Ways to Invest in Bitcoin From the UK
Investing in Bitcoin has become incredibly popular in the last few years. At the same time, concerns about the safety and future of cryptocurrency have been brought into question.
The number of crypto investors in the UK is on the rise, but only those curious about crypto may wonder, “Is it worth investing in Bitcoin?” After all, cryptocurrency is notoriously volatile, and there are many risks involved.
Still, there are advantages to jumping on the crypto train, only you might not know how to invest in Bitcoin. UK residents have several investment types and strategies to consider.
What Is Bitcoin, and How Does It Work?
The first question on a potential investor’s mind might be, “How do I invest in Bitcoin?” However, before buying your first coins on the crypto exchange, let’s take a step back.
What is Bitcoin, anyway? Bitcoin is the original cryptocurrency. It's also called a crypto asset or digital currency and uses blockchain technology, a coding mechanism that runs on many computers.
This technology also uses a public ledger to keep track of Bitcoins and transactions. You purchase Bitcoin with your local fiat currency. But once the coins are in your Bitcoin wallet, their value may fluctuate, and you can sell or trade them.
However, that's only the basic idea of learning about how to invest in Bitcoin. UK crypto-curious residents should know exactly what the process looks like.
How to Invest in Bitcoin From the UK
The idea of investing in cryptocurrency can be a little overwhelming if you don't know what it entails. The good news is that when it comes to how to invest in Bitcoin, you basically need a personal identification document, bank account, and a stable internet connection.
Granted, that covers many people in the UK. Therefore, you might ask, “How do I invest in Bitcoin – step by step?” The process is relatively straightforward and involves three steps in total.
Join a Bitcoin Exchange
Regardless of your ambitions about Bitcoin investing, the first step is always choosing a Bitcoin exchange. If you’re curious about how to invest in Bitcoin, you have to purchase coins at the exchanges.
Keep in mind that there is no designated "Bitcoin company" that covers everything, as the system is based on open-source technology.
That means you'll need to do your own research to find the exchange you want to use. Fortunately, there are many legitimate crypto exchanges with a huge user base operating in the UK.
Picking one or two exchange platforms is the basis of knowing how to invest in Bitcoin. UK crypto investors can consider these popular exchanges for a start:
- Coinbase: It's one of the most popular and safest crypto exchanges in the world. The user-friendly interface and insurance against losses in the event of a security breach are the top features.
- eToro: This is an FCA regulated crypto exchange platform that allows users to trade Bitcoin commission-free
- CoinCorner: A platform with an excellent reputation when it comes to speed and reward programs.
- CoinJar: This exchange offers ready-made crypto portfolios and free, fast payment bank transfers.
- Gemini has been around since 2015 and offers excellent services for beginners and savvy Bitcoin investors.
These exchanges are only a few of the many excellent options you have when learning how to invest in Bitcoin. UK investors have a lot more choice, creating a situation where beginners aren't sure how to choose. Hence, starting with a bigger platform is advisable.
Get a Bitcoin Wallet
Once you’ve opened an account on the crypto exchange platform, the next step in figuring out how to invest in Bitcoin is to get a crypto wallet. Most major exchanges offer custodial or hosted wallets, where you can leave your coins.
However, these wallets don’t allow you to hold the private keys that give you access to your funds. On the other hand, they are typically secure, which means you will never misplace your private keys and lose coins for good.
Custodial wallets might be the suitable solution for your very first steps in the crypto world. But, soon enough, most investors move their funds to non-custodial wallets.
Custodial wallets might be the suitable solution for your very first steps in the crypto world. But, soon enough, most investors move their funds to non-custodial wallets.
These wallets give complete control of private keys and funds and can be placed in two categories – software and hardware wallets.
As a beginner, using a web-based wallet or a mobile app wallet is more convenient. Hardware wallets
Top 5 Online Bitcoin Wallets:
Top 5 Hardware Bitcoin Wallets:
Buy and Manage Bitcoin
When you have the wallet of your choice, the next move in terms of how to invest in Bitcoin is to connect it to your bank account.
You can also buy Bitcoin with PayPal in the UK. Either way, you'll need to have a valid payment processing method available. Now, the next question is, "How much should I invest in Bitcoin?”
That will be determined by your budget and ambitions. Your initial investment doesn’t have to exceed £20-£25 on most exchanges. Once the coins land in your wallet, you can use them to make online transactions.
How to Invest in Bitcoin – Different Methods
The is “it worth investing in Bitcoin” question largely depends on which investment method you choose, as you can invest in Bitcoin directly and indirectly.
However, you also have the option of participating in Bitcoin mining, but that's typically reserved for savvier crypto users. As an enthusiastic investor, here are your options.
Buying a Standalone Bitcoin
Not all exchange platforms take ownership of a Bitcoin as a "physical" asset, but crypto brokers like Coinbase do.
If you buy a standalone Bitcoin, you get access to its price-performance and use it to make transactions. Having a standalone Bitcoin is similar to having one pound sterling in your wallet.
Greyscale’s Bitcoin Investment Trust (GBTC)
If you’re curious about how to invest in Bitcoin stock, choosing the Greyscale Bitcoin Investment Trust (GBTC) is a fantastic option. GBTC is one of the leaders in the crypto industry and a reliable name for many investors.
The GBTC has democratised Bitcoin, made it more accessible, and easier for investors to hold Bitcoin in brokerage accounts.
Amplify Transformational Data Sharing ETF (BLOK)
This is an exchange-traded fund on the stock market. So, if you’re wondering, “How do I invest in Bitcoin", this is an option to consider.
Learning how to invest in Bitcoin stock will likely encourage you to purchase shares of BLOCK. This is an actively managed ETF that specialises in the blockchain. The fund managers are actively investing in companies that use blockchain technology, thus giving investors new opportunities.
However, if you want to know how to invest in Bitcoin stock indirectly, another way is to purchase shares in companies that accept Bitcoin as payments, such as PayPal, Microsoft, or Starbucks.
How to Invest in Bitcoin UK – Strategies to Consider
We've answered the "How do I invest in Bitcoin” question, but we still have to cover some of the investment strategies.
The reality is that when it comes to how to invest in Bitcoin, the strategies are not that different from traditional investing. With Bitcoin, specifically, there are three notable routes investors can take.
Buy and “HODL” Bitcoin
Possibly, you've already heard the term "HODL", which is an intentional misspelling of the word "hold." Short for “hold on for dear life”, it essentially represents a unique investment philosophy.
Once you purchase Bitcoin, you’re meant to hold on to it and weather all the ups and downs and value fluctuations without selling it.
Holding Bitcoin Long Term
For many, the answer to the question, “Is it worth investing in Bitcoin” has only one answer – yes, but only long-term.
Indeed, it's similar to the HODL strategy, but implies that the investor will eventually sell once they are satisfied with the profits. At the core of this method is believing that Bitcoin's value will only increase over time.
Short-Term Bitcoin Trading
By far, one of the most popular ways of investing in Bitcoin is to play on its volatility. Most cryptocurrencies, and especially Bitcoin, are well-known for extreme swings in valuation.
For many Bitcoin traders, that means selling their coins when the prices are high and buying them when they dip. Regardless of its popularity, this strategy is one of the most challenging as it requires investors to act fast and stay on top of crypto events.
Is It Worth Investing in Bitcoin?
If you’re still asking, “Should I invest in Bitcoin?" the only honest answer is that it depends. The most important thing to remember is that there’s no such thing as a "good" or "bad" investment, as it all depends on your risk tolerance.
However, you should be familiar with all the relevant steps regarding how to invest in Bitcoin. As a beginner investor, you’ll need a reliable Bitcoin wallet and a crypto exchange account. From there, you can develop your investment strategy.
Some users choose to hold on to their Bitcoins; others wait for the right moment to sell. And the majority of people decide to trade in the short-term in the hope of making a great profit.
Regardless of the route you take, keep in mind that Bitcoin is volatile, and people often lose money investing, but can make significant gains too.