How To Buy Bitcoin UK (BTC Buying Guide)

How to Pay for Your Bitcoin

Nowadays, it’s really easy to buy Bitcoin from a digital marketplace and choose from the variety of available payment options. But it wasn’t always like that.

At first, the only way to pay for Bitcoin was through a bank transfer that would take days to complete. Most crypto exchanges didn’t support fiat deposits or fiat to crypto trading, so you would have to look for a third-party platform to convert your fiat currencies.

The increased demand and interest that traders have taken in this coin has resulted in exchanges adding more and more payment methods to keep their customers and expand their market into new international territories.

Let’s take a look at the most popular ways of buying Bitcoin in the UK today.

Buying Bitcoin With Your Bank Account

One of the least complicated and earliest methods to buy Bitcoin was to link your Bitcoin account with your UK bank account. These payments are quite fast and inexpensive compared to other online payment options. Plus, today there are a number of payment services to speed up the process even more.

For UK traders, the best UK-based crypto exchanges for making bank transfer deposits are the local exchange CEX.io and the popular US-based brokerage Coinbase. Both platforms support trading through UK bank accounts and allow their customers to pay in GBP. They provide high liquidity, high buying limits, and affordable fees.

As a UK resident, you can choose between a SEPA transfer, if you want to pay in EUR, or a Faster Payments transfer to deposit GBP. Faster Payments Service is a UK banking initiative that aims at making bank transfers faster and more secure. These payments usually take 1-3 days to complete and incur a 1.49% fee per trade on Coinbase or no fee at all with CEX.io.

Sometimes, if you want to trade on an international exchange because you prefer their offer, instead of regular bank transfer, you would have to pay through a wire transfer or SWIFT. We suggest avoiding these cross-border payments if you’re in a hurry as they could take up to one week.

Buying Bitcoin With a Credit Card or Debit Card

Contactless payments have become an inseparable part of our busy lives. In 2018, the BBC reported that debit card payments have surpassed cash payments for the first time ever in day-to-day spending. It’s no wonder that this payment option is popular in the Bitcoin world too.

So, what crypto exchanges accept card payments from UK traders? The most popular options are CEX.io, Coinbase, and Coinmama.

Now, one thing you need to know about “paying with plastic” is that convenience results in higher fees. To purchase Bitcoin in a matter of seconds comes at a hefty price. On top of that, you’re in for lower purchasing limits on card payments too.

If you’re a UK resident, you’ll get the fairest deal using CEX.io. The platform supports VISA and MasterCard payments with a minimum daily deposit of $20. GBP deposits made with UK-issued cards incur an incredible 1.49% commission fee!

In comparison, Coinbase charges a fixed 3.99% fee per transaction and only accepts debit card payments. The buying limit stands at around $7,500 per week. Coinmama charges a 5.00% fee on credit and debit card purchases but you get to purchase up to $5,000 worth of BTC per day or $20,000 per month.

Buy Bitcoin With Cash

Bitcoin’s founder envisioned that his digital currency would mark the onset of a global decentralized payment system, one where our money transactions would be conducted without the interference of third-party financial institutions and banks.

But buying Bitcoin online on cryptocurrency exchanges means that you still have to link your account to an existing bank account under your name and reveal a lot of personal details. You still spend extra money on service costs for their escrow services.

If you’re a UK trader who wants to trade anonymously, i.e. buy Bitcoin with cash, you can do this on the small number of decentralized peer to peer exchanges such as LocalBitcoins and Paxful. These platforms allow sellers to advertise their Bitcoin orders and a lot of them would accept cash payments.

Or you can meet face to face so you can pay them in cash. However, this option is not always the safest one, so if you feel anxious about it, you can ask for the seller’s bank details and pay in cash over the counter.

Another popular option for those of you who prefer paying in cash is to use a Bitcoin ATM. According to Coin ATM Radar, there are 271 Bitcoin ATMs in the UK. Usually, you’ll find these machines in restaurants, airports, and retail stores.

Buy Bitcoin With PayPal

In the Bitcoin community, there is a large group of traders who own a PayPal account and use its payment services. Some even prefer it over debit cards and argue it offers higher protection of their funds and sensitive data.

If you happen to be a PayPal user yourself, you’re probably wondering if you can purchase Bitcoin with the money on your PayPal balance. The answer is yes, you can, although the available options are quite limited because exchanges want to protect themselves from potential chargeback frauds. You should also expect to pay a larger service fee.

Again, our CryptoHead team recommends UK traders to use CEX.io because it allows you to connect the platform account with the same Visa/Mastercard linked to your PayPal account. This makes it easier for you to fund your account by transferring funds from the PayPal balance.

Unfortunately, this type of indirect PayPal purchase is the only one available on centralized exchanges unless you decide to use a decentralized one like Paxful and find a seller that accepts PayPal payments.

Buy Bitcoin With Another Crypto

Bitcoin might be the first and most popular cryptocurrency in the world, but there are plenty of other cryptocurrencies to choose from if you want to make your portfolio more diverse, or if your strategy involves not putting all your stakes into one coin.

After a while, you might want to exchange these altcoins for Bitcoin. To do that, you need to find a reliable altcoin exchange with high liquidity. We recommend using Binance or Bittrex, two high-volume exchanges whose services are used and praised by millions of traders around the world.

As a UK trader, you can choose from 100 different tokens and over 450 corresponding trading pairs. First, check whether the platform supports the altcoin that you want to trade against Bitcoin. If it does, create an account and deposit the cryptocurrencies from your wallet address. Click on the “Buy” section, find your trading pair, and specify the purchasing amount.

Buy Bitcoin Anonymously

The crypto industry has been increasingly targeted by hackers in the last couple of years because they know these platforms store a lot of sensitive data such as credentials, card details, and most importantly, large sums of money. Even if they keep the majority of them in cold storage, they’re still not 100% safe.

One of the ways to tackle cybersecurity threats and data breaches is for crypto exchanges to perform mandatory KYC checks on their customers and to track suspicious transaction patterns. But this takes centralization to another level, according to some traders, who feel like these checks are a direct invasion of their privacy.

Luckily, there still exist a couple of options for those who’re seeking for alternatives to be able to buy Bitcoin anonymously in the UK.

One of them is to use the nearest Bitcoin ATM, only make sure it’s one that supports cash as well as card payments and be prepared to pay a higher transaction fee than usual.

The second option is to use a decentralized exchange like LocalBitcoins where you only need to provide your email address to register for an account. Centralized exchanges, on the other hand, only allow you to trade cryptos without performing a KYC check but the withdrawal limits are really low.

Buying Bitcoin OTC (Over-The-Counter)

What if you’re an institutional investor and need a suitable platform for purchasing large amounts of Bitcoin? While you can certainly use a regular cryptocurrency exchange (with some setbacks), we recommend joining an over the counter (OTC) desk instead.

First of all, these desks are in a way decentralized, unlike regular crypto exchanges where you still need their authorization to make an order. OTC desks offer an interface where buyers and sellers meet each other and they provide high liquidity – a key element to buying a substantial amount of coins.

Moreover, when buying a lot of BTC at once, traders can experience “slippage”, i.e. paying an average price for your coins because you’re buying up both the lowest and the highest orders that the exchange has to offer. With OTC platforms you avoid this slippage and buy Bitcoin at a fixed price.

The most popular OTC platforms at the moment are Circle, ItBit, and Genesis. In an answer to the growing interest of institutional traders in Bitcoin purchases, regular crypto exchanges such as Kraken and Bitbuy are also creating space for their own OTC desks.

How to Store Bitcoin

There’s another important thing to take into account before you buy your first Bitcoins. You need to decide on a Bitcoin wallet to store them after. In reality, you’re not storing your BTC but the private key (an encrypted address, i.e. a string of digits and letters) that gives you access to your Bitcoin balance.

So, what types of wallets can you choose from?

Software or online wallets are right now the number one choice for traders worldwide. Main advantages: easily accessible and usually free. However, allowing platforms to store your private key online is highly risky!

Yes, it’s true that they integrate state-of-the-art security methods to prevent hacking attacks, but we’ve witnessed numerous unfortunate scenarios in the past.

Today, crypto traders are investing in the newest wallet invention – the hardware Bitcoin wallet. The USB like devices store your private keys offline, disconnected from the Internet, and far from hackers’ greedy hands. Even if you lose them, you can recover your funds with the recovery or “seed” phrase you get during the activation process.

Look up Ledger Wallet Nano S, Ledger Wallet Blue, and Trezor. If you can afford to purchase a more expensive and extremely secure wallet, you should get either one of the Ledger wallets. If you’re on a tighter budget, Trezor is a good value for the price.

Frequently Asked Questions