How & where to buy Bitcoin online

The easiest way to purchase Bitcoin in the US or the UK is to use an exchange or a brokerage. These are explained in more detail in other FAQs, but there are a variety of platforms in each category offering ways to buy and trade BTC in a variety of ways.

An exchange is an online platform where you can buy and sell cryptocurrency. There are two main types of exchange: ones which allow users to buy Bitcoins at a set price with more user-friendly interfaces, and full cryptocurrency exchanges which allow you to trade a wide variety of cryptocurrencies directly with other users.

Popular exchanges of the first variety, such as Coinbase, offer the ability to buy cryptocurrencies with fiat currency (such as pounds or dollars) and store these in an online account on their platform. Usually these platforms only offer a fairly limited number of cryptocurrencies, but BTC is almost always one of the currencies offered.

Other exchanges, such as Bittrex, appear more like conventional trading software, and only allow payments in cryptocurrencies. Therefore to use one of these exchanges you’ll usually need a cryptocurrency wallet. These platforms are more complex than brokerages so they take a bit of getting used to, but they are the best place for experienced traders to find better value and access a wider range of coins.

Another option when it comes to buying and selling BTC is to use a CFD broker. CFD stands for ‘Contract for Difference’ and what these platforms allow you to do is to speculate on the price of BTC using fiat currency. For instance, you can ‘buy’ £100 worth of Bitcoin, and if the price goes up by 1%, then you can cash out for £101. Through this method you don’t really own the coins and therefore do not need a wallet to store them, but you can profit off fluctuations in the value.

However much you can afford. There’s no limit to the amount of BTC that one person can own, but if you’re going to be holding very large sums, it’s usually advisable to spread your coins across a few platforms and wallets.

The same way its safer to spread savings across multiple accounts.

If you’re planning on investing by buying Bitcoins, then the first thing you will need is an account on a bitcoin exchange. These platforms allow you to purchase and to trade your coins for other cryptocurrencies. 

You can also set up a personal wallet into which you can deposit your coins, but this is not essential as on most exchanges your account will act as an online wallet. If you are considering investing a lot of money in BTC, it is advisable to get your own wallet, however, in order to ensure you can keep your coins safe.

It is also possible to invest in BTC without having to buy the coins themselves. This is done through CFD brokers which allow trades to be made by speculating on fluctuations in the price of Bitcoin, without requiring you to purchase the coins directly. If using a CFD broker, you won’t need a Bitcoin wallet – and many of these platforms offer extra trading options such as leveraged trading and the ability to adopt both short and long positions.

While both crypto and stock (or shares) can be bought, sold, and traded in order to generate profits for investors, it’s not accurate to view them as the same thing. 

As a cryptocurrency, Bitcoin is an asset that relies on decentralised blockchain technology with new coins generated through miners verifying transactions, and its value is determined by how much people are willing to pay for coins at any given time. Stock, on the other hand, is issued by companies in order to raise capital and their price is tied to the value of the business issuing them. 

It is also limited to 21 million coins, whereas there is no finite number of shares that can be issued, meaning essential laws of supply and demand play a much larger role with Bitcoin than they do with shares.

The system by which you buy and trade the two is another difference. Stocks are issued to you by name and recorded by centralised institutions, whereas Bitcoin transactions occur anonymously and are recorded on the blockchain. Because of this, you’re generally less at risk from fraud when trading the markets, as it’s very hard to prove your ownership of Bitcoins if they get stolen from your wallet (although this is almost impossible as long as you don’t reveal your private key).

Finally, cryptocurrency markets also have a reputation for being more volatile than stock markets (in which most people hold onto what they have during crises, knowing the value will likely rise again in the future). Because it’s price is tied to changes in how much the currency sells for on popular exchanges, it has the potential to rise and fall in value sharply and quickly.

This depends on your definition of ‘safer.’ Usually people invest in gold because it is a good ‘safe haven’ asset: its value tends to be largely unaffected by market turmoil, meaning investors can protect their capital at times of crisis by investing in gold.

Bitcoin on the other hand, while separate from other economic activity, is vulnerable to market fluctuations and the market is a famously volatile space. This means Bitcoin isn’t as well suited to protecting capital, if that is your sole aim.

However, something else to bear in mind is that while gold’s price is resilient and tends not to fall much at times of crisis, it doesn’t rise much either. So if you consider a ‘safe’ investment as one that will deliver you financial returns in the long run, then it is certainly worth looking at Bitcoin and other cryptocurrencies, which have stabilised in recent years and offer opportunities to make more profit out of your investment.

When investing it is a good idea to have as wide a portfolio as possible, so that you can hedge yourself against one particular asset class falling in value. As the currency has become more and more accepted in the world of finance since Bitoin’s launch in 2009, it is certainly worth considering investing in Bitcoin to mitigate risk from your other investments.

The markets aren’t pegged to the wider economy, so do not follow the same patterns. This means that you could see the value of your Bitcoin investments rise even if other investments in your portfolio begin to fall.

Because of how much we have heard about them in the years since, it is often forgotten that cryptocurrencies are only just over a decade old, which means it is still not entirely clear which asset class they fit into. This is also partly driven by their nature as currencies, meaning that while many people invest in Bitcoin and other cryptos to profit off price fluctuations, many others use them as direct means by which to pay for goods and services.

In the past Bitcoin has been referred to as “digital gold” because crytpo-markets do not have a strong relationship to the market in shares. This led people to like Bitcoin to gold as a store of value asset: there is a finite amount of both BTC and gold, and both have a degree of insulation from the stock market so can retain value as other assets plunge.

The world is still working out exactly what asset class Bitcoin and other cryptocurrencies fall into, but their decentralised nature and separation from global finance as a whole has made crypto investing attractive to many investors who wish to diversify their portfolio.

This number changes day by day as the markets fluctuates, but currently there is around $120 billion invested in Bitcoin, with a total of 18,297,137 coins out of the set limit of 21 million having been mined.

The amount of money invested in all cryptocurrencies combined is hard to give exactly, not just because the markets move day-by-day but also because of the thousands of different coins that exist.

One recent figure suggested that the overall amount invested in the top-performing cryptocurrencies was $251.8 billion (just over £202,000,000) – which is 0.7% of all the money in the world.

This is up to each individual investor to decide – our aim is to give you as much information as possible so you can make the right choices for your portfolio.

We see many strong reasons to include cryptocurrency as part of a diversified investment portfolio, such as its lack of correlation with the market offering a degree of protection from market fluctuations (and vice-versa, if you hold both, your holdings may rise even if the value of your cryptocurrency investments decreases).

Another appealing factor about investing in cryptocurrencies is their nature as an emerging technology. Part of investing in Bitcoin or other cryptocurrencies is the process of learning more about the underlying blockchain technology – as you should always have as full an understanding as possible of anything in which you are investing. If you’re into new tech, then investing in cryptocurrency is a good way to keep up-to-date.

The answer to this question will depend on exactly how you are plan to invest in the asset. If you are planning to buy and trade coins on an exchange, then the best advice is to keep only the amount of Bitcoin that you wish to trade in your account on the exchange. While exchanges have very high security, they’re not invulnerable. You should hold most of your coins in a personal wallet, and preferably a hardware wallet not connected to the internet.

If, on the other hand, you’re investing in it through CFD brokers, then you don’t need to worry as much about security. As long as you use a reputable, regulated platform to place your trades, then all profits will come to you in fiat currency that you can deposit in your bank account or wherever else you usually keep your money secure.

Yes, if you choose to invest in Bitcoin by using CFD broker platforms then you will never have to worry about owning any Bitcoins. This can be useful for many people who don’t want to handle cryptos directly or learn about what wallet they should get. 

CFD stands for ‘contract for difference’ and essentially when using one of these brokers what you are doing is taking a position on where you think the market will move. 

Let’s say you ‘buy’ £1,000 worth of BTC on one of these platforms, what you essentially have is a contract of ownership of the amount of BTC that is worth at the current price. If the market moves upwards and BTC’s price rises, the amount of BTC you have is now worth more than the initial £1,000 and you can close your position at a profit without ever having to have managed the coins yourself.

Because CFD trading platforms do not need to make Bitcoin transactions on the blockchain and instead just allow users to speculate on the price of cryptocurrencies, they can offer traders a variety of tools that you cannot find on exchanges, such as leveraged trading options.

No, BTC is not traded in whole coins, but rather in decimal increments of coins. The smallest amount of Bitcoin you can buy is 0.00000001 BTC (a one-hundred-millionth of a Bitcoin), which is less than a one-hundredth of a penny in GBP.

Many people erroneously assume that investing in the legendary coin must cost a fortune because the value of each BTC is in the thousands, but in fact the opposite is true: the network is in fact structured so you can make much smaller transactions than you can with fiat currency.

Bitcoin exchanges have incredibly robust cyber security measures, but unfortunately no platform can be completely impregnable to hackers. 

The best way to protect yourself and your coins is not to hold all your coins on an exchange. Instead, in your exchange wallet you should have only the coins you wish to trade – any other coins you should distribute among other wallets. In ideal circumstances you should use a hard wallet that is not connected to the internet, especially if holding a large amount of coins.

There have been many attempts to regulate the crypto-market in recent years, but by and large the space is still fairly unregulated as the lack of a central authority (one of the core purposes of the coin) makes it hard to work out how regulations would be enforced.

It is largely not recognised as a currency and seen more as a class of asset by governments around the world. In the USA the Securities and Exchange Commission (SEC) has worked with prominent Bitcoin exchanges to ensure they comply with anti-money laundering legislation by implementing Know Your Customer measures when people sign up for accounts.

One aspect of crypto-trading and investment that is regulated, however, is if trading using a broker. This is because with a broker you are trading CFDs related to the value of BTC and not Bitcoin itself. This means that these platforms are regulated by the relevant financial bodies in each country that regulate all trading activities.

For the most part, you can do anything that you can do with regular state-run currencies like GBP – with the added bonus that transactions are much faster.

The digital cash can be used for a variety of purposes in today’s world. Primarily it is useful for three purposes: you can trade it as an asset, use it to pay for goods and services with businesses that accept BTC payments, or you can hold it in your account to diversify your investments and reap the profits from any upward movement in its value.

Yes, you can gamble. There is a growing network of gambling sites that accept BTC as a payment method when loading your account. Additionally there are specific crypto  gambling sites, particularly for poker, where you can bet your BTC against other players.

In order to spend your coins, you’ll have to either find a business that accepts crypto payments and transfer BTC into their wallet address (usually by simply scanning a QR code), or you can pay with a Bitcoin card. There are a variety of providers that now offer debit cards that you can load with BTC and other cryptocurrencies, but that transact in fiat currency and therefore can be used in any shop that accepts card payments.

If you’re wondering if you can do this on your regular card, then the answer is no. However, there are a variety of cards on the market now that can hold both fiat and cryptocurrencies. These work generally by storing your coins, and automatically converting enough of your Bitcoin into the currency of the country you’re in when you make a purchase.

For instance, let’s say you wanted to buy a pair of trainers in the UK that cost £80 and had 0.2BTC in your account. You’d take the shoes to the checkout and make a chip and pin payment just like with a regular card, and within your account the provider would immediately sell 0.015BTC (or whatever the coins value in pounds is at that time) for £80 which would be transferred to the retailer. This would leave you with 0.185BTC and a pair of shoes.

It’s worth noting that while these cards work this way, they do often charge markup fees on the exchange rate when transferring crypto for fiat currencies, so it’s likely the amount charged in this instance would be slightly higher than £80 worth of Bitcoin.

Using crypto-currency comes with a variety of advantages, most notable of which are:

• Anonymous payments: Transactions with Bitcoin are anonymous. All that will show up on the blockchain is the wallet addresses that your transfer has gone from and to. Nobody will know your wallet address unless you reveal it to them, so you can remain anonymous when spending.
• Security: The Bitcoin blockchain is verified using cryptography involving SHA-256 hashing algorithms. This is an incredibly high level of security that prevents hackers from manipulating the system.
• Flexible fees: When transferring BTC you’ll always have to pay a small amount in miner fees, but you can slightly up this amount to ensure that your transaction will be verified faster.
• Transparency: The blockchain that underpins Bitcoin transactions is open source and freely available to be seen by anyone with an internet connection. This means you can trust the network with payments as no attacks on it can be made without everyone being able to see them.

As mentioned in other FAQs, the fees you’ll pay when you spend BTC are called mining fees. These are small payments used to pay the people who use their computing power to add new blocks to the Bitcoin blockchain.

These rates vary depending on the amount of activity on the network, but are tiny fractions of a BTC. The network also allows you to pay more in mining fees so that your transaction will be verified faster than other peoples’.

Other fees to watch out for are the conversion fees charged by Bitcoin debit cards. For information on that see the relevant FAQ in this section.