The cryptocurrency market is the newest and most exciting securities market right now with great opportunities for investments and trading. Similar to all markets and forms of investments, you need to know how to buy cryptocurrencies properly if you want to make the most of them.
That’s why we put together this complete guide on how to buy cryptocurrencies. Here, we share everything you need to know to start buying bitcoin, Ethereum and other cryptos today.
Where Do You Buy Cryptocurrencies?
Let us start with the basics: where can you buy cryptocurrencies? The answer is that there are four reliable ways to invest in and trade cryptocurrencies.
If you want to buy cryptocurrencies as long-term investments or to use them as currency, you have to buy the coins in their original form and not as derivatives, for example through an exchange. However, you can also buy cryptocurrencies to trade them and then we suggest using a broker instead.
You can find more information about this below.
Many of the leading brokers in the UK offer cryptocurrencies in different shapes and forms. Some of the provide cryptocurrencies in their original form, ie. you buy the actual coin which you can store in a suitable wallet. Although, most online brokers offer cryptocurrencies as derivatives and most commonly as Contract for Differences (CFDs).
What’s important to remember is that trading with online brokers is speculative and that you never own the coins you’re trading. Similar to when trading stocks or forex as derivatives. In other words, your goal when trading is to make a profit from small market movements and not long-term gains.
There is no doubt in our minds that eToro is the best cryptocurrency broker in the UK. Regulated by the FCA, eToro is 100% safe and reliable to use, and with the option of both buying cryptocurrencies and trading them as derivatives, this broker provides more opportunities than any other broker or exchange.
In addition, eToro is known for its social trading features where you can copy other more successful trades and benefit from their analytic work, hence lowering the amount of work you have to put in. Also, eToro is not only a crypto broker but also offers stocks, forex, indices, commodities, and more as CFDs.
2. IG Markets
IG Is a legendary online broker on the UK market with over 17,000+ assets on offer, including a range of cryptocurrencies. This broker does not allow its customers to purchase cryptocurrencies but does offer cryptos as different types of derivatives.
With this FCA regulated online broker, you can speculate on the cryptocurrency market with CFDs, spread betting and more.
Risk Warning: 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Plus500 is a smaller CFD broker that has developed its own trading platform that is one of the best mobile trading platforms ever. In 2013, Plus500 became the first online broker to offer CFDs on bitcoin, meaning that Plus500 has been breaking ground for the entire industry for almost 10 years.
In addition to cryptos, Plus500 offers CFDs on 2,000+ stocks, currency pairs, commodities, and exchange-traded funds (ETFs). And as mentioned, Plus500 is one of the best mobile brokers ever, so if you want to trade on your smartphone, we highly recommend that you pick Plus500.
Unlike online brokers, cryptocurrency exchanges allow you to buy cryptocurrencies that you personally own. Most exchanges allow you to store your cryptos on their platforms where you can trade them or just keep them as investments. However, we always recommend that you keep your cryptocurrencies stored in a safe wallet, preferably a hard wallet such as the Ledger Nano X. This way, only you will be able to access them and you will not be at the risk of losing your assets in a cyber attack.
Today, Binance is one of the most well-known and respected cryptocurrency exchanges in the world. It’s also the biggest exchange based on daily trading volumes. The best part, however, is the share number of cryptocurrencies that Binance offers. In fact, there are almost no cryptos that this exchange does not provide access to.
With the Binance platform, you can invest and trade in cryptocurrencies quite freely, either from the exchange or with other users.
Coinbase is a rather basic cryptocurrency exchange and a decent option for beginners that are buying their first cryptos. The company also operates a trading platform where you can trade a range of assets.
With that being said, while Coinbase is a decent option for beginners, it is not the best option for those that want to trade and buy cryptocurrencies actively. Instead, it’s best suited if you want to buy some cryptos that you later transfer to your wallet.
Gemini is a US-based cryptocurrency exchange that operates in North America, certain parts of the EU, parts of Asia and the UK. It’s one of the leading exchanges in the world and a reliable option for most types of cryptocurrencies.
The exchange was started and is operated by the Winklevoss Brothers, perhaps best known from the movie The Social Network outlining the dispute between them and Mark Zuckerberg regarding Facebook.
4. Buy Cryptocurrencies from Private Sellers
You can also buy cryptocurrencies from private sellers. Just keep in mind that there is a high risk of being ripped off and that the seller keeps the keys for the cryptos, meaning they still own them. Therefore, you should only buy cryptocurrencies from legitimate sellers, preferably through an established P2P platform.
What’s really important when handling private cryptocurrency transactions is to keep your private keys safe. Anyone that has access to your keys, also has access to your purchased cryptos and the blockchain, meaning that this person can use and sell your cryptos without your knowledge.
5. Cryptocurrency ATMs
Lastly, you can buy cryptocurrencies (mainly Bitcoin) from special ATMs. At the moment, Bitcoin ATMs are scattered across most of the world. When buying Bitcoin through an ATM, you can buy them completely anonymously and with cash, which is a great benefit for those that are reluctant to invest online.
How to Store Cryptocurrencies Safely
Once you’ve bought cryptocurrencies, you need to store them safely where no one else can get their hands on them. If you ever lose the password for the accounts where you’re storing your assets, you will lose the cryptos forever and there is no way of recreating them. This is also why digital safety is so important when buying cryptocurrencies.
If you’re planning on investing a lot and purchasing several different cryptocurrencies over a period of time, the most practical solution is to keep the cryptocurrencies with the exchange that you bought them from. The problem with exchanges is that they can be subject to cyber-attacks. This has already happened several times and over the past few years, millions of pounds worth of cryptocurrencies have been lost to hackers.
However, for longer storage or if you buy from a private seller, you should keep your cryptocurrencies stored more safely.
The best and safest form of storage is so-called hard wallets or cold wallets. These are physical gadgets that you can store cryptocurrencies and NFTs on. And as long as you’re the only one that has the password to the wallet, you’re also the only one that has access to the cryptocurrencies which you’ve bought.
Because of this, we highly recommend that you set up a safe wallet BEFORE you buy cryptocurrencies. This will greatly lower the risk of you losing them or being ripped off.
This is What You Need to Start Trading Cryptocurrencies
With that out of the way, we will now provide insight into what you need to get started on the cryptocurrency market. Be sure to read this carefully and do all the necessary research before you buy Bitcoin or any other cryptocurrencies.
If you’re not prepared, you run the risk of making bad decisions that will lead to financial losses. So please, spend the amount of time and effort needed to become comfortable with the market.
As mentioned, you need to find a platform that allows you to buy cryptos. We have listed the best brokers and exchanges above, and have also created guides and recommendations for specific cryptos, for example in our guide “How to Buy Bitcoin”.
Depending on what your goals are, you have different options. If you’re into trading, we suggest using an online broker with as many options as possible, preferably eToro. And if you want to invest long-term, we suggest that you buy cryptos from an exchange, ATM or private seller, and then store your cryptos in a safe wallet that only you can access.
Naturally, you can also combine trading and investments. For example by buying Bitcoin from eToro and using the eToro platform to trade other cryptocurrencies as CFDs. Our point is that you shouldn’t limit yourself too much and as long as you use regulated and reliable platforms, you can trade and invest in whichever way you want.
You should never just buy cryptos or any other security “for the sake of it”. Instead, you need to analyze the market and find opportunities that you could make a profit from. To do this, you need research and analytic tools with all the necessary information.
All the top cryptocurrency brokers that we’ve recommended have incredible research instruments that will help you find opportunities for you.
Learning how to analyze a market is not easy and it often takes years to master all the needed skills. Because of this, we recommend that you start off by focusing on one or a few different cryptos and simple investment signals.
How much you need to buy cryptocurrencies is a question we often hear. The answer is rather simple: invest as much as you can afford, but never more than you can afford to lose. In other words, you have to set a suitable budget that allows you to trade or invest freely without risking too much.
Having a budget is crucial in all forms of investments and trading, and due to cryptocurrencies’ high volatility, it’s even more important when buying cryptocurrencies.
Last but not least, you should not buy or trade cryptocurrencies or any other instruments with a strategy and plan. You must ask yourself questions like why am I buying these cryptos? What am I expecting to make in return? When do I sell to keep profits or avoid losses? How much can I spend on cryptocurrencies? etc.
he idea of using a strategy is to avoid unnecessary risks and ensure that you’re investing in the right cryptos at the right time. Unfortunately, cryptocurrencies are still quite unpredictable and it’s more difficult to strategize this type of investment compared to stocks or commodities.
How to Choose a Broker to Buy Cryptos From
We prefer buying cryptos from online brokers such as eToro. Thanks to FCA, it is the safest option available and online brokers are very easy to use. As mentioned several times, we highly recommend eToro. At the same time, we always encourage our readers to make their own decisions.
Because of this, we have listed the factors you should consider when choosing a suitable cryptocurrency online broker in the UK.
We always advise our readers to trade with brokers that are licensed and regulated by strict and renowned agencies. In the UK, that means only using crypto brokers that are licensed and regulated by the FCA.
This will ensure that you, your personal information, and, more importantly, your funds are kept safe. You’re also guaranteed accurate prices and protection in case something doesn’t go as planned.
The platform you choose should have a great user interface design and be easily customisable. We prefer brokers that allow you to both invest in cryptos as well as trade cryptos as CFDs since it gives you as a trade many more options to benefit from. It’s always a bonus if the broker offers other markets in addition to cryptos so that you can combine your Bitcoin investments with stocks, commodities, and more.
The best brokers are clear and honest with all their trading charges. This means that you always know what each trade or investment will cost you before you place it. Without this knowledge, it is impossible to stick to a budget or invest efficiently.
Every broker that we recommend is honest and affordable.
The hustle of currency exchange can delay your trading progress. Whereas some brokers offer a wide range of payment methods, others are still stuck with the traditional methods. For this reason, we advise you to check which payment method is convenient for you and keep this in mind when choosing the right cryptocurrency trading app.
Unlike exchanges, online brokers have demo accounts where you can trade in a risk-free environment. Trading is done using virtual funds which means that you can lose or make real money. It is, however, a great way of testing a platform before registering an account, and an effective way to practice trading before you get started.
Therefore, we encourage all our readers to make use of demo accounts before and while buying cryptocurrencies.
You can buy fractions of any cryptocurrencies which effectively means that you can buy for as much or as little as you want to. Keep in mind that the golden rule of investment is to never invest more than you can afford to lose. That’s why you always need to set a budget and stick to it, or you run the risk of ending up with debt and economic issues for a very long time.
In short, don’t buy cryptos with money that you need for other things such as rent, food, commuting, etc.
To start buying cryptocurrencies you need to find a platform to use, register an account, make a deposit, and start buying the assets you’re interested in. If you haven’t bought cryptos before, we recommend that you read this guide to get started. We have outlined everything you need to know about how to buy cryptocurrencies, including the best places to start and tips that will help you along the way.
We believe that the safest way to buy cryptocurrencies is by using an online broker regulated by the FCA. And when it comes to regulated crypto brokers in the UK, eToro is, by far, the best, safest, and easiest option.
So if you want to buy and trade cryptocurrencies safely, we suggest that you do so through the eToro platform.
Cryptocurrency trading in the UK is categorized as other federal businesses, and as such, any profits you make on cryptocurrencies are subjected to capital gains tax.
Please note that if you use an online broker to spread bets on the cryptocurrency market, you don’t have to pay taxes. This is because spread betting is considered betting and not trading, and therefore your profits are not taxed.