How to buy bitcoin – Forbes Advisor UK

Bitcoin has experienced explosive growth in recent years. In May 2016, you can buy 1 bitcoin for around £400. As of April 2022, one bitcoin is worth over £30,160. That’s a growth of over 7000%.

Some analysts believe that the price of Bitcoin could rise further as cryptocurrency and blockchain technology becomes a greater part of people’s daily lives. But buying bitcoin has great risks. Besides impressive gains, Bitcoin has also experienced devastating declines. Having reached close to £16,000 in 2017, for example, the value of Bitcoin has fallen to around £2,400 about a year later.

Bitcoin remains a highly volatile asset. If you want to buy Bitcoin, experts recommend that you invest no more than a small percentage of your net worth in the leading cryptocurrency.

How to buy bitcoin in 4 steps

1. Choose a cryptocurrency exchange

To buy Bitcoin, or any cryptocurrency, you will need a crypto exchange where buyers and sellers meet to exchange pounds for coins.

There are hundreds of exchanges, but as a beginner, you will need to choose one that balances ease of use, low fees, and high security. Be sure to check out our top picks for the best cryptocurrency exchanges, such as eToro, or Coinbase, if you don’t already have an exchange in mind.

Be sure to check if your exchange has a Bitcoin wallet built into its platform; If not, you will need to find one of your own. You can also choose to buy your cryptocurrency on a platform like Robinhood or Paypal, although buying crypto this way often means that you can’t withdraw your coins and transfer them to another platform. If you want to hold the cryptocurrency in a different wallet, you will need to sell your holdings and then buy them back on a different exchange.

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2. Select the payment option

After choosing an exchange, you must fund your account before you can start investing in Bitcoin. Depending on the exchange, you can fund your account through bank transfers from a checking or savings account, PayPal, bank transfers, a cryptocurrency wallet, or even a credit or debit card.

However, keep in mind that platforms may charge higher transaction fees for certain financing options. For example, Coinbase does not charge any fees if you make a wire transfer from a bank account. However, it does charge a fee of 3.99% of your transaction value if you pay by debit card via PayPal.

Credit card transaction fees on other platforms often reach at least that high.

Since fees reduce the amount of money you can invest (and thus also the amount of money that has to grow), it makes sense to use electronic transfers from a bank account rather than other methods. Additionally, if you use a credit card to purchase cryptocurrency, it will generally be charged as a cash advance and subject to a higher interest rate than you would pay on the regular fee. Moreover, borrowing to buy volatile investments is very risky.

3. Place an order

Once your account is funded, you can place your first order to buy Bitcoin. Depending on the platform you are using, you may be able to purchase it by clicking a button, or you may have to enter the Bitcoin (BTC) ticker code. You will then have to enter the amount you want to invest.

When the transaction is complete, you will own a file bit Bitcoin. This is because it requires a large upfront investment to buy one Bitcoin now. If the current bitcoin price is £30,000, for example, you would need to invest a lot to buy bitcoin. If you invest less, say £1,000, you get a percentage, in this case 3.33%, of bitcoin.

Buy and sell cryptocurrency with Coinbase

The world’s largest and easiest place to buy cryptocurrency

4. Select the Safe Storage option

Many cryptocurrency exchanges have an integrated bitcoin wallet, or at least a preferred partner where you can keep your bitcoins securely. However, some people do not feel comfortable leaving their cryptocurrency online, as hackers can steal it more easily.

Most major exchanges have private insurance to compensate clients if this happens, and they also store the majority of client assets in an offline mode called “cold storage.”

If you want absolute security, you can store your Bitcoin in an online or offline Bitcoin wallet of your choice. But keep in mind that if you transfer cryptocurrency from an exchange, you may have to pay a small withdrawal fee. Additionally, if you use a third-party crypto wallet custodian, you may also not be able to permanently access your coins if you lose the private key that acts as your wallet password. This has left some Bitcoin millionaires out of their fortunes.

sell bitcoin

When you decide that you are ready to sell your Bitcoin, you can place a sell order through the exchange, just like you did when you originally bought it. Most exchanges offer multiple order types, so you can decide to sell only when Bitcoin reaches a certain price, or you can place an order that gets executed instantly.

You can choose to sell your entire Bitcoin holdings or just sell a specific amount. Once the sale is completed, you can transfer the money to your bank account. However, your disbursement may have a holding period before you can make a transfer back to your bank account. This is not cause for concern. It takes some time to make sure that the transactions are clear.

When you sell your Bitcoin, you can make a profit. If your earnings exceed a certain threshold, you will be in trouble for capital gains taxes, so be sure to keep track of your earnings.

Should you buy bitcoin?

When the price of Bitcoin goes up exponentially, it can be tempting to invest in the popular cryptocurrency. But while it is likely to be a profitable investment, you should be careful. Even if you decide to go ahead, its volatility has led many experts to recommend not allocating a large percentage of your money to buying it.

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