How to invest in Bitcoin in the UK?

If you're interested in trading crypto, you may have wondered how to invest in Bitcoin in the UK.

Bitcoin is a decentralised digital currency functioning autonomously, free from the power of central authorities or government regulations. It operates using peer-to-peer software technology and relies on cryptographic principles.

Being an open-source system, the coin is accessible to the general public. This inclusive nature allows anyone to engage in Bitcoin transactions. The distinctive features of Bitcoin offer unprecedented possibilities for various innovative applications that were not feasible with traditional payment systems.

The coin has always been a volatile asset, rising and falling like tides, presenting opportunities to investors alongside heavy risk. However, BTC has been the investor's top choice in the investment portfolio.

Buying Bitcoin has always been the best move when investing in the crypto industry. Below, in the article, we've explored how to invest in Bitcoin in the UK and where to store it.

How to invest in Bitcoin UK

1.    Choose a crypto exchange

To purchase and invest in Bitcoin (BTC), individuals must choose a crypto exchange, a platform where trades meet to exchange their pounds sterling for the digital coin.

Crypto exchanges offer investors the opportunity to purchase, sell, and retain cryptocurrencies and facilitate the transfer of digital assets to secure wallets.

While multiple exchanges exist, new investors should prioritise selecting an exchange that balances user-friendliness, low transaction fees, and robust security measures. Monitalks has conducted detailed research to help new investors choose the best exchange platform.

2.    Link your payment method to the exchange platform

After selecting an exchange, you must deposit funds into your account to initiate Bitcoin investments. The options for funding your account may vary depending on the exchange, including bank transfers from a current or savings account or using a cryptocurrency wallet.

Considering that fees directly impact the amount of money available for investment and subsequently affect the potential for growth and compounding, it is generally advisable to opt for electronic transfers from a bank account over alternative methods.

3.    Place your Bitcoin order

Once you have successfully deposited funds into your account, you can initiate your first purchase of Bitcoin. The process varies depending on the platform. Some allow you to buy Bitcoin by simply tapping a button. In contrast, others may require you to enter Bitcoin's ticker symbol (BTC). Following that, you must specify the amount you wish to invest.

Upon completing the transaction, you will become a partial owner of a Bitcoin. This is due to the significant initial investment required to purchase a complete Bitcoin. For example, if the Bitcoin price is £30,000, you would need to invest that amount in acquiring one Bitcoin. In the scenario where you invested a lesser amount, say £1,000, you would receive a proportionate percentage of a Bitcoin, which in this case would be 3.33%.

4.    Store your coin in a Bitcoin wallet

Cryptocurrency exchanges commonly offer integrated Bitcoin wallets or establish partnerships with trusted entities that provide secure storage for Bitcoin. However, some individuals may be concerned about leaving their digital assets connected to the internet, as it increases the risk of potential theft by hackers.

To address such concerns, many reputable exchanges have implemented private insurance policies that offer compensation to clients in case of theft. Furthermore, these exchanges are increasingly adopting storing most customer funds in offline storage solutions known as 'cold storage,' which provides an additional layer of security.

For those seeking the highest level of security, storing Bitcoin in a personal online or offline wallet is possible. Nevertheless, it is important to note that transferring crypto from an exchange to a personal wallet may incur a small withdrawal fee. Moreover, if a third-party crypto wallet custodian is utilised, losing the private key, which is the wallet password, may result in losing permanent access to the stored coins.

Hot wallets vs. cold wallets

Hot wallets store personal and private keys online in a password-protected account, typically with a crypto exchange. Hackers target them to gain access to assets for trading. While hot wallet providers have improved security measures, hackers pose a threat.

Hot wallets offer convenience as they can be accessed from anywhere, and the provider can help restore access through identity verification if login details are forgotten.

Cold wallets are offline and disconnected from the internet, making them potentially more secure than hot wallets. They are like thumb drives that require a seed phrase, a randomly generated private key, to unlock the wallet, which is difficult to crack without prior knowledge.

However, connecting a cold wallet to an internet-connected device eliminates the security advantage, exposing vulnerabilities to hackers. Also, if a user loses their private key, it becomes nearly impossible to recover the cold wallet.

Lastly, cold wallets must be purchased, while hot wallets are often free.

Ledger Nano X

Ledger Nano X is the best cold Bitcoin wallet available in the market. It is a highly suitable choice for most investors due to its extensive support for over 5,000 coins and its ability to manage NFTs. Moreover, it includes an integrated exchange feature that enables secure cryptocurrency purchases using the wallet. This device can be efficiently operated on any 64-bit PC, iOS, or Android platform.

The Ledger Live app, accompanying the Nano X, provides additional features such as payment options and DApps. Furthermore, it allows the seamless transfer of assets from multiple exchanges to the Nano X, offering enhanced convenience for asset management and trading while prioritising their safety.

Coinbase

Coinbase- the most chosen hot wallet, provides an exceptional user experience and caters to various user needs in the UK. It ensures accessibility and assists new users in navigating the crypto world. Cutting-edge security technologies protect virtual assets, and web and mobile wallets offer flexible access. The decentralised platform enables users to have complete control over their crypto assets. Features like staking, lending, and Yield Farming are also available.