market if you’re planning on a short or medium term investment.
Timing doesn’t matter as much for a long-term investment. In fact, Bitcoin is in a bear market at the moment, so a long-term investment at the current moment would make the most sense.
As for the exact timing for short-term and long-term investments, we recommend trying to time it up with a slump greater than 10% that is followed by a small rebound.
Step 3: Use Stop Orders
If you purchase your coins on certain cryptocurrency exchanges, then you can place a stop order on your investment.
What is a stop order?
A stop order is either a sell or buy order at a predetermined price. This allows you to protect your investment from losing too much value during a crash or to lock in gains during a quick spike in price.
Of course, a stop order requires leaving your Bitcoin on the cryptocurrency exchange, which does have some level of risk.
Step 4: Place Your Bitcoin in a Bitcoin Wallet
Finally, you should place your Bitcoin in your Bitcoin wallet if you plan on holding it for the long-term.
Cryptocurrency exchanges have been hacked in the past, which has resulted in everyone that held bitcoin on the exchange losing their bitcoin.
As you might know, bitcoin transactions are not reversible, so you’re out of luck in the event that your cryptocurrency is lost due to a hack.
You have a few options for a Bitcoin wallet. We recommend using the normal computer based wallet if you only have a small amount of Bitcoin.
If you have a lot of Bitcoin and are tech savvy, then you are better off with a paper wallet or a hardware wallet for security.
Bitcoin wallets are extremely secure with one caveat – you cannot lose the private key to access your wallet. If you lose the private key, then there is no way to recover the bitcoin from your wallet.
It is lost forever.
That is the most common way that people lose their bitcoin investment. They simply lose the private key to their Bitcoin wallet.
Investing in Bitcoin in the UK – Frequently Asked Questions (FAQ)
Here are the most common questions related to investing in Bitcoin in the UK.
Do I have to pay taxes on my Bitcoin investment?
Yes. You must pay taxes on your Bitcoin investment when you realize the gains. This applies even if you sell the bitcoin for a different cryptocurrency.
On the other hand, you can write off losses once you realize them.
Is Bitcoin safe?
Yes. Bitcoin is perfectly safe in terms of security.
If you keep bitcoin in your own wallet, then the biggest risk of losing it comes from losing the private key to your wallet.
In terms of investment, Bitcoin is a volatile investment, but plenty of people have made a lot of money on Bitcoin.
Is now a good time to invest in Bitcoin in the UK?
It would appear that now is a good time to invest in Bitcoin for the long-term. It is currently in a bit of a slump after the ICO craze of 2017, but the emergence of DeFi (decentralized finance) appears like it might shake up cryptocurrency in the coming years.
How do I sell my Bitcoin?
Selling bitcoin is as easy as purchasing it. Simply transfer it to your exchange from your wallet, wait for it to appear on your account (should take 30 minutes), and sell the bitcoin.
You can then withdraw the fiat currency to your bank account or transfer the cryptocurrency you acquired with the bitcoin to a different wallet.
The cryptocurrency exchange will send relevant tax details to the HRMC.