Bitcoin and the general idea of cryptocurrency is here to stay even though it’s still somewhat difficult to predict when it would gain mass adoption.
Bitcoin is the first, most popular, and most valuable decentralized digital currency designed for peer-to-peer transactions without the intermediary of traditional financial institutions.
In the last 10 years, Bitcoin has caused governments, financial institutions, and businesses to start rethinking the idea of money– especially in the digital economy. Now, many business owners are paying attention to the rising popularity of cryptocurrencies so that they can understand its potential effects on their cashflows in the short to medium terms. If you are curious about getting started with crypto, this piece is a comprehensive guide on how to buy and sell Bitcoin in the UK in 2020.
How to buy and sell Bitcoin in the UK
Cryptocurrency exchanges are popular, and they are doing a commendable job of pushing the narrative that crypto is the future of money. Crypto exchanges are usually centralized, peer-to-peer, or decentralized exchanges.
Centralized exchanges allow people to include their buy or sell orders in the orderbook and the exchange’s matching engine pairs up the trades for fulfilment. For instance, if you want to buy 1 BTC at £10,000, you’ll place the buy order and the matching engine looks for another sell order for 1BTC at £10,000 to facilitate your trade. If you purchase your crypto from an exchange, it is in your best interest to withdraw the tokens into a wallet that you own and control to protect them from being stolen in a hack.
Peer-to-peer exchanges allow people to list buy and sell offers on the amount of cryptocurrency they want to buy/sell and the price at which they are willing to make the trade. Other users on the exchange respond to the offers, negotiate where applicable, agree on the escrow method and payment times before proceeding to complete the transaction independently.
Crypto Custodian service
A crypto custodial service is a licensed and regulated third party that provides a solution for people to buy, store, and sell Bitcoin securely. When you buy Bitcoin through a custodial service, you keep the tokens with the company and the company is responsible for storing your coins until whenever you want to sell it.
Storing cryptocurrencies securely requires an understanding of technical concepts such as private keys, public keys, hot and cold storage among other concepts. The long list of crypto hacks and the fact that stolen crypto is practically irrecoverable are reasons why custodial services are important.
Many small business owners who are starting to include cryptocurrencies in their operations probably don’t have the technical expertise or experience on the best practices for storing their Bitcoin or for securing their wallets. Hence, many small business owners tend to avoid exploring the possibilities in cryptocurrencies because they don’t want to run the risk of losing their funds in an exchange hack.
Thankfully, companies that provide crypto custodial services leverage the best security measures to store and protect the cryptocurrencies in their care. Also, crypto custodial services are typically insured to ensure that users get some respite in the unlikely effect of a hack or theft.
If you are buying or selling large volumes of Bitcoin or any other cryptocurrency, you’ll most likely be better off placing your trade through a broker than from executing the trade on a cryptocurrency exchange. Crypto brokers are part of a dealer network that pair people who hold large pools of crypto in over the counter trades.
When you place a buy or sell order for a large volume of Bitcoin on an exchange, it is unlikely that there will be a corresponding trade for the same volume and price in the order book at the same time. Hence, the matching engine will most likely scour the order book to look for different orders with which it can complete your transaction. The fact that your trade is completed through multiple transactions, in turn, increases the slippage and the transaction fees on the trade.
Buying and selling cryptocurrencies through broker services ensures that the trade is facilitated in a single transaction to ensure faster settlement. More so, using broker services reduce the risk that you’ll inadvertently move the market through a whale transaction.
Where to buy and sell Bitcoin in the UK
Most popular: Coinbase
Coinbase is the world’s most popular Bitcoin exchange as it provides a platform to buy and sell Bitcoin for more than 30 million users across over 30 countries. Founded in 2012, it has raised £168 million from some of the world’s leading investors and its users have traded more than £116 billion in cryptocurrencies.
Another factor that makes Coinbase the most popular apart from its age is that it allows users to buy bitcoins with debit cards, bank transfer, SEPA transfer, and other payment options. It also boasts high liquidity and buying limits because of its large userbase and huge transaction volumes. The major downside with Coinbase, however, is that it can take up to 5 days for settlement when you buy Bitcoin with debit cards.
Most simple: Skrill
Skrill provides the simplest, hassle-free, and most straightforward place to buy and sell Bitcoin in the UK. Founded in 2001, Skrill has built a reputation for simplifying digital payments while ensuring speed and security. Skrill started making a big push in facilitating the buying and selling of Bitcoin in mid-2018 and it has succeeded in utilizing its existing rails to make crypto a core part of its business.
Skrill’s simplicity is evident through a dedicated crypto tab in its app where users can select the crypto coin they want to buy and the sum to be purchased. The trade is executed in real-time and Skrill goes one step further to provide custodianship for the tokens so that you don’t have to worry about wallet addresses, private/public keys, or hot/cold storage. Skrill’s custodianship is especially reliable because it is a member of the Paysafe Group recording more than £1.5 billion in annual revenues.
Skrill provides an option to buy and sell more than 40 fiat pairs, therefore, making it easier for small businesses with forex exposures.
Most private: LocalBitcoins
LocalBitcoins is a peer-to-peer service for people that want to buy and sell Bitcoin in the UK directly with other cryptocurrency users. The peer-to-peer nature of LocalBitcoins makes it one of the most private ways to buy and sell Bitcoin. The fact that you don’t necessarily need an ID before you can place a buy or sell offer and the fact that you can pay with cash or any other mutually acceptable payment option makes it attractive to some privacy-conscious users.
However, the peer-to-peer nature of LocalBitcoins put most of the responsibility of due diligence on the counterparties involved in a trade. More so, the private nature of the transactions suggests that you’ll need to be extra cautious to avoid falling prey to scams.
Most credit card-friendly – CEX.IO
CEX.IO is a London-based service that has built a reputation as a multi-functional cryptocurrency exchange for more than one million users. Founded in 2013, CEX.IO provides access to high liquidity orderbook for top currency pairs on the market while ensuring time-proven platform stability that guarantees the safety of user tokens and data.
CEX.IO is noteworthy for being one of the few exchanges that allow you to buy Bitcoin with credit cards while charging a modest fee of 3.5%. It takes about two days from the funds to be available but its relatively low rate seems to make up for the delay. CEX.IO also has four levels of limits and liquidity depending on the number of cryptocurrencies you want to buy and how much verification you are willing to provide.
Bitcoin is here to stay even though critics are erroneously underestimating its disruptive potential on business, finance, and the economy. Granted, Bitcoin still lags the GBP and other fiat currencies as a payment mechanism, means of exchange, or store of value. Yet, there’s no denying the fact that crypto has a critical role to play in the evolution of money in an increasingly digitalized economy.
In the last 10 years, Bitcoin has caused governments, financial institutions, and businesses to start rethinking the idea of money– especially in the digital economy. Now, many business owners are paying attention to the rising popularity of cryptocurrencies so that they can understand its potential effects on their cashflows in the short to medium terms. If you are curious about getting started with crypto try Bitcoin Era, so many people across the world have have amazing experiences with this trading app. Read more about Bitcoin Era