How to Buy Cryptocurrency In The UK

Who would’ve thought ten years ago that millions of individuals and businesses worldwide, would readily take to some farfetched and still not fully developed idea about digital coins? Back then, cryptocurrencies were used by a small crypto community and not even they could foresee the success that cryptos have gained in recent years.

In our guide, we’ll briefly touch upon the history of these coins of the future and how UK traders took an interest in them. We’ll discuss the perks and flaws of investing in cryptocurrencies and what to do once you purchase them.

The History of Cryptocurrencies

Many assume that the idea of using a digitalized version of money is quite new when, in reality, it was born half a century ago.

It’s true that the first digital coin, Bitcoin, the electronic payment system, and the technology on which they were built were publicly released in 2009 by their pseudonymous creator Satoshi Nakamoto. However, we cannot talk about Bitcoin or cryptocurrencies in general, without giving credit to a number of other computer scientists and cryptographers that worked during the 1980s and ‘90s and influenced Nakamoto’s invention.

We need to acknowledge the work of David Chaum, who developed the concept of blind digital signatures in 1982 and piloted an electronic payment system in 1994, called DigiCash, based on these signatures. Then we have Adam Back who developed the anti-spam algorithm HashCash, an early proof of work system, Wei Dai who took this system even further in his proposal for B-Money in 1998, and the revolutionary ideas of Hal Finney and Nick Szabo.

Nakamoto created his system and blockchain technology by using and taking these ideas one step further. He managed to solve the main challenge of verifying transactions, i.e. the double-spending problem, by introducing a peer to peer network that uses cryptographic proof.

The Rise of Cryptocurrencies in the UK

Until 2018, the growing presence of the crypto industry and its implications were overlooked by government and financial institutions in the UK. As a result, crypto trading was heavily unregulated and the status of cryptocurrencies remained unsolved.

Finally, in 2019, the United Kingdom Jurisdiction Taskforce of the LawTech Delivery Panel published a Legal Statement on Crypto Assets and Smart Contracts, discussing not only digital coins but the potential of the blockchain technology as well. It was decided that crypto assets would be classified as property and taxed accordingly. Based on the type of transaction, they are subjected to Capital Gains Tax (CGT) or Income Tax (IT). You can read more in the policy paper Cryptoassets: Tax for Individuals, published on the HM Revenue and Customs website.

As far as crypto exchanges are concerned, they have the obligation to register with the Financial Conduct Authority (FCA) to get a license. As of 2020, FCA is the anti-money laundering (AML) and counter-terrorist financing (CTF) supervisor.

Investing in Cryptocurrencies

Cryptocurrencies have shown they’re here to stay! Due to the existing strong ties between fintech and cryptos, they’re likely to be assigned a lot more use cases in the near future.

On the other hand, they continue to be an attractive investment across the world, with millions of traders buying digital coins and holding on to them, waiting for their price to go up before they sell them. These things: buying, selling, trading, converting, or transferring cryptocurrencies is done on specially designed crypto exchanges. If you’re interested, you can have a look at our guides on how to buy cryptocurrency in Canada, in the US, or in Australia.

However, we can’t turn a blind eye to some of the risks commonly associated with the crypto industry. First of all, the market is undoubtedly a highly volatile one because it’s based on speculations for the most part. This and the problem of low liquidity are common for developing markets. The best thing you could do is not to invest more than you could afford to lose and to avoid investing in obscure altcoins if you’re haven’t done thorough research first.

Should You Invest in Cryptocurrency?

Cryptocurrencies are used by individuals and companies because they allow them to complete money transactions faster and cheaper. They have revolutionized the financial industry by displacing the middleman and maintaining a higher level of privacy. That’s why some traders choose to invest in cryptocurrencies because of their inherent ideology.

Others like the idea of digital coins replacing fiat currencies one day, so they decide to invest in them and hold on to them until the right time comes to use or sell them. They speculate and bet cryptos against the British Pound, hoping to make a profit in the long run.

Browse the web and conduct your research, outline an investment plan and strategy, and don’t make the mistake to fall for trends or hyped (but suspicious!) coins. After all, crypto trading shouldn’t be stressful!

What Cryptocurrencies are There?

Bitcoin has caused an avalanche of cryptocurrencies, digital assets, and all sorts of tokens in the last eleven years. CoinMarketCap lists more than 5,000 cryptocurrencies on their website! Some of the most popular altcoins besides Bitcoin include Ethereum, Bitcoin’s fork Bitcoin Cash, Ripple, Monero, Litecoin, etc, but they’re still worth a lot less than Bitcoin’s current price of $7,815.

The initial vision behind these coins wasn’t that of becoming Bitcoin’s rivals. Instead, apart from tradeable assets, a lot of them were created for different purposes. Ethereum, for example, was designed to show that blockchain technology can be used to facilitate a new type of decentralized contracts called smart contracts where Ethereum would function as a fuel for these services.

What to do When You Have Bought Your Cryptocurrency

You’ve decided that crypto trading is the right thing for you and bought your first digital coins. What’s next?

Well, if you want to hold onto your coins longterm or store them temporarily, you have two options: you could either keep them in a digital wallet on the same crypto exchange you bought them from or if the exchange doesn’t provide one, you can use a third-party online wallet instead.

However, storing cryptocurrencies online is quite risky as these platforms are frequent targets for hackers and liable to malware. The safest option is to store them on a hardware wallet that’s disconnected from the Internet. It’s not very expensive, it’s portable and incredibly secure. It’s locked with a personal key that only you have access to.

If you want to learn to compare different wallets and choose the one for you, go to our “Best Cryptocurrency Wallets” guide.