Cryptocurrency is a type of digital payment that can be exchanged online for products and services. In other words, this kind of currency uses digital files for money with the help of a technology known as the blockchain. One can exchange actual currency like dollars to buy ‘tokens’ or ‘coins’ of a provided cryptocurrency. There is a wide variety of cryptocurrencies available in the market like Bitcoin, Litecoin, Ether, ‘Cash’, Ripple, etc. However, Bitcoin is the most famous among all.
All the giant finance and tech companies have their slice of the crypto pie. In fact, Facebook has developed its own cryptocurrency known as Libra. Several digital channels such as Robinhood and Coinbase have effectively made investing in cryptocurrencies like Bitcoin easier. But, this procedure is more complex than taking a traditional currency.
Volatility is the most common denominator for any currency, one invests in. However, cryptocurrencies are much riskier for speculators and investors, as these are not backed by precious metals like Gold or government, unlike other currencies.
Here is a step-by-step guide on how to invest in cryptocurrency in the UK.
1.CONDUCTING THE RESEARCH
Before jumping into the cryptocurrency investment process, the investor must be clear about which coins to target and also understand the essence of technology that supports it, that is Blockchain.
Blockchain is an infallible and decentralized ledger that records all transactions of cryptocurrency, without any need for regulations from nation-states or agents. No doubt, Bitcoin is the most recognized of all cryptocurrencies but there are around 5000 coins traded in the market. You must be able to identify which will work wonders for your trading success.
2.MAKE ACCOUNT FOR CRYPTOCURRENCY EXCHANGE
The next step is to open an account in the cryptocurrency exchange. There are numerous cryptocurrency exchanges hosted by the UK. Also, gambling on the cryptocurrency pair such as BTC/GBP can also be done.
CEX.IO: This UK-based exchange provides cryptocurrencies that can be bought with USD, EUR, and GBP. The company offers a competitive fee structure with leverage of 3:1 and one can trade nine forex currency pairs. It accepts Visa, Crypto Capital, SEPA credit transfers, MasterCard credit cards, and bank transfers to fund cryptocurrency purchases.
Coindirect: It is similar to an international peer-to-peer marketplace like localbitcoins.com. This publishes traders of various cryptocurrencies and digital assets to users in your area. You can select from 213 bitcoin ATM installations in the UK to purchase cryptocurrency without opening an account.
BC Bitcoin: This UK-based exchange emphasizes fast withdrawals and deposits and offers incredible customer care service. It supports cryptocurrencies like Ethereum (ETC), Ripple (XRP), Bitcoin (BTC), Litecoin (LTC), and Monero (XRM).
Coinfloor: This UK-registered exchange offers users the option of trading into different national currencies against many cryptocurrencies, even after the fact that the UK market favors the GBP/BTC currency pair.
3.PLACE AN ORDER AND GET A CRYPTOCURRENCY WALLET
After choosing an exchange and connected a payment gateway option, you can buy cryptocurrencies. Crypto exchanges now provide ample modes to invest and order types. The majority of crypto exchanges deliver limit, stop-loss, and market orders. For instance, Kraken is an exchange that delivers limit, stop-limit, market, stop-loss, and take-profit limit orders.
With wallets, you can safely store your digital assets. To reserve complete control of the cryptocurrencies, you must extract them from their origin, be it a peer-to-peer group, private crypto wallet, an exchange, or ATM. The personal wallet should be secured with a private key.
The wallet alerts the source or the crypto exchange when you are willing to deal in transactions. This wallet functions with two keys one public and another private key. The public key can be given to seeking payments and gifts. Whereas the private key acts as a confidential password to your wallet.
Wallets are also of two kinds; Hot and Cold. Hot wallets are internet-connected wallets operating on online devices like phones, computers, and tablets. Nevertheless, a hot wallet is more feasible in making and accessing transactions quickly, but keeping your private key on the online devices makes it more prone to hacking as well.
On the contrary, cold wallets are offline and thus are less riskier. They are also regarded as hardware wallets. Thus, the users can view and work on their portfolios without risking the private key.
Many people also use Paper Wallets, by printing out their private & public keys on a piece of paper. These can also be laminated and stored safely.
Some of the wallets you can consider using are; Toast, coinpayments.net, Ledger Nano S, Coinomi, etc.
4.EXTRACTING BITCOIN TO THE WALLET
After purchasing bitcoin from a source or exchange, the investor can redeem the currency to their musty-currency or personal bitcoin wallet with the help of a QR code. Since you can lose control of the private keys and exchanges can be hacked, it is better to not leave bitcoins to exchange to prevent risk.
Once you have extracted your currency from the exchange successfully, that can be counted as a successful purchase of cryptocurrency.
5.STUDY THE DATA
The cryptocurrency market is significantly affected by volatility due to various elements, even though the industry attempts to be more stable. The investors must be fully updated about all the current happenings about their portfolio, to secure their investment.
There are tremendous data sources rendered by experts in the market, that can aid you in keeping better supervision on crypto trading. This essentially helps in structuring further strategies for your investments.
Overall, the above-mentioned steps give a quick overview of how to invest in cryptocurrency in the UK. Although there is a certain risk in any sort of investment, cryptocurrencies are riskier. Before investing, consulting with an expert is a must to prevent risk.