How to Buy and Sell Bitcoin in the UK – A Guide for All Beginners

Bitcoin trading has been a very popular activity in the investors’ world for over a decade now. It seems like as years go by, investing in cryptocurrencies is more and more widely accepted.

One of the countries that have accepted cryptocurrencies as taxable assets is the UK. Therefore, you can always get your hands on the number one cryptocurrency by market cap – as long as you pay your taxes.

So here, we will put our focus on how you can navigate the Bitcoin landscape by purchasing and then selling it. We will also walk you through the storage options you have, so let’s get started!

Hvordan fungerer Bitcoin?

Let’s take a step back first. Bitcoin er den first cryptocurrency that hit the financial world after the economic crisis in 2008. Its launch sent shockwaves to the entire digital world as Bitcoin was presented as a decentralised digital currency, not issued by any state, government or central authority.

Instead, users themselves issue and distribute Bitcoin among themselves on the Bitcoin network. Fiat currencies such as the British Sterling depend on payment providers, banks and other various third parties for money transfers, Bitcoin is peer-to-peer.

Bitcoin goes around the traditional central authorities and places its trust in its users to maintain, hold and update their ledgers.

Bitcoin’s Legal Status in the UK

Som du kan forestille deg, legal status of Bitcoin varies from one country to another, but buying Bitcoin in the UK is completely legal. There is a robust regulatory network in place in which cryptocurrencies are categorised as taxable assets by His Majesty’s Revenue and Customs.

Buying Bitcoin in the UK will trigger the tax reporting obligations with crypto transactions. Therefore, we urge you to maintain accurate records when kjøpe BTC i UK, so you make sure you are fully compliant with tax regulations for crypto gains and losses.

Keep in mind that the UK government does not recognize Bitcoin as a legal tender, unlike the British pound. For that reason, you must be fully aware of the risks that come with investing in Bitcoin – mainly its volatile status.

Just in September 2023, The Travel Rule of the UK mandater det UK-based crypto asset businesses må samle, verifisere og share information on Bitcoin transfers. This is seen as a big hit to the decentralised nature of the cryptocurrency.

For this reason, no one should really be surprised to see that some big market players have since left the UK.

Crypto Exchanges and Brokers – The Most Popular Ways to Buy Bitcoin

Let’s now dive into your options for buying Bitcoin. All investors in the UK need to choose between brokers or exchange platforms through which they will buy BTC. Both enable seamless ways to get your hands on BTC, but you must make some distinctions between the two.

Even though the crypto landscape comes with good security features, choosing the best exchange or broker is a must, as hacker attempts are not uncommon.

A Crypto Exchange

Crypto exchange platforms in the UK operate without any formal regulation. However, the Financial Conduct Authority in the UK mandates that all crypto exchanges must be registered.

This doesn’t mean that you won’t be suffering from the drawbacks that come with Bitcoin assets. Given their extremely volatile nature, and the lack of government protection for cryptocurrencies, you must be very cautious before you buy BTC – even if you go through FCA – authorized providers.

A good piece of advice here is to diversify your BTC holdings across several exchanges, thus mitigating the risk of a single failure leaving you with nothing.

In addition, before choosing a crypto exchange, check whether it accepts BTC. The vast majority of platforms in the UK accept the largest crypto by market cap, but it doesn’t hurt to double-check and make sure.

Furthermore, you also need to be aware of the daily trading volume. If the exchange has adequate numbers here, it will guarantee much-needed liquidity for smooth BTC transactions. Fees are also something you need to keep an eye on, especially if you trade big volumes of BTC.

Since the new regulatory guidelines mentioned above came into practice, big exchange platforms such as CEX.IO and Binance announced that they have suspended onboarding new UK customers, so you won’t be able to use them for your everyday BTC trading.

Exchange Platforms You Can Choose From

Siden Binance og CEX.IO er not available in the UK anymore, some investors may be worried about the options they have at their disposal, Well, not all is bad news, as you still have tons of exchanges to choose from. Let’s take a look at the biggest ones registered with the FCA.

1. Coinbase

The first name that pops up to mind is Coinbase - En BTC exchange platform that allows you to sell, buy and hold cryptocurrencies, NFT-er and various DeFI products.

Besides Bitcoin, Coinbase supports over 240 cryptocurrencies, making it one of the most versatile exchanges out there. You can choose from the biggest coins like USD Coin Tether, Dogecoin and Polygon, but rare and niche coins are also at your disposal.

All users at Coinbase have access to a self-custody crypto wallet where you can store your assets and NFTs in one place.

2. eToro

Går videre, det har vi eToro – a multi-asset trading platform that allows you to invest in BTC, other cryptos, NFT-er, ETF, ForexOsv

eToro does not have a rich list of cryptocurrencies like Coinbase, but there are still over 70 available, so you will have plenty of Bitcoin alternatives.

Another attractive point about eToro is that it is ideal for newbies and experienced traders. The first group of investors will benefit from all the educational materials, easy user interface, copy trading tools, etc.

As for the advanced traders, they can take full advantage of eToro’s analytic tools, staking service, social trading, and crypto news.

3. CoinJar

Neste, vi har CoinJar - En krypto-app og utveksling Det works in the UK og Australia. CoinJar has over 50 supported cryptocurrencies, including Bitcoin.

I tillegg CoinJar has an active card that lets you make purchases with crypto – anywhere where MasterCard is supported.

4. Opprettholde

Endelig har vi opprett~~POS=TRUNC, one of the most beginner-friendly exchange platforms that allows you to trade with more than 250 cryptocurrencies. Apart from crypto transactions, all users can buy and sell up to 3 national currencies – including the GBP.

Akkurat som CoinJar, opprett~~POS=TRUNC has a virtual crypto card that works everywhere MasterCard is accepted. There are no transaction fees when using the Uphold card, and you can seamlessly link it to Apple Pay or Google Pay.

5. Crypto Brokers

Foruten krypto utvekslingsplattformer, you can also use crypto brokers to simplify your Bitcoin buying process. Note that some crypto brokers charge bigger transaction fees, while others may offer their services for free, in exchange for selling your data or executing trades at suboptimal market prices.

Sure, crypto brokers offer more convenient and simple BTC buying processes, but they can limit the transfer of crypto holdings from their trading platforms. Brokers can also restrict you from moving your BTC holdings to external wallets.

What After Choosing An Exchange or a Broker?

Well, due to the limitations that come with brokers, we suggest you use crypto exchange platforms for buying BTC. After you do so, the process would go as follows.

Bitcoin Minibanker

Besides crypto exchange platforms and brokers, up until recently, UK residents had the possibility of buying Bitcoin through crypto ATMs. However, for all those wondering, the FCA imposed a ban on ATMs just in 2023.

Du might still find some Bitcoin ATMs in the UK, but we advise you to stay away from them. Buying Bitcoin this way is illegal, so you might get into a lot of trouble when using unregulated ATM operators.

Other Popular Methods for Buying Bitcoin

Worry not, even though Bitcoin ATMs are not available in the UK, you still have tons of alternative options to choose from.

First off, some UK banking and financial apps like PayPal, Revolut, Skrill and MoonPay allow users to buy Bitcoin directly through their platforms. Of course, you need an account on those platforms if you are to use their services.

Furthermore, you can use payment processors like BitPay to acquire BTC by seamlessly converting fiat currency into Bitcoin.

Lastly, a very prominent and widespread method of buying Bitcoin is through peer-to-peer crypto platforms. Examples of popular P2P platforms include CashApp and Paxful, and they enable you to directly agree on every detail of a crypto transaction with the other user.

Of course, you must be careful here, as you have limited legal protection with such platforms due to the way they operate.

Lagringsalternativer

We touched upon this subject above in the article, and we cannot emphasize enough how important it is to store your Bitcoin assets safely. For that, you can choose to store your assets directly in the crypto exchange platform – also known as a non-custodial wallet since the platform itself takes care of your holdings.

Exchange platforms fall under the hot wallets category, also known as software wallets. As the name itself suggests, software wallets are apps or web extensions that you can access from any device at any time. You don’t need to worry about losing access to your wallets since the provider will always have recovery options in place.

As you may imagine, hot wallets have one big drawback – they can be prone to hacker attempts, as is anything that works online. That is where cold wallets come into the frame. Such wallets are devices that don’t run on internet access, so they are arguably more secure than their hot wallet compatriots.

Cold wallets will require your seed phrase to access your private keys, and they always come with a cost – some options like Trezor Model T and Ledger devices cost upwards of $200.

Basic BTC Concepts to Grasp

Before we take a look at the process of selling your Bitcoin assets, we can finish up this section by mentioning a few basic BTC concepts you must fully grasp:

1. offentlig Key – your wallet address that you share with other users and it helps you receive Bitcoin.
2. private Key – a phrase that you must remember to access your BTC holdings. It is a 12-word and number phrase that you must not share with anyone.
3. Bitcoin lommebok – a place where you store and manage your Bitcoin. As seen above, you can choose from hot and cold BTC wallets.

Selling BTC

Let’s say that you have some BTC holdings and you think that this is the right time to sell them, so how do you do that exactly? Depending on your preferences, you have plenty of ways to sell your assets, but all of them are straightforward. Let’s see the different ways to sell BTC.

Wallet Apps

Some hot wallets also work as digital platforms where you can sell your Bitcoin assets for fiat currencies, and the process of doing so is as simple as it gets:

1. Open your wallet’s app or web extension and find a “Sell” button
2. Choose the amount of Bitcoin you wish to sell
3. Bekreft transaksjonen
4. Transfer the funds you have received straight to your linked bank account.

Kryptoutvekslingsplattform

If you already have an account at a crypto exchange platform, selling your BTC holdings is a walk in the park:

1. Choose BTC from the list of currencies
2. Choose the currency you want to receive and enter the amount – you can choose fiat or crypto, depending on the exchange
3. Review the order and then add your wallet address
4. Enter your bank details and send the BTC
5. Be aware that it can take up to 3 business days for the funds to reach your bank account

P2P-plattformer

Since Bitcoin ATMs are not legal in the UK, the last option you have at your disposal for selling BTC is via a P2P platform, for which the process goes as follows:

1. List your BTC tokens for sale or look through the buyer listings on the platform
2. Agree on a price and a payment method with the potential buyer
3. Transfer your BTC to escrow. The platform will keep it there until the buyer sends the money

A Tempting Asset to Trade

Totalt sett kan vi si det no one can predict how the BTC price will develop in the coming years, but there is no running away from the fact that it is a very attractive investment opportunity.

It surely has the potential to be a very lucrative investment for UK citizens, but you always need to be wary of its volatile status.

Now that you have all the information you need about buying and selling BTC, choose from the options above and make your first investment!