Are you looking to buy Bitcoins in the United Kingdom? But don’t know where to purchase and how? This unbiased guide has been created to help members of the British public understand Bitcoin in further detail.
Firstly, we’ll take a quick look at what Bitcoin is, so you can gain more knowledge before making a purchasing decision.
In basic terms Bitcoin is a ‘cryptocurrency’, this basically means a ‘digital asset’ which can be exchanged like money. However, a Bitcoin is not ‘real’, there’s no physical coin you can hold in your hands, it’s purely digital. It’s uses ‘cryptography’ to secure its transactions, to verify the amount of transfers and the control of the number of units in circulation.
People commonly ask, ‘is bitcoin safe?’ As it’s been designed with cryptography to secure communication from third-parties, so it’s as safe as any other form of digital currency. The cryptography will stop people from reading private messages and data, it’s basically a form of encryption.
Typically, you’ll need to purchase bitcoins from an exchange, this is a peer-to-peer network. The transactions are verified by network ‘nodes’, through the use of cryptography and recorded in a public distributed register called a blockchain.
Bitcoin Step by Step Buying Process
If you’re unsure with the buying process or it’s your first time purchasing bitcoins, this easy to follow guide should help you.
Set up a Wallet
Just like having a wallet or purse to store your credit cards, coins and notes, Bitcoin also needs a ‘digital’ wallet to store your Bitcoins. In most cases you can set up a wallet with the exchange platform you decide to use or from an independent provider. You can have a desktop wallet, a mobile wallet or an offline wallet (such as an external hard drive).
There’s lots of different options and providers to choose from, it can be hard to say which one is ideal for you, as we all have different requirements. Usually the wallet will be ‘free’, so if you find somebody charging a large amount of money look elsewhere.
It’s really important that you remember to keep the ’keys’ (this a string of characters) and/or the passwords safe. If you lose them, you’ll lose access to the bitcoin stored there and there’s usually no way of retrieving them
Open an Account
You’ll need to use a Bitcoin exchange to ‘buy and sell’ the coins. There’s a huge list of exchanges throughout the world, most will operate in US Dollars (USD), however some also operate in Euros. The hardest thing about purchasing Bitcoins is knowing which exchange is the most secure. As the whole cryptocurrency industry is still quite new, many exchanges open and close in quick succession. It’s certainly ‘recommended’ to do as much research as possible before you make any purchase.
In most cases you’ll need to verify who you are, this is because of a ‘clampdown’ on some people using Bitcoin for money laundering activities. Typically, the verification process will include a photo of yourself on an official ID, this tends to be a passport, driving licence and so on. Some exchanges will also require a ‘proof of address’, this can be a typical utility bill, mobile phone bill and so on.
Over the last year or so, more exchanges are beginning to accept GBP as a payment currency, some won’t, others will. Usually the majority will only accept a bank transfer or credit card, some may accept PayPal, however it’s not the ‘standard’ option.
Just like investing money into the stock market, you’ll find that most exchanges will charge a fee, this varies depending on which one you use. However, please remember to read all the terms and conditions so you know exactly how this applies to you.
Once the exchange has received your payment, it will purchase the number of bitcoins you have stated on your behalf. It will deposit them in an automatically generated wallet on the exchange. This process can take minutes, however sometimes it may take a couple of hours depending on the demand at the time.
Once the coins are in your wallet on the exchange, it’s recommended you move the funds to your ‘off-exchange’ wallet as explained above. Moving them from the exchange is for extra security, remember though, don’t lose the password or ‘keys’ to your wallet!
Places to Buy Bitcoins
Before you make a purchase, we always recommend doing your own research, the following exchanges are to be used as a ‘general guide’ only and we cannot ‘verify’ their business practices or procedures.
What’s Bitcoins Status in England?
As Bitcoin took the world by storm, lawmakers and Governments have been attempting to keep up with this new form of currency. The Financial Conduct Authority (FCA) views bitcoin as a “commodity”.
In December 2017, Andrew Bailey, head of the Financial Conduct Authority, told the BBC that neither central banks nor the government stood behind the “currency” and therefore it was not a secure investment.
“The decision on what we regulate is appropriate for government and Parliament,” he said.
“It would be for Parliament ultimately to make that choice if it wished to do so. I don’t press for that providing people understand very clearly this is a very volatile commodity. [But] if parliament wants to go further we will happily provide the evidence we have and will support the decision they want to take.”
(Source – BBC News )
About and History
Bitcoin was originally invented by an unknown person under the name Satoshi Nakamoto, it has been speculated that it may have been more than one person, however no confirmation has been received.
The currency was released as ‘open-source software’ in 2009. The bitcoins are created by a process called ‘mining’, this is a record keeping service done through the use of computer processing power.
It’s been stated that over 100,000 merchants and stores accepted bitcoin as a payment method throughout the world. This highlights the massive growth the currency has had since its inception. Equally it was also estimated by the University of Cambridge that around 2.9 to 5.8 million unique users using a cryptocurrency wallet, with most of them using bitcoin. (Source – University of Cambridge )
It’s not just in Europe where Bitcoin is popular, of course it’s a worldwide currency. Japan has passed a law to accept bitcoin as a legal payment method and Russia has announced that it will legalise the use of cryptocurrencies.