how to buy bitcoin UK

How To Buy Bitcoin UK: The Ultimate Guide (2021)

This is the easiest to follow guide on how to buy Bitcoin in UK

So, if you want to:

  • Legally Buy Bitcoins in UK
  • Find the best Exchange in 2021
  • Pay the least fees possible
  • Secure them properly

Then you’ve landed on the perfect guide.

Let’s get started!

Chapter 1: Some Important Questions

Wait… we’re not diving right into buying bitcoins?!

While I can tell you how to buy bitcoin in the UK, there are 3 important questions that you need to ask so you don’t get ripped off.

I will try to answer them as best as I can but the answers will vary depending on your goals.

Here are the questions with a short explanation on why they matter:


Are you buying at the real exchange rate?

What do I mean by the ‘real’ exchange rate?

Imagine one bitcoin is $10,000 at a given time and you decide to buy it. Ideally, you should be paying the same amount but that’s not usually the case. In fact, most crypto exchanges don’t follow this ‘real’ exchange rate but instead usually have it slightly higher.

This means you are technically paying more (along with any fees) without having any clue.

Luckily, there are websites you can use to track the current price like the Coindesk Price Tracker.

I definitely recommend checking the real GBP to BTC rate before any purchase.


Do you want instant access to your funds?

Usually people decide to buy bitcoin after a sudden price movement, hoping to get in on the action.

What if you had to wait a few days?

Many exchanges like Coinbase may take up to 24 hours (if not more) for your funds to be available.

This might result in you missing a sweet 10%+ gain with the insane volatility of the crypto market.


Fixed Fee vs. Percentage Fee

A lot of times, crypto exchanges have different models for charging fees on your purchases.

It can be Fixed Fees, Percentage Fees or even a combination of both in some cases. This can be a really big consideration depending on how many bitcoins you plan to buy.

Here’s a small table to better help you understand how massive the difference between these models can be:

Purchase AmountExchange A: Fixed Fee ($10)Exchange B: Percentage Fee (1%)
$100$10 is 10% of purchase amount$1
$1000$10 is 1% of purchase amount$10
$10,000$10 is 0.1% of purchase amount$100
$100,000$10 is 0.01% of purchase amount$1000
Fees comparison Example

Yup, small fees can add up to some pretty huge amounts if you don’t plan ahead.


Chapter 2: The Cheapest Way To Buy Bitcoin in UK

Finding the cheapest exchange is a tough task…

And even though I would’ve loved to give you the absolute single best exchange, there really isn’t one that’s the best choice for everyone.

BUT I have narrowed it down to ONLY 3 amazing exchanges from more than 23 that I tested for this article.

These are the absolute best in terms of ease of use, fees and safety of funds and any of them is a great choice for buying your first bitcoin.

Let’s get into them! (Be sure to check the next chapter for securing your purchase)


1. Coinmama (Best For Beginners)

Coinmama UK

If I had to suggest one exchange for newbies, it would definitely be Coinmama.

Helpful support, user-friendly interface and super high security make it simply the best option for anyone just looking to buy bitcoin in UK.

In fact, I can almost guarantee that you won’t go wrong with Coinmama if you are buying your first bitcoin.

PROS:

  • Extremely friendly and helpful support
  • Beginner focused user interface (it’s super simple to use)
  • Accepts an insane amount of payment methods including Credit & Debit Cards
  • High focus on security of transactions
  • Easy to use and fast processing
  • Insanely quick verification (took me 10 minutes)

CONS:

  • Only for buying and selling
  • Few tokens available
  • Need to setup a wallet (Check next chapter for best hardware wallets)

While Coinmama is only focused on buying and selling only the most popular tokens (Bitcoin, Ethereum, Cardano, Litecoin, etc.), this is also what makes it the best choice for beginners. Anyone can get started within a few minutes of reading this simple guide on their website.


2. Coinbase PRO (Best Overall)

Coinbase Pro UK

One of the most used and trusted exchanges throughout the world, Coinbase Pro is my top choice if I could suggest only one exchange for holding your bitcoins on the exchange (Not recommended, read next chapter for a best way to store your bitcoins).

Obviously, it’s not perfect and has some pretty annoying disadvantages but overall, there is a reason people still flock to it.

It’s also one of the cheapest ways to buy bitcoin in UK using bank transfers.

PROS:

CONS:

  • User Interface might take some time to understand for beginners
  • Takes 1 business day to complete Bank Transfers in GBP

You should also check the Coinbase Pro Fee Structure and this short guide on using their platform before getting started.


3. Binance (Trader’s Choice)

Binance UK

Binance is the MOST popular exchange in world with (probably) the widest reach of any exchange. It’s available in most countries and is highly trusted by the crypto community as one of the pillars of cryptocurrency.

I would say Binance is the best choice if are looking into becoming more active with your funds (trading or investing in smaller marketcap coins).

So, if you want to get into something crazy like the next Doge hype then Binance is your best bet (seriously, its got everything!).

PROS:

  • No deposit fees
  • Uses Real Exchange Rate (refer to previous chapter)
  • Browser, Desktop and Mobile Apps Available
  • Super Fast Verification (took me barely 45 mins)
  • Reduce trading fees further by holding BNB (Binance Coin)
  • Availability of many smaller coins for trading

CONS:

  • Browser interface can be difficult to use (for beginners)
  • Withdrawal Fees (both BTC and GBP) can be high for small buyers

I would not recommend using Binance if this is your first time buying bitcoin and instead opt for a combination of Coinmama + Hardware Wallet.

As always, make sure to read the Binance Fee Structure and this short guide on getting started before you start using it.


Chapter 3: Securing Your Bitcoins With Hardware Wallets

You might be thinking that I have already answered ‘How to buy bitcoin in UK’ so why do we need more chapters?

Even though you’ve already bought your first bitcoin (or about to), it’s still not completely secure!

In fact, even though exchanges these days have many security measures and are quite trustworthy, there have been too many hacks in the past to fully trust anyone else with holding your money (BTC).

Hardware wallets completely solve this problem.

What are Hardware Wallets?

Hardware wallets are basically small devices that have been built to securely store and use cryptocurrencies. They work by making sure sensitive information needed to hack/access your funds never ends up leaving in the device in any scenario.

Essentially they are a convenient physical key to access and manage your funds by making sure EVERY transaction needs physical confirmation through the device.

You must be thinking, this seems super hard…

It’s really not! The whole process can be followed by even the most non tech-savvy person and takes at most 5 minutes.

Honestly, setting up my iPhone seemed more complicated than this.

This is why I suggest investing in (at least) one of the two hardware wallets I am about to mention. They are simple to use and the most secure way to HODL your bitcoin (or other supported cryptocurrencies).


1. Ledger Nano S (Best Choice)

Ledger Nano S Hardware Wallet
Ledger Nano S

Ledger is a company based in France that has been around since 2014 and has experienced 0 problems with their devices so far.

They have sold over 1.5 MILLION devices to date with security being constantly updated through their Ledger Live platform.

I have used my Ledger Nano S device for many years without any issues while actively using it to move around my Bitcoins.

You can connect it to both Mac and Windows computers with a simple USB wire (provided with the device) with the setup process taking me around 3 minutes total.

The device itself is pretty small (the same size as a pendrive) and very lightweight BUT the build quality seems top notch with my years old devices still looking brand new.

PROS:

  • Supports both Mac and Windows
  • Great build quality
  • Affordable price
  • Supports a large number of smaller coins (like DOGE and Litecoin)
  • Easy to setup for beginners
  • Clean User Interface
  • Excellent Security Features

CONS:

  • No Bluetooth support
  • Smaller storage than Nano X (still enough for most people)

If I had to recommend one wallet that was affordable, secure and easy to use for beginners then it’s definitely the Ledger Nano S. It hardly has any weaknesses and seems to be the best option if you are just getting into crypto. They also deliver fairly fast in the UK.


2. Ledger Nano X (Mobile Friendly)

Ledger Nano X Hardware Wallet

While the Ledger Nano S has all the core features you need, Ledger Nano X expands on them to include many more ease-of-use and premium ones.

The target market of this device seems to be active traders and crypto enthusiasts who treat the space more as their full time job than just another investment.

This is not to say that the device is not easy to use, in fact it’s technically easier to use with the ability to connect with Bluetooth to any device including mobile phones.

I personally do all my trading on a computer (I’m an old fart) so that’s not really a consideration for me but if you want to handle your Bitcoins (or any other cryptocurrency) through your phone then this is the only option you should be looking at.

PROS:

  • Supports all devices including mobile phones
  • Amazing build quality
  • Bluetooth connectivity option
  • CC EAL5+ certified chip (One of the most secure chips used in passports and credit cards)
  • Supports the most number of alternative coins of any hardware wallet
  • Easy to setup for beginners
  • Clean User Interface
  • Large storage for apps
  • Higher resolution (128px x 64px)

CONS:

  • Expensive (double price from Nano S)

Realistically, the Ledger Nano S should be more than enough for most people but you can’t deny the ease-of-use of the Ledger Nano X. It is simply better if price is not a consideration with its Bluetooth support, extensive alternative cryptocurrency support and larger storage.

So if you got the extra bucks, Ledger Nano X is the best hardware wallet on the market right now.


3. Trezor One (Best Secondary Wallet)

Trezor One Hardware Wallet

(Update: Trezor One can be hacked through specialized hardware as reported by Kraken. I suggest not buying Trezor till we can assure its complete safety.)

Trezor one was released in 2014 as the world’s first hardware wallet and it has stood the test of time throughout the years.

And while it’s still a great wallet with no glaring issues, I personally believe the Ledger Nano S does everything better.

This isn’t to say that the Trezor One doesn’t have its uses. Being a close second to the Nano S, it serves as the best secondary wallet for people who want to own multiple hardware wallets and split their funds.

PROS:

  • Supports Windows and Mac
  • Easy to setup
  • Clean User Interface
  • Cheaper than Ledger

CONS:

  • Feels clunky to use
  • Worse build quality than Ledger
  • No Bluetooth support
  • Lower number of supported currencies
  • Reportedly hacked by Kraken Security Division

In conclusion, I would recommend you to get the Ledger Nano S as it does everything better and personally feels a lot better in terms of quality.


Chapter 4: How To Pay Crypto Taxes in the UK

Now that I’ve answered ‘how to buy bitcoin in uk’ AND ‘how to secure my bitcoins’, we are only left with with one thing…

Not getting in trouble with the nice blokes at the HMRC.

(Obviously, I am not a tax expert and this is definitely not taxation or financial advice.)

This app can be the difference between searching through your transactions and noting them down for days (even weeks) or the whole process taking only a few minutes.

It also removes the part of human error by not missing any transactions that could later get you intro trouble.

Keep in mind that I tested many different apps and while all of them work great for U.S. and Canada taxes, this is the only one that works flawlessly for the UK. There were a few others that tried to add functionality for the UK but they felt severely lacking in many aspects.


1. Koinly (Best Tax Filing Software UK)

Koinly Tax Software UK

Koinly is an amazing web based software that takes all the headache out of filing taxes for cryptocurrency. Started in 2018, the company has quickly grown to become a leader in its space and keeps on actively developing its offerings.

It’s super simple to use (even someone like me figured it out within minutes) and streamlines tracking all my transactions throughout the year when filing my taxes.

I actually linked it to some of the platforms I use and it tracked all my previous transactions perfectly as well so that’s a huge plus.

PROS:

  • Easy to use
  • Fully tax laws compliant for the UK
  • Multiple price plans (includes free version)
  • Availability of different tax reports
  • Helpful customer support

CONS:

  • Does not accept payments in crypto

Whether you are a seasoned veteran or just starting out, I would recommend getting Koinly over any other app out there many times over.

There’s also a free version available on their website to try out (I ended up directly using the paid version).


Conclusion

If you are a complete beginner looking to buy bitcoin in UK then I would generally recommend buying the bitcoins on Coinmama and ordering the Ledger Nano S (do this and set it up before buying) to store them. In case, the amount is high or you are looking to be active with your funds then make sure to also get Koinly to remain tax compliant.

This guide should set you up perfectly but if there is anything I missed or you would like mentioned then please leave a comment below.

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