How to buy Bitcoin online
This beginner-friendly guide takes you through everything you need to know about how and where to buy Bitcoin. From what Bitcoin is and how it works to, what to consider when buying and selling coins – find out if now is the best time to invest in Bitcoin.
Compare where to buy Bitcoin, and open an account
If you’re ready to buy Bitcoin now, simply click one of the links in the table below to visit one of our trusted partners. We compare all the best online brokers to help you find the right platform when buying cryptocurrency. If you need to know a little more about how to buy Bitcoin and what to consider, then scroll down and keep reading.
What is Bitcoin?
Bitcoin is the most widely used and traded cryptocurrency in the world. Instead of requiring a centralised body such as a bank to verify transactions, all Bitcoin payments are recorded on a public ledger called a Blockchain which is constantly maintained by users of the cryptocurrency. This means that Bitcoin can be bought, spent, and traded without the need for any institution to oversee the process.
Not only is it the largest crypto, Bitcoin was also the first. It was launched in 2008 through an academic paper entitled, Bitcoin: A Peer-to-Peer Electronic Cash System. This paper was published under the name Satoshi Nakamoto, which most people today believe to be a pseudonym for a group of mathematicians who worked on the project together. The identity/identities of Satoshi Nakamoto have never been revealed.
How does Bitcoin work?
Bitcoin works by recording any and all movements of coins on a blockchain. When one coin is sent from one wallet to another, the information about this transaction is added to the blockchain. As the blockchain is publicly accessible to everyone, this creates an immutable record that the Bitcoin has moved from one location to another.
This might sound fairly trivial, but it’s this process that allows Bitcoin – and all other cryptocurrencies – to exist. Before Satoshi Nakamoto’s white paper in 2008, nobody had figured out a way to prevent somebody spending the same coin more than once without having a centralised body (such as a bank) keeping a record of all transactions. With the invention of the blockchain, the ‘double spend problem’ was solved and Bitcoin became a viable alternative currency.
This is just a very short summary of the way Bitcoin works. To get the full picture, and understand the meaning of key processes such as Bitcoin mining, take our quick and free Bitcoin 101 course. Keep reading to find out how to buy Bitcoin now.
How to buy Bitcoin online – step-by-step guide
Step 1. Find an exchange to buy Bitcoin
If you’re wondering where to buy Bitcoin, then there are a wide variety of exchanges you can use. Every platform has its own benefits and drawbacks, and our in-depth reviews and quick comparison tables (one of which you’ll find at the top of this page) can help you make the right choice. For now, here are two of our favourite Bitcoin exchanges:
- Binance: Binance is one of the largest and best cryptocurrency exchanges around, with the option to trade Bitcoin along with a huge variety of other coins. It has a user-friendly app, and offers very competitive fees. You can open an account right here >
- Bitpanda: Bitpanda is a user-friendly cryptocurrency exchange that allows users to invest in Bitcoin quickly and easily. The registration process is simple, and after signing up you can buy Bitcoin and more than 50 other cryptos. Register with Bitpanda by clicking this link >
Step 2. Sign up and fund your account
To use an exchange, you’ll usually have to sign up and register for an account. The exact steps this will require vary from platform to platform, but expect to be asked to provide an email address, phone number, and photo ID.
In terms of funding your account to buy crypto, the payment methods accepted again will depend on your chosen platform. Some exchanges only allow you to make deposits in cryptocurrency, and those that accept fiat deposits won’t always accept e-wallets such as PayPal.
Step 3. Buy Bitcoin
You will be able to buy Bitcoin once you have funded your account. Simply select ‘Bitcoin’ from the list of coins you can buy and trade, or select the trading pair for the coins you’re trading (e.g. BTC/GBP if you’re buying Bitcoin with British Pounds) and execute your trade.
Step 4. (Optional) Get a suitable wallet
With most exchanges, you can hold your Bitcoin on the exchange platform. While this is convenient if you’re looking to trade Bitcoin, it can be worth getting your own personal wallet if you’re going to buy and hold Bitcoin for a long time. This is the best way of keeping your coins secure, and these are two of our recommended options:
- Ledger Nano S: Ledger is one of the biggest names in the cryptocurrency wallet space, with a range of secure hardware wallets designed to be the same size as standard USB drives. The Ledger Nano S is an easy-to-use way fo storing Bitcoin and other cryptos. Get a secure crypto wallet today >
- Trezor One: With state-of-the-art security features and the ability to hold 1000s of different coins, the Trezor One is one of the most popular crypto wallets for people concerned about the safety of their coins. Buy a Trezor One for your Bitcoins >
How to trade Bitcoin – step-by-step guide
Step 1. Find a broker
If you’re looking to trade Bitcoin, then the best option is to use an online broker that allows you to open and close positions quickly. Pretty much all brokers that allow cryptocurrency trading will allow you to trade Bitcoin, and here are two of our top picks:
- eToro: One of Europe’s most popular brokers, eToro allows users to trade a variety of assets including cryptocurrencies such as Bitcoin. Using your eToro account you can also trade CFDs on forex, commodities, and stocks – so your investments don’t have to purely crypto-based. Register for an eToro account now >
- Plus500: Similarly to eToro, Plus500 is a well-known online broker that supports CFD trading for number of different cryptocurrencies and other assets. You can trade other large-cap cryptocurrencies such as Litecoin and Ethereum on Plus500. Start trading with Plus500 today >
Step 2. Deposit money
Before starting to trade you’ll need to make a deposit into your account. Brokers will usually accept deposits only in fiat currencies (e.g. GBP an dUSD), and there will typically be fees associated with deposits and withdrawals. Have a read of our reviews to find the best deal.
Step 3. Decide how you’d like to trade
The two trading options you’ll have with most brokers will be CFDs (contracts for difference) or spread betting. With both of these approaches, you’ll be trading against the value of Bitcoin rather than actually taking ownership of the coins yourself. You can read more about both of these approaches here on Invezz to help make your decision.
Step 4. Start trading
It’s best to start trading with a demo account first if you’re new to Bitcoin. This way you can learn the ropes without risking any money – which is particularly useful in a volatile market such as cryptocurrency.
When trading the crypto markets you’ll be speculating on the movements in the price of Bitcoin – taking either a long (buy) position or a short (sell) position. You’ll want to keep up-to-date with all the latest news and come up with strategies that can help you determine which way the market will move.
Once you get more experienced, you might also consider trading with leverage. Many brokers will allow you to trade large amounts with you only having to pay a small ‘margin.’ Be careful of leveraged trading though, as it can lead to big losses just as quickly as it can lead to big profits.
To help you make your decision, we’ve condensed everything into these quick pros and cons. Keep reading below to read more about what you should consider before buying Bitcoin and whether it’s the right time.
- Bitcoin is the largest and most well-known cryptocurrency
- It’s increasingly widely accepted as payment method
- Built in scarcity gives BTC intrinsic value
- Has previously skyrocketed in price in short spaces of time
- Volatility might appeal to traders but can make buyers nervous
- There are now thousands of other cryptocurrencies competing with Bitcoin in the crypto space
- Bitcoin has recently attracted criticism for the environmental impact of energy-intensive mining
In addition to these pros and cons, here’s a quick run through of three things to consider when investing in Bitcoin.
1. Is now a good time to buy Bitcoin?
The answer to this question depends on why you want to buy Bitcoin. If you’re looking to own some Bitcoin in order to use and spend it, then it’s rarely a bad time to invest in Bitcoin (as long as you can afford the coins). If, however, your aim is to make a profit in either the long or short term, then there are more things to consider.
Before buying Bitcoin, look at how it has performed over time – both recently and over the long term. The price of BTC has often seen steep rises and sharp falls over short periods of time, and you want to do everything you can to ensure you’re buying the dip rather than the peak. For this, it’s important to keep up to date with the latest analysis of the Bitcoin market. Here’s the latest from our experts:
Bitcoin price analysis for May
Bitcoin (BTC) price analysis for 2021 as crypto adoption ramps up
Bitcoin (BTC) price analysis as Central Bank of Turkey bans crypto payments
2. What problem does Bitcoin solve, and what are the coin’s investment prospects?
The problem that Bitcoin solves is the same as it has been since its launch in 2008: how to have a viable currency without the need for a centralised institution. Bitcoin’s fame and value have been built on its ability to function as a currency without the need for the backing of banks.
Since Bitcoin emerged, thousands of other coins have followed, but none has (as of yet) knocked Bitcoin off its perch as the leading cryptocurrency in the world. Many of the coins that came after Bitcoin have built themselves on ambitious projects trying to apply the blockchain to new problems, but Bitcoin remains just as it ever was: a currency enabled by blockchain technology.
This could make it sound like Bitcoin has had its day and is now somewhat old fashioned in the crypto space. However, many people have made similar arguments over the years and Bitcoin is still here, with no sign of disappearing any time soon. You can find all the latest news right here and keep on top of any recent developments that could impact Bitcoin’s investment prospects:
Turkey to start monitoring crypto transactions worth more than £868
Arte Surfside begins accepting crypto as payment for its luxury condos
Citibank contemplates rolling out crypto trading and custody services
3. Do you want to hold Bitcoin for the long term?
There are some times when it’s best to hold Bitcoin for a long time, and others when it might be better to get in and out quickly. It basically comes down to how soon you want to see your returns. Here’s what you want to consider when investing in Bitcoin for the long or short term, and how this might impact your choice as to where to buy Bitcoin.
Considerations for a long term investment strategy
Long term investing is best if you believe that Bitcoin’s price is going to trend upwards in the coming months and years. If you’re going to invest in Bitcoin in this way, it makes sense to buy coins through an exchange and then transfer them to a secure personal wallet.
Considerations for a short term trading strategy
Short term investing is more focused on taking advantage of volatility to make small amounts of money quickly and often. If you want to trade Bitcoin in this way, then you should sign up to a broker with low trading fees, and maybe consider looking for other options such as leveraged trading.
The easiest way to acquire Bitcoin is to use either 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.
Usually yes there are small fees when buying and selling Bitcoin – especially on user-friendly exchanges such as Coinbase where you pay for cryptocurrencies in fiat currency. These platforms will usually charge small flat fees for transactions.
When transferring your coins to other wallets (either to other wallets you own or to other people to whom you are selling to), you also have to pay a small amount in mining fees. This fluctuates depending on how busy the network is at that moment, but they work out to a very small fractional amount of BTC to ensure that the miners maintaining the network are fairly rewarded. You can also choose to pay slightly more in mining fees in order to have your transfer verified faster on the blockchain.
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.
This depends on the country you are in, but in general the answer is yes, your investments in crypto should be declared. Bitcoin is generally treated as an asset and any income you make is liable for taxation – usually in the form of capital gains tax or income tax. If you are in the UK, there is a full breakdown of the tax liabilities for people trading cryptocurrencies on the gov.uk website.
It is also a good idea to be declaring income from cryptocurrencies in general as it’s hard to imagine an efficient method of taxation won’t emerge in the long run.
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.
If a merchant accepts BTC, it’s very easy indeed. Usually the easiest method is by scanning a QR code which contains the merchant’s wallet address, and then selecting how many coins you want to transfer to them.
If you want to spend your digital cash even in places that don’t accept crypto payments, then you can also get yourself a BTC card which will work anywhere that has a standard card machine and even in ATMs.