In , students in the UK are eagerly investing in cryptocurrency to cover their living expenses. According to a survey conducted by British financial advice website Save The Student, the proportion of students investing in crypto has tripled over the past year.

Reasons for investing in cryptocurrency

The study polled 2, students from UK universities between May and August Mental health issues and the consequences of the Covid pandemic were cited as the most common reasons of economic distress. 41% of respondents cited money worries as the primary reason for potentially dropping out of university.

“As we’ve found, the funding on offer to the average student is only slightly more than half of their living costs. With an unstable part-time job market as well as some parents losing earnings due to the pandemic, the usual funding sources for students bridging the finance shortfall have become hard to come by,” said Jake Butler of Save the Student.

However, regulators are warning young people about the risks involved in investing in cryptocurrency. The UK’s Financial Services Authority (FSA) has stated that young people are investing in products for which no one is responsible. To protect citizens, the FSA banned retail investors from purchasing cryptocurrency derivatives and exchange-traded notes last November.

How much money do students need?

On average, young people face monthly living expenses of £ Research has shown that the typical student is £ a month short. Possible earnings do not cover the average monthly costs of travel, food and accommodation.

The most likely ways to fill this gap are financial help from parents, part-time work and savings.

Some students said they had found other ways to raise money, from overdrafts and selling property to gambling and taking part in drug trials. Crypto investing remains a niche activity, with 6% of students participating. However, this figure has tripled over the past year.

UK residents’ attitude towards cryptocurrency has changed dramatically. They no longer consider digital assets as speculation and see them as a serious investment option. Whereas last year 38% of people compared the cryptocurrency market to gambling, that figure has now dropped to 9%.

This year in June, Opinium conducted a survey for Interactive Investor private equity platform. The survey involved 1, UK respondents between the ages of 18 and 45% of young people chose cryptocurrencies for their first investment. Bitcoin was the undisputed leader among digital assets, with a fifth of respondents having had invested in the largest coin on the crypto market.

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With bitcoin prices increasing more than fivefold since March , institutional investors in the U.K. are keen to get a slice of the action. Not only are some investors making peace with the notorious volatility of cryptoassets, they are starting to view them as a vital ingredient for a balanced portfolio.

Global cryptoassets under management hit $ billion at the end of the third quarter of , up from $ billion a year previously, according to Cryto Fund Research. The U.K. accounts for only 6% of the number of cryptocurrency funds globally, compared to the U.S.' 48% and Hong Kong and China's 11%. But industry participants say that the U.K. market is set for a growth spurt.

As central banks around the world keep interest rates low to cope with the economic fallout of the coronavirus pandemic, growing worries about inflation have prompted institutions to look at cryptoassets anew, according to industry insiders. The result is that negative messaging about the "Wild West" of cryptoassets has given way to conversations about their properties as an inflation hedge, or even "digital gold," according to Blair Halliday, head of U.K. at Gemini Trust Company LLC, a cryptocurrency www.oldyorkcellars.com York-headquartered Gemini, which was founded by the Winklevoss twins, Tyler and Cameron,expandedinto the U.K. in September and in March this year it said it was launching a cryptocurrency fund services platform for asset managers.

"We now no longer have the constant negative verbiage [about cryptocurrencies]. There is more understanding, and more awareness of what the opportunity is," Halliday said in an interview.

Cryptocurrencies such as bitcoin are decentralized digital currencies, the operations and transactions of which operate independently of central banks.

Bitcoin prices wobbled during February after a bull run that lasted for much of the second half of

However, as the price hovers around the $50, mark in early March, it is still far above where it was one year earlier, at about $8,,asthe trading volumes and market cap of the digital currency soared in January this year, according toCoinMarketCap data.

Institutional investors have played a "major" role in the growth of bitcoin prices in the past year, according to Francesc Rodriguez Tous, lecturer in banking at the Business School of City, University of London.

"In a world where interest rates are so close to zero, investors will search for yield. And bitcoin, with all its ups and downs, has managed to provide an impressive return in previous years," he said in an email.

Obi Nwosu, CEO and co-founder at Coinfloor, a U.K.-based cryptocurrency exchange, also believes that increased institutional investment has fueled price growth.

"With bitcoin, it seems to be driven by institutional investors," he said in an interview, adding that bitcoin is the only "institutional grade" cryptocurrency.

Price movements in other, less established cryptocurrencies are generally more influenced by retail investors, he said.

Several major institutions in the U.S. have taken steps to invest in cryptocurrencies. BlackRock Inc. said in January that it had submitted documents to the U.S. regulator to allow two funds to start investing in bitcoin futures. Goldman Sachs Group Inc. said in March that it will resume trading in cryptocurrencies, while Elon Musk's Tesla Inc. put $ billion of spare cash into the digital currency in January, and Square Inc. parked $50 million in October

U.K. investors are gradually moving into the asset class. Traditional fund manager Ruffer Investment Management invested % of its $27 billion portfolio in cryptocurrencies in late By February , the company had already made a $ million profit, according to Coindesk.

Nwosu said that he expects that more U.K.-based companies will start to hold spare cash in cryptocurrency in future.

Coinfloor already provides services for a number of U.K. corporates that hold reserves in cryptocurrency, but Nwosu said that he cannot disclose names.

The coronavirus effect

As the pandemic continues and monetary policy remains loose, institutional investors are concerned about a "significant pickup" in inflation, according to Francesca Fornasari, head of currency solutions at Insight Investment, a specialist asset manager.

"Investment in assets with a limited supply such as bitcoin have become popular as a form of digital gold," she said in an email.

As unusual monetary policy persists, insurance companies, asset managers and wealth managers are starting to take bitcoin's inflation-hedging properties seriously, according to Anatoly Crachilov, founding partner and CEO at Nickel Digital Asset Management, a U.K.-based digital asset hedge fund,

"A wall of capital is set to come into the sector. We are going into a period of structural growth of the sector, and it is increasingly driven by institutions," he said.

The volatility question

For Alex Manson, head of SC Ventures, the innovation and ventures arm of Standard Chartered PLC, volatility is a fact of life regardless of the asset class, and institutional investors have plenty of tools to manage it.

"Institutions don't see volatility as inherently good or bad," he said in an interview.

SC Ventures launched Zodia, a cryptocurrency custodian service for institutional investors, in partnership with Northern Trust Corp., in December

"Crypto is here to stay. The market will mature, and will become less volatile, but it will take time," Manson said.

Crachilov also believes that volatility in cryptocurrencies will eventually even out over time. The presence of larger institutional investors who take a long view of the market, and have less sensitivity to the daily prices changes, should mean that today's wild swings will eventually become a thing of the past, he said.

Investing in Bitcoin (BTCUSD) can seem complicated, but it is much easier when you break it down into steps. Investing or trading Bitcoin only requires an account at a service or an exchange, although further safe storage practices are recommended.

There are several things that aspiring Bitcoin investors need: a cryptocurrency exchange account, personal identification documents if you are using a Know Your Customer (KYC) platform, a secure connection to the Internet, and a method of payment. It is also recommended that you have your own personal wallet outside of the exchange account. Valid methods of payment using this path include bank accounts, debit cards, and credit cards. It is also possible to get bitcoin at specialized ATMs and via P2P exchanges.

Before You Buy Bitcoin

Privacy and security are important issues for Bitcoin investors. Anyone who gains the private key to a public address on the Bitcoin blockchain can authorize transactions. Private keys should be kept secret—criminals may attempt to steal them if they learn of large holdings. Be aware that anyone can see the balance of a public address you use. The flip side to this public information is that an individual can create multiple public addresses for themselves. Thus, they can distribute their stash of Bitcoin over many addresses. A good strategy is to keep significant investments at public addresses that are not directly connected to ones that are used in transactions.

Anyone can view a history of transactions made on the blockchain—even you. Although transactions are publicly recorded on the blockchain, identifying user information is not. On the Bitcoin blockchain, only a user's public key appears next to a transaction—making transactions confidential but not anonymous. In that sense, Bitcoin transactions are more transparent and traceable than cash because all of them are available for public view, unlike private cash transactions. But Bitcoin transactions also have an element of anonymity built into their design. It is very difficult to trace the transacting parties—i.e., the sender and recipient of the bitcoin—on the cryptocurrency's blockchain.

International researchers and the FBI have claimed they can track transactions made on the Bitcoin blockchain to users' other online accounts, including their digital wallets. For example, if someone creates an account on Coinbase, they must provide their identification. Now, when that person purchases bitcoin, it is tied to their name. If they send it to another wallet, it can still be traced back to the Coinbase purchase that is connected to the account holder's identity. This should not concern most investors because Bitcoin is legal in the U.S. and most other developed countries.

Buying Bitcoin 

Source: TradingView

We have broken down the steps to buying bitcoin below. Remember that you still need to do your research and select the best option for yourself based on your circumstances.

Step 1: Choose a crypto trading service or venue

The first step in buying bitcoin consists of choosing a crypto trading service or venue. Popular trading services and venues for purchasing cryptocurrencies include cryptocurrency exchanges, payment services, and brokerages. Out of these, cryptocurrency exchanges are the most convenient option because they offer a breadth of features and more cryptocurrencies for trading.

Signing up for a cryptocurrency exchange will enable you to buy, sell, and hold cryptocurrency. It is generally best practice to use an exchange that allows its users to withdraw crypto to their own personal online wallet for safekeeping. For those looking to trade Bitcoin or other cryptocurrencies, this feature may not matter.

There are many types of cryptocurrency exchanges. Because the Bitcoin ethos is about decentralization and individual sovereignty, some exchanges allow users to remain anonymous and do not require users to enter personal information. Such exchanges operate autonomously and are typically decentralized, which means they do not have a central point of control.

Although such systems can serve nefarious purposes, they can also provide services to the world's unbanked population. For certain categories of people—refugees or those living in countries with little to no infrastructure for government credit or banking—anonymous exchanges can help bring them into the mainstream economy.

Right now, however, most popular exchanges are not decentralized and follow laws that require users to submit identifying documentation. In the United States, these exchanges include Coinbase, Kraken, Gemini, FTX, and www.oldyorkcellars.com, to name a few. These exchanges have grown significantly in the number of features they offer.

The crypto universe has grown rapidly in the last decade, with many new tokens competing for investor dollars. With the exception of Bitcoin and certain prominent coins, such as Ethereum, not all of these tokens are available at all exchanges. Each exchange has its own set of criteria to determine whether to include or exclude the trading of certain tokens. 

Coinbase, Kraken, and Gemini offer Bitcoin and a growing number of altcoins. These three are probably the easiest on-ramps to crypto in the entire industry. Binance caters to a more advanced trader, offering more serious trading functionality and a better variety of altcoin choices. FTX, a fast-growing crypto exchange that has garnered a multibillion-dollar valuation, offers a restricted number of altcoins to U.S. investors. However, traders outside the U.S. have a greater choice of tokens on its platform.  

An important thing to note when creating a cryptocurrency exchange account is to use safe Internet practices. This includes two-factor authentication and a long, unique password that includes a variety of lowercase letters, capitalized letters, special characters, and numbers.

Step 2: Connect your exchange to a payment option

After you have chosen an exchange, you will need to gather your personal documents. Depending on the exchange, these may include pictures of a driver's license or Social Security card, as well as information about your employer and source of funds. The information you may need can depend on the region you live in and the laws within it. The process is largely the same as setting up a typical brokerage account.

After the exchange has verified your identity, you will be asked to connect a payment option. At most exchanges, you can connect your bank account directly or you can connect a debit or credit card. Although you can use a credit card to purchase cryptocurrency, it is not a good idea because cryptocurrency price volatility could inflate the overall cost of purchasing a coin.

Bitcoin is legal in the United States, but some banks may question or even stop deposits to crypto-related sites or exchanges. It is a good idea to check to make sure that your bank allows deposits at your chosen exchange.

There are varying fees for deposits via a bank account, debit, or credit card. It is important to research the fees associated with each payment option to help choose an exchange or to choose which payment option works best for you.

Exchanges also charge fees per transaction. These fees can either be a flat fee (if the trading amount is low) or a percentage of the trading amount. Credit cards incur a processing fee in addition to the transaction fees.

Step 3: Place an order

You can buy bitcoin (or other cryptocurrencies) after choosing an exchange and connecting a payment option. In recent years, cryptocurrency exchanges have slowly become more mainstream. They have grown significantly in terms of liquidity and their breadth of features. The operational changes at cryptocurrency exchanges parallel the change in the perception of cryptocurrencies. An industry that was once thought of as a scam or one with questionable practices is slowly morphing into a legitimate one that has drawn interest from all the big players in the financial services industry.

Now, cryptocurrency exchanges have gotten to a point where they have nearly the same level of features as their stock brokerage counterparts. Crypto exchanges today offer a number of order types and ways to invest. Almost all crypto exchanges offer both market and limit orders, and some also offer stop-loss orders. Of the exchanges mentioned above, Kraken offers the most order types. Kraken allows for market, limit, stop-loss, stop-limit, take-profit, and take-profit limit orders.

Aside from a variety of order types, exchanges also offer ways to set up recurring investments, allowing clients to dollar-cost average into their investments of choice. Coinbase, for example, lets users set recurring purchases for every day, week, or month.

Step 4: Safe storage

Bitcoin and cryptocurrency wallets are a place to store digital assets more securely. Having your crypto outside of the exchange and in your personal wallet ensures that only you have control over the private key to your funds. It also gives you the ability to store funds away from an exchange and avoid the risk of your exchange getting hacked and losing your funds.

Although most exchanges offer wallets for their users, security is not their primary business. We generally do not recommend using an exchange wallet for large or long-term cryptocurrency holdings.

Some wallets have more features than others. Some are Bitcoin only, and some offer the ability to store numerous types of altcoins. Some wallets also offer the ability to swap one token for another.

When it comes to choosing a Bitcoin wallet, you have a number of options. The first thing you will need to understand about crypto wallets is the concept of hot wallets (online wallets) and cold wallets (paper or hardware wallets).

Hot wallets

Online wallets are also known as hot wallets. Hot wallets are wallets that run on Internet-connected devices such as computers, phones, or tablets. This can create vulnerability because these wallets generate the private keys to your coins on these Internet-connected devices. Though a hot wallet can be very convenient in the way you are able to access and make transactions with your assets quickly, storing your private key on an Internet-connected device makes it more susceptible to a hack.

This may sound farfetched, but hot wallet holders who haven't set up enough security run the risk of losing funds to theft. This is not an infrequent occurrence, and it can happen in a number of ways. For example, boasting on a public forum such as Reddit about how much bitcoin you hold while you are using little to no security and storing it in a hot wallet would not be wise. That said, these wallets can be made secure so long as precautions are taken. Strong passwords, two-factor authentication, and safe Internet browsing should be considered minimum requirements.

These wallets are best for small amounts of cryptocurrency or cryptocurrency that you are actively trading on an exchange. You could liken a hot wallet to a checking account. Conventional financial wisdom would say to hold only spending money in a checking account while the bulk of your money is in savings accounts or other investment accounts. The same could be said for hot wallets. Hot wallets encompass mobile, desktop, web, and exchange account custody wallets. 

As mentioned previously, exchange wallets are custodial accounts provided by the exchange. The user of this wallet type is not the holder of the private key to the cryptocurrency that is held in this wallet. If an event were to occur wherein the exchange is hacked or your account becomes compromised, you would lose your funds. The phrase "not your key, not your coin" is heavily repeated within cryptocurrency forums and communities.

Cold wallets

The simplest description of a cold wallet is that it is not connected to the Internet and therefore stands at a far lesser risk of being compromised. These wallets can also be referred to as offline wallets or hardware wallets. These wallets store a user's private key on something that is not connected to the internet and can come with software that works in parallel so that the user can view their portfolio without putting their private key at risk. 

Perhaps the most secure way to store cryptocurrency offline is via a paper wallet. A paper wallet is a wallet that you can generate off of certain websites. It then produces both public and private keys that you print out on a piece of paper. The ability to access cryptocurrency in these addresses is only possible if you have that piece of paper with the private key. Many people laminate these paper wallets and store them in safe deposit boxes at their bank or even in a safe in their home. These wallets are meant for high-security and long-term investments because you cannot quickly sell or trade bitcoin stored this way.

A more common type of cold wallet is a hardware wallet. A hardware wallet is typically a USB drive device that stores a user's private keys securely offline. Such wallets have serious advantages over hot wallets because they are unaffected by viruses that could infect one's computer. With hardware wallets, private keys never come into contact with your network-connected computer or potentially vulnerable software. These devices are also typically open source, allowing the community to determine their safety through code audits rather than a company declaring that they are safe to use.

Cold wallets are the most secure way to store your bitcoin or other cryptocurrencies. But they require more technical knowledge to set up.

A good way to set up your wallets is to have three things: an exchange account for buying and selling, a hot wallet to hold small to medium amounts of crypto you wish to trade or sell, and a cold hardware wallet to store larger holdings for long-term durations.

How to Buy Bitcoin With PayPal

You can also buy bitcoin through payment processor PayPal Holdings, Inc. (PYPL). There are two ways to purchase bitcoin using PayPal. The first and most convenient method is to purchase cryptocurrencies using your PayPal account that is connected to a payment mechanism, such as a debit card or bank account. The second option is to use the balance of your PayPal account to purchase cryptocurrencies from a third-party provider. This option is not as convenient as the first because very few third-party sites allow users to purchase bitcoin using the PayPal button.

Four cryptocurrencies—Bitcoin, Ethereum, Litecoin, and Bitcoin Cash—can be purchased directly through PayPal. With the exception of those who live in Hawaii, residents of all states can either use their existing PayPal accounts or set up new ones. You can also use your cryptocurrencies to purchase products and services through the "Checkout With Crypto" feature.

To set up a crypto account with PayPal, the following information is required: name, physical address, date of birth, and tax identification number.

It is not possible to use a credit card to purchase Bitcoin using PayPal. During the buying process, PayPal will display a price for the cryptocurrency. But that price is subject to rapid change due to the volatility of cryptocurrency markets. It is a good idea to make sure you have more than the price you budgeted for the purchase in your bank account. 

When you buy bitcoin directly from PayPal, it makes money off the crypto spread or the difference between Bitcoin's market price and its exchange rate with USD. The company also charges a transaction fee for each purchase. These fees depend on the dollar amount of the purchase. For example, a flat fee of $ is charged for purchases between $ and $ Thereafter, the fee is a percentage of the overall dollar amount. For example, a fee of 2% of the total amount is charged for crypto purchases between $ and $

One disadvantage of purchasing cryptocurrencies through PayPal is that you cannot transfer the crypto outside the payment processor's platform. Therefore, it is not possible for you to transfer your purchased bitcoin from PayPal's wallet to an external crypto wallet or your personal wallet.

The other disadvantage of using PayPal is that very few exchanges and online traders allow the use of the payment processor to purchase payment. eToro is among the few online traders that allow the use of PayPal to purchase bitcoin on its platform.

How to Buy Bitcoin With a Credit Card

The process for purchasing bitcoin with credit cards is similar to the process for buying it with debit cards or through automated clearing house (ACH) transfers. You will need to enter your credit card details with the exchange or online trading firm and authorize the transaction. In general, however, it is not a good idea to purchase bitcoin with credit cards. There are a couple of reasons for this.

First, not all exchanges allow bitcoin purchasing with credit cards due to associated processing fees and the risk of fraud. This decision may work out in the best interests of customers. This is because credit card processing can tack additional charges onto such transactions. Thus, in addition to paying transaction fees, you will end up with processing fees that the exchange may pass onto you.

The second reason is that credit card purchases can be expensive. Credit card issuers treat bitcoin purchases as cash advances and charge hefty fees and interest rates on such advances. For example, American Express and Chase both count purchases of cryptocurrencies as cash advance transactions. Thus, if you purchase $ worth of bitcoin using an American Express card, you will pay $10 (current cash advance fee for such transactions) plus an annual percentage fee of 25%. What's more, the credit card company also limits you to $1, worth of bitcoin purchases per month.

An indirect method of purchasing bitcoin using a credit card is to get a Bitcoin rewards credit card. Such cards function like your typical rewards credit card except they offer rewards in the form of bitcoin. So, they invest the cash back earned from purchases into Bitcoin. One example of a Bitcoin rewards card is the BlockFi Bitcoin Rewards Credit Card. Beware, however, that the annual fees for these cards may be steep and there may be additional costs associated with the conversion of fiat currencies into crypto.

Alternative Ways to Buy Bitcoin

Bitcoin ATMs

Bitcoin ATMs act like in-person bitcoin exchanges. Individuals can insert cash into a machine and use it to purchase bitcoin that is then transferred to online wallets for users. Bitcoin ATMs have become increasingly popular in recent years—even retail giant Walmart Inc. (WMT) is testing a pilot program that will offer its customers the option of purchasing bitcoin. Coin ATM Radar can help to track down the closest machines.

However, ATMs are an expensive option. There are two charges associated with ATM bitcoin purchases: a purchase fee and a conversion fee for converting a fiat currency to bitcoin. Both fees are fairly steep compared to those of other options. For example, the worldwide average purchase fee at Bitcoin ATMs is % (of the purchase amount) and % for sales at ATMs.

P2P exchanges

Unlike decentralized exchanges, which match buyers and sellers anonymously and facilitate all aspects of the transaction, there are some peer-to-peer (P2P) exchange services that provide a more direct connection between users. LocalBitcoins is an example of such an exchange. After creating an account, users can post requests to buy or sell bitcoin, including information about payment methods and prices. Users then browse through listings of buy and sell offers, choosing the trading partners with whom they wish to transact.

LocalBitcoins facilitates some aspects of the trade. Although P2P exchanges do not offer the same anonymity as decentralized exchanges, they allow users the opportunity to shop around for the best deal. Many of these exchanges also provide rating systems so users have a way to evaluate potential trade partners before transacting.

Mainstream brokerages  

Very few mainstream brokerages offer bitcoin purchase and trading capabilities due to the uncertainty surrounding the regulatory status of cryptocurrencies. Robinhood Markets, Inc. (HOOD), an app popular with retail investors, is one exchange that offers crypto trading facilities. It charges 0% commission for cryptocurrency trades and purchases and makes money from payment for order flow, passing its trading volume onto other trading platforms or brokerages.

The absence of a commission fee may be an enticing prospect for beginners, but there are a couple of catches to that offer. First, Robinhood does not have the breadth of features and coins offered by prominent crypto exchanges like Coinbase. Robinhood had enabled trading on its platform for seven cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Bitcoin SV, Dogecoin, and Ethereum Classic. In contrast, you can trade more than cryptocurrencies on Coinbase. The exchange also offers various order types to minimize risk and offset losses during trading. 

The Robinhood platform also does not have a hosted wallet. Therefore, if you want to purchase cryptocurrencies through Robinhood, you will have to factor in additional costs for an online wallet provider.

How to Sell Bitcoin

You can sell bitcoin at the same venues where you purchased the cryptocurrency, such as cryptocurrency exchanges and P2P platforms. Typically, the process of selling bitcoin on these platforms is similar to the process for purchasing it.

For example, you may only be required to click a button and specify an order type (i.e., whether the cryptocurrency should be sold instantly at available prices or whether it should be sold to limit losses) to conduct the sale. Depending on the market composition and demand at the venue, the offering price for Bitcoin may vary. For example, exchanges in South Korea traded bitcoin at a so-called kimchi premium during the run-up in its prices back in   

Cryptocurrency exchanges charge a percentage of the crypto sale amount as fees. For example, Coinbase charges % of the overall transaction amount as fees.

Exchanges generally have daily and monthly withdrawal limits. Therefore, cash from a large sale may not be immediately available to the trader. There are no limits on the amount of cryptocurrency you can sell, however.

The Bottom Line

The process for purchasing bitcoin is slightly more complicated than the process to buy regular equity or stock. This is mainly because the cryptocurrency ecosystem and infrastructure are not as well developed as those of mainstream trading.

A bitcoin purchase process consists of four steps: selecting a service or venue for the purchase, connecting with a payment method, placing an order, and ensuring safe storage for your purchased cryptocurrency. Each of these steps requires research and a careful assessment of the pros and cons of each service. You can also buy bitcoin at Bitcoin ATMs or from payment services like PayPal and mainstream brokerages like Robinhood.

Executive Summary

Introduction

Bitcoin, blockchain, initial coin offerings, ether, exchanges. As you’ve no doubt noticed, cryptocurrencies (and their corresponding jargon) have caused quite the uproar in the media, online forums, and perhaps even in your dinnertime conversations. Despite the buzz, the meanings of these terms still elude many people’s comprehension. Perhaps we could put it as simply as Stephen Colbert does below, but we’ll be a tad more precise.

Originally known for their reputation as havens for criminals and money launderers, cryptocurrencies have come a long way—with regards to both technological advancement and popularity. The cryptocurrency market cap has been projected to reach as high as $ trillion in The technology underlying cryptocurrencies has been said to have powerful applications in various sectors ranging from healthcare to media.

With that said, cryptocurrencies remain controversial. While critics including economist Paul Krugman and Warren Buffet have called Bitcoin “evil” and a “mirage,” others, such as venture capitalist Marc Andreessen, tout them as “the next internet.” For every person declaring that cryptocurrencies are in a bubble, there’s another insisting that they are the next wave of the democratization of finance. At their simplest, they are merely the newest fintech fad; yet at the most complex level, they’re a revolutionary technology challenging the political, economic, and social underpinnings of society.

This article will attempt to demystify cryptocurrencies’ appeal, its complex underlying technology, and why a purely digital currency is able to have value. It will also examine the outstanding issues surrounding the space, including their evolving accounting and regulatory treatment.

What Is a Cryptocurrency and Why Use It?

Cryptocurrencies are digital assets that use cryptography, an encryption technique, for security. Cryptocurrencies are primarily used to buy and sell goods and services, though some newer cryptocurrencies also function to provide a set of rules or obligations for its holders—something we will discuss later. They possess no intrinsic value in that they are not redeemable for another commodity, such as gold. Unlike traditional currency, they are not issued by a central authority and are not considered legal tender.

At this point, use of cryptocurrencies is largely limited to “early adopters.” For scale, there are around 10 million Bitcoin holders worldwide, with around half holding Bitcoin purely for investment purposes. Objectively, cryptocurrencies are not necessary because government-backed currencies function adequately. For most adopters, the advantages of cryptocurrencies are theoretical. Therefore, mainstream adoption will only come when there is a significant tangible benefit of using a cryptocurrency. So what are the advantages to using them?

Pseudonymity (Near Anonymity)

Buying goods and services with cryptocurrencies takes place online and does not require disclosure of identities. However, a common misconception about cryptocurrencies is that they guarantee completely anonymous transactions. What they actually offer is pseudonymity, which is a near-anonymous state. They allow consumers to complete purchases without providing personal information to merchants. However, from a law enforcement perspective, a transaction can be traced back to a person or entity. Still, amid rising concerns of identity theft and privacy, cryptocurrencies can offer advantages to users.

Peer-to-Peer Purchasing

One of the biggest benefits of cryptocurrencies is that they do not involve financial institution intermediaries. For merchants, the lack of a “middleman” lowers transaction costs. For consumers, there’s a tremendous advantage if the financial system is hacked or if the user does not trust the traditional system. For comparison’s sake, if a bank’s database were hacked or damaged, the bank would be completely reliant on its backups to restore any missing information. With cryptocurrencies, even if a portion were compromised, the remaining portions would continue to be able to confirm transactions.

Still, cryptocurrencies are not completely immune from security threats. In one of the “largest digital heists in history,” the Decentralized Autonomous Organization (DAO), a decentralized fund intended to democratize the funding of Ethereum projects, was hacked. The decentralized application (DAPP) built on top of the Ethereum currency was hacked and hackers gained control of one-third of the fund ($55 million). Fortunately, most of the funds were restored. However, the incident shook the community and prompted the SEC’s decision to subject offerings and exchanges to US securities laws.

Programmable, “Smart” Capabilities

Certain cryptocurrencies can confer other benefits to their holders, including limited ownership and voting rights. For example, a cryptocurrency-funded organization can include voting rights in the currency’s software code. Cryptocurrencies could also include fractional ownership interests in physical assets such as art or real estate.

Cryptocurrency Technology

Much of the cryptocurrencies’ popularity and security advantages are derived from its groundbreaking technological innovation.

Blockchain Technology Explained

Blockchain technology underlies Bitcoin and many other cryptocurrencies. It relies on a public, continuously updating ledger to record all transactions that take place. Blockchain is groundbreaking because it allows transactions to be processed without a central authority—such as a bank, the government, or a payments company. The buyer and seller interact directly with each other, removing the need for verification by a trusted third-party intermediary. It thus cuts out costly middlemen and allows businesses and services to be decentralized.

Another distinguishing feature of blockchain technology is its accessibility for involved parties. It’s akin to Google Docs, where multiple parties can access the ledger at once, in real time. Today, if you write a friend a check, you and your friend balance your respective checkbooks when it’s deposited. But things start to go awry if your friend forgets to update their checkbook ledger, or if you don’t have enough in your bank account to cover the check (which the bank has no way of knowing beforehand).

With blockchain, you and your friend would view the same ledger of transactions. The ledger is not controlled by either of you, but it operates on consensus, so both of you need to approve and verify the transaction for it to be added to the chain. The chain is also secured with cryptography, and significantly, no one can change the chain after the fact.

From a technical perspective, the blockchain utilizes consensus algorithms, and transactions are recorded in multiple nodes instead of on one server. A node is a computer connected to the blockchain network, which automatically downloads a copy of the blockchain upon joining the network. For a transaction to be valid, all nodes need to be in agreement.

Though blockchain technology was conceived as part of Bitcoin in , there may be many other applications. Technology consulting firm CB Insights has identified 27 ways it can fundamentally change processes as diverse as banking, cybersecurity, voting, and academics. The Swedish government, for example, is testing the use of blockchain technology to record land transactions, which are currently recorded on paper and transmitted through physical mail. The World Economic Forum estimates that by , 10% of global GDP will be stored on blockchain technology.

Cryptocurrency Mining

“Mining” refers to a step whereby two things occur: Cryptocurrency transactions are verified and new units of the cryptocurrency are created. Effective mining requires both powerful hardware and software.

When it comes to verification, an individual computer isn’t powerful enough to profitably mine cryptocurrencies because you’d run up your power bill. To address this, miners often join pools to increase collective computing power, allocating miner profits to participants. Groups of miners compete to verify pending transactions and reap the profits, leveraging specialized hardware and cheap electricity. This competition helps to ensure the integrity of transactions.

The largest pools include AntPool, F2Pool, and BitFury, with AntPool alone controlling over 19% of all mining. Most mining pools are located in China, comprising more than 70% of total Bitcoin mining. China manufactures most cryptocurrency mining equipment and leverages the country’s cheap electricity prices.

Cryptocurrency Exchanges

Cryptocurrency exchanges are websites where individuals can buy, sell, or exchange cryptocurrencies for other digital currency or traditional currency. The exchanges can convert cryptocurrencies into major government-backed currencies, and can convert cryptocurrencies into other cryptocurrencies. Some of the largest exchanges include Poloniex, Bitfinex, Kraken, and GDAX, which can trade more than $ million (equivalent) per day. Almost every exchange is subject to government anti-money laundering regulations, and customers are required to provide proof of identity when opening an account.

Instead of exchanges, people sometimes use peer-to-peer transactions via sites like LocalBitcoins, which allow traders to avoid disclosing personal information. In a peer-to-peer transaction, participants trade cryptocurrencies in transactions via software without the involvement of any other intermediary.

Cryptocurrency Wallets

Cryptocurrency wallets are necessary for users to send and receive digital currency and monitor their balance. Wallets can be either hardware or software, though hardware wallets are considered more secure. For example, the Ledger wallet looks like a USB thumb drive, and connects to a computer’s USB port. While the transactions and balances for a bitcoin account is recorded on the blockchain itself, the private key used to sign new transactions is saved inside the Ledger wallet. When you try to create a new transaction, your computer asks the wallet to sign it and then broadcasts it to the blockchain. Since the private key never leaves the hardware wallet, your bitcoins are safe, even if your computer is hacked. Still, unless backed up, losing the wallet would result in the loss of the holder’s assets.

In contrast, a software wallet such as the Coinbase wallet is virtual. This type of software device can place the holder’s funds online in the possession of the wallet provider, which has added risk. Coinbase introduced its Vault service to increase the security of its wallet.

For a deeper dive on the technology powering cryptocurrencies, check out this guide from Toptal’s Engineering blog.

Types of Cryptocurrencies

Currently, there are two major categories of cryptocurrencies: those utilized for the purchase of goods and services and those that allow for the creation of “smart contracts,” which are agreements that enforce themselves via code rather than courts. We’ll discuss both in this section.

According to experts in the industry, “There won’t be one supreme digital currency…A kind of crypto-pluralism is taking hold.” Though Bitcoin and Ethereum comprise the majority of the cryptocurrency market share (see Chart 2 below), we’ve seen the emergence and rapid growth of many new technologies. In fact, there are over 1, cryptocurrencies in existence right now (called “altcoins”); over have market capitalizations of over $,

Bitcoin

Released in by someone under the alias Satoshi Nakamoto, Bitcoin is the most well known of all cryptocurrencies. Despite the complicated technology behind it, payment via Bitcoin is simple. In a transaction, the buyer and seller utilize mobile wallets to send and receive payments. The list of merchants accepting Bitcoin continues to expand, including merchants as diverse as Microsoft, Expedia, and Subway, the sandwich chain.

Although Bitcoin is widely recognized as pioneering, it is not without limitations. For example, it can only process seven transactions a second. By contrast, Visa handles thousands of transactions per second. The time it takes to confirm transactions has also risen. Not only is Bitcoin slower than some of its alternatives, but its functionality is also limited. This is reflected in its market share, which has fallen from 81% in June , to 40% nearly two years later. While Bitcoin’s price has generally been following an upward trend, in early Bitcoin’s price fell sharply, dipping below $8, as news of tougher regulation from China and South Korea surfaced (to be discussed in a subsequent section). Bitcoin’s price also fell following announcements of SEC crackdown on crypto exchanges and after Binance was reportedly hacked. Other currencies like Bitcoin include Litecoin, Zcash and Dash, which claim to provide greater anonymity.

Ether and Ethereum

Ether and currencies based on the Ethereum blockchain have become increasingly popular. In August , its market capitalization was around $28 billion. At one point, financial analysts had anticipated that Ether’s market capitalization would surpass that of Bitcoin (the “flippening”). However, issues with Ethereum technology have since caused declines in value. Ethereum has seen its share of volatility. Like Bitcoin, in mid-January , the price of ethereum also experienced a plummet from close to $1, to under $1, within a few day’s time.

Often used interchangeably, Ethereum is a platform that allows for relatively easy creation of smart contracts while Ether is a “token” used to enter into transactions on the Ethereum blockchain. Put simply, smart contracts are computer programs that can automatically execute the terms of a contract. They function similarly to the “IF (then)” Excel function: When a pre-programmed condition is triggered, the smart contract executes the corresponding contractual clause.

Let’s apply this to an example. Let’s say you’re a company that creates and sells video game consoles. You work with suppliers and shipping companies, and you’re concerned with ensuring that: 1) the consoles are manufactured well and on time, 2) there are no labor violations, and 3) all parties get paid on time. With traditional operations, numerous contracts would be involved just to manufacture a single console, with each party retaining their own paper copies.

However, combined with blockchain, smart contracts provide automated accountability. Smart contracts can be leveraged in a few ways: When a truck picks up the manufactured consoles from the factory, the shipping company scans the boxes. These are then added to the blockchain, which triggers a release of funds from the video game company’s account. There’s no invoice or chasing down of payments. Beyond payments, a given worker in production could scan their ID card, which is then verified by third-party sources to ensure that they do not violate labor policies.

Like blockchain technology, smart contracts can also have many use cases in other industries, including healthcare or music/media.

Other Popular Cryptocurrencies

• Litecoin: Launched in , Litecoin functions similarly to Bitcoin in that is also open sourced, decentralized, and backed by cryptography. However, it was intended to serve in a complementary role to Bitcoin, “the silver to Bitcoin’s gold.” Litecoin has a faster block generate rate and faster transaction confirmation.
• Dash:Released in as “Darkcoin,” Dash has since re-branded and offers more anonymity for its users due to its decentralized mastercode network. It utilizes something called a “Masternode” network which has a more robust foundation than Bitcoin.
• Zcash: Released in October , Zcash is a relative newcomer in the space. However, there are claims that it is the first truly anonymous cryptocurrency in existence due to its employment of zero knowledge SNARKS, which involves no transaction records whatsoever. The technology ensures that, despite all the information being encrypted, it is still correct and that double spending is impossible.
• Monero: Monero possesses unique privacy properties. For example, Monero enables complete privacy by leveraging a technique called “ring signatures.” It’s become popular in the dark web black market, where users purchase everything from drugs to firearms.
• Ripple: Released in , Ripple offers instant and low-cost international payments. Ripple utilizes a consensus ledger as its method of verification and doesn’t require mining—which distinguishes it from Bitcoin and other cryptocurrencies. It thus requires less computing power.

Investing in Cryptocurrencies

As mentioned previously, cryptocurrency has no intrinsic value—so why all the fuss? People invest in cryptocurrencies for a couple primary reasons. First, there’s a speculative element to cryptocurrency prices which entice investors looking to profit from market value changes. For example, the price of Ether appreciated from $8 per unit in January to almost $ six months later as the Ether market became more bullish—only to decline to $ per unit in July due to technical issues.

Apart from pure speculation, many invest in cryptocurrencies as a geopolitical hedge. During times of political uncertainty, the price of Bitcoin tends to increase. As political and economic uncertainty in Brazil increased in and , Bitcoin exchange trade increased by % while wallet adoption grew by %. Bitcoin prices also increased in response to Brexit and Trump victories, and continue to increase alongside Trump’s political controversies.

Factors Affecting Cryptocurrency Prices

• Supply and Demand. The supply of Bitcoin is limited by code in the Bitcoin blockchain. The rate of increase of the supply of Bitcoin decreases until the number of Bitcoin reaches 21 million, which is expected to take place in the year As Bitcoin adoption increases, the slowing growth in the number of Bitcoin all but assures that the price of Bitcoin will continue to grow.

Bitcoin is not the only cryptocurrency with limits on issuance. The supply of Litecoin will be capped at 84 million units. The purpose of the limit is to provide increased transparency in the money supply, in contrast to government-backed currencies. With the major currencies being created on open source codes, any given individual can determine the supply of the currency and make a judgment about its value accordingly.

• Applications of the Cryptocurrency. Cryptocurrencies require a use case to have any value. A miner of a rare metal may see rapid appreciation in value if it’s used, for example, in the next iPhone 8; if the metal is not used, however, it becomes worthless. The same dynamic applies to cryptocurrencies. Bitcoin has value as a means of exchange; alternate cryptocurrencies can either improve on the Bitcoin model, or have another usage that creates value, such as Ether. As uses for cryptocurrencies increase, corresponding demand and value also increase.

• Regulatory Changes. Because the regulation of cryptocurrencies has yet to be determined, value is strongly influenced by expectations of future regulation. In an extreme case, for example, the United States government could prohibit citizens from holding cryptocurrencies, much as the ownership of gold in the US was outlawed in the s. It’s likely that ownership of cryptocurrency would move offshore in such a case, but it would still severely undermine their value.

• Technology Changes. Unlike physical commodities, changes in technology affect cryptocurrency prices. July and August saw the price of Bitcoin negatively impacted by controversy about altering the underlying technology to improve transaction times. Once the change was completed, the price of Bitcoin shot up—increasing from $ to a record high of $ in just over two weeks. Conversely, news reports of hacking often lead to price decreases.

Still, given the volatility of this emerging phenomenon, there is a risk of a crash. Many experts have noted that in the event of a cryptocurrency market collapse, that retail investors would suffer the most. According to Mohamed Damak, S&P Global Rating sector lead, “For now, a meaningful drop in cryptocurrencies’ market value would be just a ripple across the financial services industry, still too small to disturb stability or affect the creditworthiness of banks we rate.” Read more here on the bear case of the cryptocurrency market.

Initial Coin Offerings

Initial coin offerings (ICOs) are the hot new phenomenon in the cryptocurrency investing space. ICOs help firms raise cash for the development of new blockchain and cryptocurrency technologies. Instead of issuing shares of ownership, they offer digital tokens, or “coins.” Investors gain early access to the technology, and are able to use it however they see fit. Startups are able to raise money without diluting from private investors or venture capitalists. Bankers are increasingly abandoning their lucrative positions for their slice of the ICO pie.

Not convinced of the craze? This year, former Mozilla CEO Brendan Eich raised $35 million from an ICO in less than 30 seconds, and Bancor Protocol raised $ million in under three hours. Additionally, blockchain-related projects have raised more than $ billion via ICOs to date, while venture capitalists have provided only $ million for cryptocurrency companies across more than deals.

Outstanding Issues around the Cryptocurrency Market

With cryptocurrencies still in the early innings, there are many issues surrounding its development. It’s interesting to contemplate the philosophical and political implications of cryptocurrencies. Cryptocurrencies are inherently political because they challenge the traditional “social contract” that societies operate under. According to this theory, members of society implicitly agree to cede some of their freedoms to the government in exchange for order, stability, and the protection of their other rights. By creating a decentralized form of wealth, cryptocurrencies are governed by code alone.

It’s no wonder, then, that the accounting treatment, regulation, and privacy issues surrounding cryptocurrencies and blockchain have yet to be fully determined. The following section will discuss these tangible aspects of cryptocurrency development.

Accounting Treatment of Cryptocurrencies

Under current accounting guidelines, cryptocurrencies are most likely not cash or cash equivalents since they lack the liquidity of cash and the stable value of cash equivalents. However, the accounting treatment of cryptocurrencies is still uncertain as there has not been official guidance on the issue from the International Finance Reporting Standards (IFRS) or The American Institute of CPAs (AICPA).

Internal Revenue Service Ruling

In the US, IRS Revenue Ruling stated that holders of cryptocurrencies should account for them as personal property, with gains or losses on purchases or sales. The value of cryptocurrency holdings on balance sheets would be at cost or fair market value at the time of receipt. Therefore, with the rapid increase in price, sales of cryptocurrencies lead to enormous gains at the time of sale: just consider the capital gains taxes on buying Bitcoin at $ in and selling it for more than $4, in !

The ruling left many questions unanswered. For example, it’s unclear whether the exchange of one cryptocurrency for another is eligible for tax deferral under something called the “like-kind exchange” rules. These rules exclude certain investment assets, but do not explicitly exclude cryptocurrencies, so their applicability is unclear. In a given exchange of Bitcoin for Ether, it’s unclear whether the two currencies are sufficiently comparable that they are of the same “kind” and thus eligible for like-kind tax treatment, or whether they are simply of the same “class”—which are ineligible.

International Tax Treatment of Cryptocurrencies

Outside the US, accounting treatment of cryptocurrencies varies. In the EU, a decision of the European Court of Justice rules that cryptocurrencies should be treated like government-backed currencies, and that holders should not be taxed on purchases or sales. In countries such as Germany and the UK, cryptocurrencies are treated like “private money” and not subject to tax outside of commercial use.

Similarly, in Japan, cryptocurrencies were recently reclassified as a “means of settlement” of transactions, and thus exempted from Japan’s consumption tax. Previously, purchases of cryptocurrencies were subject to an 8% consumption tax.

Regulation of Cryptocurrencies

Regulatory treatment of cryptocurrencies continues to evolve, but because the technology transcends global boundaries, the influence of national regulators is limited. Since cryptocurrencies were conceived specifically to avoid governmental controls, it’s uncertain whether regulation efforts will be successful.

Japan Is the First to Take an Unambiguous, Encouraging Regulatory Approach

Japan has not only legally recognized Bitcoin, but also created a regulatory framework to help the industry flourish. This is considered a major step forward for legitimizing cryptocurrencies. However, Japan has also mandated that by October 1, any Bitcoin or “alternative coin” must be registered with the Japan Financial Services Agency and be subjected to annual audits. Though the registration is expensive and demanding (including a three-year business plan and anti-money laundering requirements), many parties are rushing to get registered because they recognize that the handsome reward includes “voracious” Japanese retail investors. The media has generally praised the new regulatory scheme, though the Japanese Bitcoin community has criticized the system as hampering innovation. The move follows the major fraud and investor losses from the Mt. Gox Bitcoin exchange scandal.

Mike Kayamori, chief executive of the cryptocurrency exchange Quoine says, “When you are talking about startups, which of course a lot of the Bitcoin-related businesses are, you never really think of regulation as a good thing…But in this case, it just might be different. The retail investor—Mrs. Watanabe—doesn’t want to be in the wild, wild west. She wants something regulated and trustworthy.”

US, China, and South Korea National Regulators Crack Down on Cryptocurrencies

• US. On the other hand, US regulators have been less than keen about the rise of virtual currencies. The Financial Stability Oversight Council, a group of regulators, expressed concern in a recent annual report: “Market participants have limited experience working with distributed ledger systems, and it is possible that operational vulnerabilities associated with such systems may not become apparent until they are deployed at scale.”

  US regulators are starting to crack down on previously unregulated cryptocurrency activities. Take initial coin offerings (ICOs) for example. Despite their popularity, many ICOs are for new cryptocurrencies with speculative business models, and have been widely criticized as scams.

  In response, the SEC indicated that tokens issued from ICOs must be registered under the US Securities Laws if offered to US residents. Since ICOs can be sold across national borders, it remains to be seen whether ICO issuers will choose to comply or simply move transactions outside of the US. Due to the pseudonymous nature of ICO transactions, it may be difficult for national governments to significantly limit cryptocurrency sales or trading.

  Regulation is also expanding beyond ICOs. As of March , the SEC is requiring that cryptocurrency trading platforms be formally registered as formal “exchanges” like the New York Stock Exchange or CBOE. This move is a result of concern that cryptocurrency investors believe they are receiving the protections and benefits of a registered exchange when they, in fact, are not. To date, compared to securities brokers, cryptocurrency exchanges have had no capital rules and have been largely unregulated other than for anti-money laundering—something that seems to be subject to change. Exchanges registered with the SEC will be subject to inspections, required to police their markets, and mandated to follow rules aimed at ensuring fair trading. The SEC announcement coincided with a “large-scale” theft attempt on crypto exchange Binance.

• China. China has banned ICOs, called on local exchanges to stop trading in cryptocurrencies, and limited mining. Bitcoin and other cryptocurrency trading are still permitted to be traded, but only via over-the-counter (OTC) markets, which is a slower process that may increase credit risk. China also recently cracked down on a cryptocurrency loophole that allowed Chinese investors to trade crypto assets on overseas exchanges. Overall, China has taken a tough stance on cryptocurrencies, looking to cleanse the financial markets for years now and viewing cryptocurrencies as a potential shadow banking sector and a way to move money out of the country. Still, this doesn’t mean that it’s against the phenomenon. In fact, the People’s Bank of China has been developing its own prototype cryptocurrency and wants to be the first central bank to issue digital money. The Chinese government believes its benefits include decreased transaction costs, enhanced access to financial services for rural areas, and increased efficacy of monetary policies. However, it wants to maintain full control of these transactions.
• South Korea. South Korea has become a hub for crypto trading, for housewives and students alike. South Korea’s won accounted for over 10% of Bitcoin trades in the second half of and was the top currency for transactions in Ethereum until late in the year. However, South Korea banned ICOs in September , and since then regulators have been contemplating shutting down local crypto exchanges, outlawing deposits into anonymous virtual accounts at banks, even instituting a capital gains tax on crypto-trading. It remains to be seen how regulation will shake out.

Individual US States Have Adopted Varying Approaches

New York State created the BitLicense system, which imposes new requirements on companies looking to conduct business with New York residents. As of mid, only three BitLicenses have been issued, and a far greater number withdrawn or denied. In , the cost of obtaining a license was estimated to be as much as $,, galvanizing an exodus of cryptocurrency companies from New York state.

In contrast, Vermont and Arizona have embraced the new technology. Both states passed laws providing legal standing to facts or records tied to a Blockchain, including smart contracts. Arizona also passed a second law prohibiting blockchain technology from being used to track the location or control of a firearm.

Security and Privacy Issues

Computer hacking and theft continue to be impediments to widespread acceptance. These issues have continued to rise in tandem with the popularity of cryptocurrencies. In July , one of the five largest Bitcoin and Ethereum exchanges (Bithumb) was hacked, resulting in the theft of user information as well as hundreds of millions of Korean Won. The FTC also recorded an increase in identity fraud complaints of more than % between and , and Coinbase, the largest US-based exchange, saw account hacking double between November and December

The pseudonymous nature of blockchain and Bitcoin transactions also raises other concerns. In a typical centralized transaction, if the good or service is defective, the transaction can be cancelled and the funds returned to the buyer. However, in the cryptocurrency ecosystem, there isn’t a central organization to facilitate recourse against the seller.

Parting Thoughts

Despite advancements since their inception, cryptocurrencies rouse both ire and admiration from the public. The challenge proponents must solve for is advancing the technology to its full potential while building the public confidence necessary for mainstream adoption. After all, critics are not entirely wrong. Clearly, there’s a lot of hype surrounding the space. Bitcoin’s price reflects expectations that are not necessarily supported by reality, and it’s not hard to imagine a day when another cryptocurrency will overshadow it. Bitcoin and its investors could end up like brick and mortar stores, eclipsed by the next big thing. New cryptocurrency advancements are often accompanied by a slew of risks: theft of cryptocurrency wallets is on the rise, and fraud continues to cast an ominous shadow on the industry. This tension between promise and peril makes this new world unlike anything we’ve experienced before.

Still, cryptocurrencies and blockchain could be truly transformative. Imagine an election where vote totals are confirmed by hundreds of nodes operating in an open source environment instead of a single government agency’s computer. Or where the purchase and sale of real estate no longer requires signed documents or an official “closing”—just the transfer of a cryptocurrency backed by a smart contract. The only limit is your imagination.

As Richard Branson puts it, “I’m not sure if anybody knows exactly how emerging payment technologies are going to change the world for good in the long-term – I certainly don’t. But I’m convinced they are going to have a big, positive impact, and am excited about going on the journey.”

Understanding the basics

Cryptocurrencies are primarily used to buy and sell goods and services, though some newer cryptocurrencies also function to provide a set of rules or obligations for its holders.

Cryptocurrency wallets are necessary for users to send and receive digital currency and monitor their balance. Wallets can be either hardware or software, though hardware wallets are considered more secure.

During mining, two things occur: Cryptocurrency transactions are verified and new units are created. Effective mining requires powerful hardware and software. Miners often join pools to increase collective computing power, splitting profits between participants. Groups of miners compete to verify transactions.

Cryptocurrency wallets help users send and receive digital currency and monitor their balance. Wallets can be hardware or software, though hardware wallets are considered more secure. Transactions and balances are recorded directly on the wallet, which cannot be accessed without the device.

Released in by Satoshi Nakamoto (alias), Bitcoin is the most well known of all cryptocurrencies. In a Bitcoin transaction, the buyer and seller utilize mobile wallets to send and receive payments. Although Bitcoin is recognized as pioneering, it is it can only process seven transactions a second.

The Bitcoin supply is limited by code in the Bitcoin blockchain. The rate of increase of the supply of Bitcoin decreases until Bitcoin reaches 21 million, expected to happen in As Bitcoin adoption increases, the slowing growth in the number of Bitcoins assures that the price of Bitcoin will continue to grow.

Module overview

This course will explore the architecture of Blockchain technology that is rapidly changing the landscape of the financial industry and beyond. Countless applications are being explored in payments, insurance, lending, fund raising, settlement of securities transactions and contract execution. Cryptocurrencies, one of the most popular uses of blockchain, are explored in detail. The module will present technical concepts at a high level suitable for students whose main interest is finance and the financial applications of blockchain.

There will be dedicated discussions of a design of optimal investment strategy in cryptocurrency market. Investment under uncertainty has a got a new dimension with the advent of cryptocurrency. Unravelling the investment strategy of cryptocurrency is like a gospel, as the world economy is preparing steadily for the establishment of a new crypto-market and legalising the same within the monetary system. However, there are veritable challenges in investment in cryptocurrencies – a majority of these challenges are just like a black box, with no easy solution to be found at present.

Aims and Objectives

Learning Outcomes

Subject Specific Intellectual and Research Skills

Having successfully completed this module you will be able to:

• Analyse the potential usage of blockchain technology for financial services industry, weighing its pros and cons.
• Explain how investors can construct a cryptocurrency portfolio and develop a successful trading strategy in the cryptocurrency markets.
• Advise investors on a suitable strategy for Blockchain adoption and cryptocurrency investments.

Knowledge and Understanding

Having successfully completed this module, you will be able to demonstrate knowledge and understanding of:

• Blockchain technology and its application in financial services industry.
• Cryptocurrencies and their technical and financial characteristics.
• Investment opportunities and risks associated with the rapid growth of cryptocurrency markets.

Transferable and Generic Skills

Having successfully completed this module you will be able to:

• Interpret and analyse quantitative data related to business issues, using appropriate financial and/or statistical skills and models to solve problems.
• Manage individual tasks, personal resources and time effectively.
• Write effectively for business purposes.

Syllabus

This module contains ten topics:

• Blockchain and distributed ledger technology
• Applications of Blockchain
• Technological aspects of cryptocurrencies
• Bitcoin and beyond: cryptocurrency classification
• Financial characteristics of cryptocurrencies
• Opportunities and risks of cryptocurrency investments
• Cryptocurrency portfolio and diversification strategies
• Regulatory, legal and environmental aspects
• Fintech adoption and its implications for finance service industry
• Future of Blockchain and Cryptocurrency

Learning and Teaching

Teaching and learning methods

Taking into account the excellence of the Southampton Business School in Digital Finance research, this module will incorporate research-led teaching, where leaners can benefit from cutting edge research results in Blockchain and Cryptocurrency Investments. Learners will get access to Bloomberg terminal and all main global financial databases, and will be able to apply their knowledge to practice and acquire essential skills to support their careers in finance related industries. All classes will have interactive element and the effective dialogue between learners and teaching staff will be established. Plenty of opportunities for reflection and feedback will be provided.

Assessment

Formative

This is how we’ll give you feedback as you are learning. It is not a formal test or exam.

Summative

This is how we’ll formally assess what you have learned in this module.

Referral

This is how we’ll assess you if you don’t meet the criteria to pass this module.

Repeat

An internal repeat is where you take all of your modules again, including any you passed. An external repeat is where you only re-take the modules you failed.

Two-thirds (67%) of university students would consider relying on cryptocurrency to cover the cost of university, according to recent research by student accommodation provider UniHomes.

A survey of 1, students on 19 May this year revealed that university students are twice as likely to invest in crypto then the general population, with an estimated , UK undergraduates currently owning some form of the currency.

While the crypto market remains volatile, it is thought that m people across the country have invested, amounting to approximately 5% of the population and placing the UK 11th in the global rankings for investor prominence. By comparison, 10% of the student population currently own crypto, amounting to , young people.

In terms of cryptocurrency ownership by employment status, university students come second only to military personnel (20%).

&#;Students are becoming more entrepreneurial, with out-of-the-box thinking when it comes to financial savviness, compared to previous generations&#; – Phil Greaves, UniHomes

The survey also confirmed that many students are keen to maintain their grasp of the crypto market, with 18% saying they are still keeping money aside to invest in the likes of cryptocurrencies, stocks and shares.

While the opportunity for crypto transactions remains limited, students are keen for this to change, with 67% saying they would consider using the fruits of their crypto investments to cover the cost of their university tuition, rent, and even the general cost of living if they could.

The study found that the average overall cost of higher education in the UK is £18, a year. With Bitcoin currently valued at £28, (as of 20 May), students studying a three-year degree could comfortably cover tuition and life expenses with just Bitcoin at current market rates.

&#;With cryptocurrency such a new form of investment, it&#;s interesting to see just how many students would consider this a viable currency in the future,&#; said Phil Greaves, co-founder and director of UniHomes.

&#;Students are becoming more entrepreneurial, with out-of-the-box thinking when it comes to financial savviness, compared to previous generations.&#;

In other news: Middlesex University uses augmented reality to entice new students

In the space of just over 12 years &#; Bitcoin has gone from a developer’s pipedream to a global marketplace that is now worth over £1 trillion. And as such, you can now invest in thousands of different cryptocurrencies from the comfort of home.

If you’re thinking about entering this marketplace today &#; this beginner’s guide will explain how to buy cryptocurrency in the UK in under five minutes with an FCA-regulated broker.

How to Buy Cryptocurrency UK &#; Quick Guide

To get the ball rolling, the quickfire walkthrough below will show you the basics of how to buy crypto in the UK via FCA-broker eToro.

If the above quickfire guide is a bit too brief for your skillset &#; you will find a more comprehensive walkthrough further down in this article.

Where to Buy Cryptocurrency in the UK

Where can I buy cryptocurrency? A question that runs through most crypto-hungry investors. With so many UK crypto exchanges out there, choosing the right one for your needs can be like trying to find a needle in a haystack.

Some of the key metrics to consider before making a decision include, payment methods, fees, supported cryptocurrencies, and customer service.

If you need pointing in the right direction &#; below you will find a list of pre-vetted brokers and exchanges that allow you to buy cryptocurrency in the UK.

Note: Brokers allow you to buy cryptocurrency in the UK directly from the provider, while exchanges offer a platform for you to trade with other market participants.

1. eToro &#; Best Place to Buy Cryptocurrency UK (FCA Regulated)

In terms of regulation, fees, supported markets, and many other important metrics &#; eToro stands out as the best place to buy cryptocurrency in the UK and the best Bitcoin broker. The platform was first launched in and is largely favored by inexperienced investors. You can open an account in under two minutes here and instantly deposit funds with a UK debit/credit card or an e-wallet like PayPal.

When you have completed the registration and deposit process &#; you will then have access to over 40+ cryptocurrencies. Some of the most popular tokens hosted at eToro include Ethereum, Ripple, Cardano, Dogecoin, and of course &#; Bitcoin. All of the digital currencies available at eToro can be traded from just $10 &#; and all orders are executed on a spread-only basis. For example, you can buy Shiba Inu with a minimum spread of %.

In simple terms, this means that you only need to cover the difference between the ‘bid’ and ‘ask’ price of the respective cryptocurrency. In addition to digital assets, eToro also offers thousands of commission-free shares and ETFs, as well as forex and commodity markets. Best of all, eToro allows you to invest passively through its CopyPortfolio and Copy Trading tools.

The former allows you to gain exposure to diversified portfolios that are managed by the eToro team. The CryptoPortfolio, for example, covers more than a dozen leading digital assets &#; which you can invest in through a single trade. The Copy Trading tool, on the other hand, allows you to copy the portfolio of an experienced trader. Finally, eToro is regulated and authorized by the FCA.

Buy Crypto on eToro Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

2. Huobi &#; Buy Cryptocurrency UK With MasterCard

Another cryptocurrency exchange to consider is Huobi &#; which is home to hundreds of tradable markets. This platform is arguably more suited to MasterCard holders &#; as Huobi does not support Visa.

You can, however, also deposit funds with digital currency. Either way, once your Huobi account is funded and ready to go &#; you can trade cryptocurrencies from just % per slide. For large-scale traders, this commission is reduced once you surpass certain day volume thresholds.

At Huobi, you can also deposit your crypto assets into a savings account &#; which allows you to earn interest.

Buy Crypto on Huobi Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

3. Margex – Best Platform to Trade Crypto Derivatives Markets

Margex is another of our recommended cryptocurrency brokers, offering a wide selection of derivatives markets to trade on. Featuring an order book depth of $40 million and over 12 liquidity providers, Margex prides itself on executing trades faster than anyone else – averaging only eight milliseconds per order. In addition, Margex provides up to x leverage on the platform&#;s six trading pairs, significantly increasing the potential profits that investors can attain.

In terms of security, Margex ensures users&#; holdings are as safe as possible by storing % of customer assets in multi-signature cold wallets. The platform also employs two-factor authentication and SLL encryption to greatly reduce the chance of cyberattacks occurring. Aside from the platform&#;s high security, Margex will also appeal to users who wish to trade anonymously, as there is no need to complete KYC checks when setting up a trading account.

Although Margex currently only offers six trading pairs, including BTC/USD, ETH/USD, and XRP/USD, the platform’s fees are very low. Margex employs a maker/taker model, which will cost % in maker fees and % in taker fees. Finally, the trading experience at Margex is incredibly user-friendly, with the web-based platform featuring real-time price charts from TradingView and in-depth order book information.

Buy Crypto on Margex Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

4. www.oldyorkcellars.com – Best Platform to Buy Cryptocurrency on Mobile

If you&#;re looking to buy cryptocurrency on your smartphone, then www.oldyorkcellars.com is an appealing option. www.oldyorkcellars.com is one of the fastest-growing crypto exchanges globally, boasting over 10 million registered users. Much of the platform&#;s appeal is due to its user-friendly nature, as www.oldyorkcellars.com allows traders to invest on the browser-based platform or the mobile app.

The latter features a sleek design, complete with price charts, real-time data, and price alerts. Users can invest in cryptocurrencies from only % per position, which can be reduced by 10% if these trading fees are paid in CRO – www.oldyorkcellars.com’s native token. Alternatively, www.oldyorkcellars.com also allows users to buy cryptocurrencies using a credit or debit card. This removes the need to deposit and is completely free for the first 30 days of using the platform.

www.oldyorkcellars.com users can add to their trading balance easily via crypto or FIAT – with both options accruing no fees whatsoever. Notably, UK-based traders can fund their accounts in GBP instantly using Faster Payments. In terms of features, www.oldyorkcellars.com offers a free DeFi wallet app and a dedicated &#;University&#; section, complete with educational materials for beginners.

Buy Crypto on www.oldyorkcellars.com Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

5. Coinbase &#; Popular Place for Beginners to Buy Cryptocurrency UK

In a similar nature to eToro, Coinbase is a popular place for beginners to buy cryptocurrency in the UK. The Coinbase website is simple and free of complex jargon &#; and you can typically open an account in less than 15 minutes.

However, many UK users have reported that the verification process can be challenging &#; as Coinbase will often state that it cannot validate uploaded documents. Nevertheless, once your account is verified, you can proceed to buy cryptocurrency in the UK with your Visa or MasterCard.

The transaction will be processed instantly at a rather high fee of %. UK bank transfers are an alternative option &#; as this deposit method is fee-free. But, once the money arrives, you will still need to cover the % standard commission.

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Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

6. Binance &#; Largest Exchange to Trade Cryptocurrency in the UK

With more than million using this popular cryptocurrency exchange, Binance is a market leader in this industry. The platform offers huge levels of liquidity too &#; not least because it facilitates trading volumes in the billions of pounds &#; each day.

Furthermore, UK residents can buy and sell cryptocurrency here at a commission of just %. Another benefit of using Binance is that you will have access to over 1, digital currency markets. However &#; there are also drawbacks with Binance.

At the forefront of this is the FCA’s ongoing investigation into the exchange &#; which has resulted in Binance being unable to directly accept UK debit/credit cards or bank transfers. Instead, you need to go through a third-party processor &#; which can result in fees of up to 10%.

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Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

7. Mode &#; Buy Bitcoin in the UK via a Bank Transfer

Mode is a UK-based broker that offers a safe and relatively simple way to invest in cryptocurrency. However, we should note that Mode only supports one digital asset &#; Bitcoin.

As such, this won’t be a good option if you are looking to diversify across several different coins. Nevertheless, if you do want to buy Bitcoin via Mode &#; the broker allows you to deposit funds fee-free via a bank transfer.

In most cases, the payment will arrive in your Mode account in less than a minute. In terms of fees, Mode claims that it charges % per Bitcoin trade. However, you also need to keep an eye on the spread &#; which Mode doesn’t advertise.

Should I Buy Cryptocurrency?

Many first-time cryptocurrency investors will jump straight into this industry without having a firm understanding of the basics. This is a high-risk approach to take &#; not least because cryptocurrencies are both speculative and volatile.

As such, in the sections below, we explain some of the fundamental points you need to be aware of when learning how to buy cryptocurrency in the UK.

Benefits of Buying Cryptocurrency

In terms of the benefits, many investors in the UK look to buy cryptocurrencies for the following reasons:

Cryptocurrency Growth vs UK Stock Markets

The overarching objective of investing your hard-earned money is to make a profit. Plenty of options exist in this respect, albeit, many investors in the UK will turn to the traditional stock markets.

However, in comparison to cryptocurrencies, growth in the UK stock market has been virtually non-existent in recent years.

For instance, the FTSE &#; which is the UK&#;s primary index that covers the largest domestic companies, has grown by less than 3% over the prior five years. This is potentially less than what you would have made by keeping your money in a conventional savings account.

However, over the same period, Bitcoin has increased in value by more than 4,%. Other cryptocurrencies have grown by an even more impressive rate &#; with the likes of Shiba Inu and Safemoon up in the millions of percentage points since they were launched.

Although cryptocurrencies are undoubtedly much riskier than the UK stock market or a savings account &#; there is no denying that this asset class offers huge upside potential.

Asset Diversity

When you invest in the stock markets &#; you have thousands of companies of all shapes and sizes to choose from. This ultimately allows you to create a diversified portfolio. This sentiment is also true in the cryptocurrency industry &#; with more than 16, digital tokens now available to buy, sell, and trade online.

This means that you can attempt to reduce your exposure by investing in a wide range of cryptocurrencies &#; as opposed to only buying one or two.

Decentralization

Not all cryptocurrencies are decentralized &#; but many are. For those unaware, this simply means that the cryptocurrency project is not and cannot be controlled by any single person or entity.

This also means that no central bank or government can influence the supply of a decentralized cryptocurrency. Bitcoin is a perfect example of a decentralized project &#; not least because its total supply will be capped to 21 million tokens by the year And much like gold &#; this finite supply of Bitcoin gives the cryptocurrency intrinsic value.

This is why many people invest in Bitcoin and other leading cryptocurrencies as a store of value.

Beginners are Welcome

In a nutshell, since cryptocurrencies have become mainstream, the investment process is now fully catered to the Average Joe. That is to say, in less than five minutes &#; you can open an account with an FCA-regulated broker like eToro and buy cryptocurrencies from just £7-ish.

Not only does this mean that the investment process is straightforward &#; but you don’t need to risk a large sum of money to get started. Furthermore, when you use an FCA-regulated broker, you don’t need to worry about the safety of your funds.

Cryptocurrency is Still in its Infancy

Both cryptocurrencies and blockchain technology are still defined as emerging phenomena that are still in their infancy. As such, you still have the opportunity to invest in the cryptocurrency landscape early.

In theory, this gives you the best chance possible of entering the market at a favorable price. In many ways, this is no different from buying shares in Apple or Tesla when they were first starting out.

Easy to Cash Out

Oftentimes, inexperienced investors that are just learning how to buy cryptocurrency in the UK are hesitant because they are worried about being able to cash out in the future. After all, this is the primary goal of investing in digital assets &#; as, at some point, you will hope to withdraw your profits.

This sentiment is, however, a misconception &#; as cryptocurrencies can be sold for pounds and pence on a 24/7 basis. And, as cryptocurrencies now operate in a trillion-pound industry, you will never need to worry about finding a buyer.

The selling process is made even easier when you use a broker like eToro &#; as the digital tokens remain in your portfolio until you are ready to cash out. When you do, the cryptocurrency will instantly be converted to real money &#; which you can withdraw back to your UK bank account or debit/credit card.

When to Buy Cryptocurrency

Experienced cryptocurrency investors will often look to ‘time to market’ with the view of maximizing their returns. In simple terms, this follows the age-old thesis of buying a cryptocurrency when it is going through a market dip.

For example, during the pandemic in early , Bitcoin went from highs of $10, to lows of $5, in the space of a couple of weeks.

Had you purchased Bitcoin at this level, and held on until April , you could have cashed out at a market price of over $63, After hitting highs of $63,, Bitcoin then hit lows of $31, in July

Again, had you invested at this level, you would have been able to sell at almost $69, in November However, unless you are a seasoned investor with a solid understanding of technical and fundamental analysis &#; timing the market in this manner is no easy feat.

With this in mind, the best strategy that you can take when learning how to buy cryptocurrency in the UK is to dollar-cost-average your investments.

Buy Cryptocurrency via a Dollar-Cost Average Strategy

Dollar-cost averaging isn’t unique to just cryptocurrencies &#; it’s a strategy that has been used in the traditional stock markets for many decades.

In its most basic form, the process involves buying cryptocurrency at set intervals, at fixed investment stakes. As a basic example, you might decide to invest £ into cryptocurrencies at the end of every month.

On each purchase, you will invariably be buying digital assets at a different cost price. That is to say, when the markets are going well, you will be investing at a higher price and vice versa.

With time, this will allow you to forget about short-term market volatility &#; as you will be averaging your investments out across many different cycles. Ultimately, as long as cryptocurrencies continue to increase in value on a long-term basis &#; dollar-cost averaging is potentially the best strategy to take.

What are the Best Cryptocurrencies to Buy?

We mentioned earlier that when you learn how to buy cryptocurrency in the UK &#; you will have thousands of digital tokens to choose from.

This can, of course, make it very difficult to know what cryptocurrency to buy for your portfolio. To fast-track the process for you, below we discuss five cryptocurrency projects that you might want to consider in Always do your own research, however, before parting with any money.

Bitcoin

   If you’re a complete newbie in the world of digital currencies and want to keep things as simple as possible &#; it might be worth just sticking with Bitcoin.

In doing so, you will be investing in the original and still de-factor crypto asset of choice &#; with Bitcoin since surpassing a market capitalization of over a trillion dollars.

This digital asset is not only held by millions of people around the world &#; but even hedge funds and companies like Tesla.

Those that invested in Bitcoin when it was first launched would have paid less than $ per token. Since then, the digital currency has grown to highs of nearly $69, This translates into growth of almost million percent.

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Ethereum

In addition to Bitcoin, Ethereum could also be one of the best crypto to buy now if you are a complete beginner in this industry. Etehreum was launched in &#; six years after Bitcoin.

Since then, this digital currency has grown in value by over 25,% and it has solidified its status as the world’s second-largest crypto asset in terms of market capitalization.

Ethereum is, however, different from Bitcoin in terms of what the underlying blockchain can do. For instance, while Bitcoin focuses on decentralized payments, Ethereum can facilitate smart contract technology.

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Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Binance Coin

Another digital asset to think about purchasing when learning how to buy cryptocurrency in the UK is Binance Coin. As the name implies, this is the native cryptocurrency of the previously reviewed exchange Binance.

Initially, Binance created its digital token as an incentive to its users to save money on trading commissions. Although this commission structure is still in place, Binance Coin has since opened to new markets. In particular, users that buy and sell digital tokens on the Binance Smart Chain have to pay their transaction fees in Binance Coin.

As such, this increases the use case by a considerable amount &#; especially when you consider that the Binance Smart Chain hosts billions of dollars worth of trading activity on a day-to-day basis.

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Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Shiba Inu

All digital tokens carry a significant amount of risk &#; not least because pricing trends are often based on hype and FOMO (Fear of Missing Out). This sentiment is especially the case with Shiba Inu &#; which was one of the best-performing cryptocurrencies of

In fact, this digital currency went from a price of $ in January to $ by November of the same year. This means that in just 11 months of trading, Shiba Inu grew in value by almost 80 million percent.

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Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

XRP

XRP is the native digital currency of Ripple &#; a cross-border payments system launched in Since then, Ripple has partnered with over + financial institutions which are now trialing or using the Ripple network to send funds overseas.

The overarching selling point of the Ripple framework is that cross-border and cross-currency transactions take just seconds to process. Moreover, fees amount to less than $ per transfer &#; which is significantly cheaper than any other network in the market.

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Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Ways of Buying Cryptocurrency

This beginner’s guide has so far discussed where to buy cryptocurrency in the UK, alongside a discussion on the best digital tokens in the market right now.
Next, we can talk about the many different ways to buy cryptocurrency in the UK &#; based on your preferred choice of payment method.

Buy Cryptocurrency With PayPal

If you’re looking at how to buy cryptocurrency in the UK with Paypal, the best way to do this is with FCA-regulated broker eToro. This is because you only need to deposit $10 or more to get started &#; and fees are super-competitive at just Your Paypal deposit will be processed securely, as eToro offers institutional-grade encryption protocols.

Buy Cryptocurrency With Credit Card or Debit Card

If you want to use your credit or debit card to buy cryptocurrency in the UK, the process is fast and simple when using eToro. Once again, you only need to deposit $10 and your payment will be processed instantly.

With that said, it is important to note that some financial institutions have since banned cryptocurrency purchases with a credit card. The reason given for this is that buying digital tokens on credit is extremely risky &#; due to the volatile nature of the industry.

Note: While Coinbase charges % on debit/credit card deposits &#; and Binance up to 10%, eToro is one of the cheapest options in the market at just %.

Buy Cryptocurrency With Neteller or Skrill

Once you have opened an account with FCA-regulated broker eToro &#; you can also buy cryptocurrency with Neteller or Skrill. The same deposit minimums and fees as mentioned above apply.

Buy Cryptocurrency With Bank Transfer

Many brokers in the UK also allow you to buy cryptocurrency via a traditional bank transfer. If your chosen provider supports the Faster Payments network &#; the funds should arrive relatively quickly.

How to Buy Cryptocurrency Safely

Over the past decade, billions of pounds have been stolen from cryptocurrency exchanges. Moreover, during the same period, significant amounts of money have been extorted via scams and malware attacks &#; with Bitcoin seemingly the preferred currency of choice for cyber-criminals.

You then have the threat of cryptocurrency wallets &#; which are vulnerable to hackers when sub-par security practices are undertaken. To ensure you understand the risks &#; below we explain how you can buy cryptocurrency in the UK safely.

Unregulated Brokers and Exchanges

As you now know &#; the best way to buy cryptocurrency in the UK is to use an online broker or exchange. However, although there are hundreds of platforms active in this industry &#; the vast majority operate without a regulatory license. And as such, you can never be % sure that your money is in safe hands.

Without a doubt, the most effective safeguard here is to only use an online broker that is authorized and regulated by the FCA. Ultimately, this is why we argue that eToro is the best place to buy cryptocurrency in the UK &#; as its FCA-regulated status will ensure that you can trade in a secure environment.

Cryptocurrency Wallets

When learning how to buy cryptocurrency in the UK &#; you also need to think about wallets and crypto cards. This is because digital tokens are stored in wallets that either come in the form of software or a hardware device.
Unfortunately, wallets can be a complex thing to understand if you’re a complete newbie &#; which further adds to the risk of buying cryptocurrency.

After all, if your cryptocurrency wallet is hacked or you lose your private keys &#; you will likely never see the funds again. The good news, however, is that by using an FCA-regulated broker like eToro to buy cryptocurrency in the UK, you don’t need to worry about wallets.

This is because upon making your purchase, the digital tokens will be kept secure by eToro. Therefore, the tokens will remain safe and sound until you decide to cash out.

Cryptocurrency Regulation UK

Although the first cryptocurrency &#; Bitcoin, was launched back in , the UK is yet to enact any cryptocurrency-specific legislation.

With that said, online brokers and exchanges that are regulated by the FCA must still follow anti-money laundering regulations. This is why you are required to upload a copy of your passport or driver’s license when you sign up with eToro.

Furthermore, FCA-regulated platforms are also required to make the risks of investing clear and restrict access to cryptocurrency derivatives &#; such as CFDs or futures.

How to Buy Cryptocurrency UK &#; Tutorial

This beginner’s guide has explained everything you need to know about investing in digital currencies in a safe and risk-averse manner. And to conclude, we are now going to show you how to buy cryptocurrency in the UK with FCA-regulated broker eToro.

Simply follow the walkthrough below to invest in your chosen digital asset in under five minutes.

Step 1: Open an eToro Account

The process of registering an account with eToro is extremely easy and should take you no time at all. First, click on the ‘Join Now’ button via the eToro homepage to populate a registration form like in the image below.

Enter your personal information and contact details as prompted &#; and choose a suitable username and password.

Step 2: Verify Your eToro Account

Once you have opened your account, UK residents can actually deposit up to €2, (about £1,) without uploading any ID.
However, you won’t be able to make a withdrawal until you meet this requirement &#; so it’s best to get the KYC (Know Your Customer) process out of the way now.

Crucially, all you need to do is upload a clear copy of your passport or driver’s license &#; alongside proof of address, and eToro will verify the documents in minutes.

Step 3: Deposit Funds

Before you can buy cryptocurrency on the eToro website, you must first make a deposit. Your choice of payment method includes:

• UK Bank Transfer
• Debit Card
• Credit Card
• Paypal
• Neteller
• Skrill
• WebMoney

In avoiding a UK bank transfer, your eToro deposit will be processed instantly. The minimum deposit required is $10 and you will only pay a transaction fee of %.

Step 4: Search for Cryptocurrency

At this stage, you should now have an eToro account that is funded. If so, you can now click on the ‘Discover’ button followed by ‘Crypto’. This will bring up every digital token that the eToro website supports.

If, on the other hand, you know which cryptocurrency you want to buy &#; you can use the search box at the top of the page. In our example above, we are searching for XRP.

Step 5: Buy Cryptocurrency UK

Once you have decided which cryptocurrency to buy on eToro &#; click on the ‘Trade’ button. In doing so, you will see an order box like in the image below.

To complete the process &#; enter the amount of money that you want to risk. Take note, this needs to be entered in US dollars and the minimum trade size allowed at eToro is $

Finally, once you click on the ‘Open Trade’ button &#; eToro will debit your account balance and subsequently add your newly purchased cryptocurrencies to your portfolio.

How to buy crypto on eToro UK

Expert Crypto Guides

If you want to learn all there is about buying crypto in the UK, check out these expert guides.

Conclusion

If you’re looking at how to buy and sell cryptocurrency in the UK &#; you first need to ensure that you have considered the risks. You also need to do some research in terms of choosing the best cryptocurrencies for your financial goals and risk tolerance.

To get the ball rolling right now &#; you can buy cryptocurrencies in the UK at an FCA-regulated broker in less than five minutes. The minimum deposit and trade size required is a very affordable $10 (about £7) and the platform offers over 40+ digital tokens.

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Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Frequently Asked Questions when Buying Cryptocurrency

We’re hearing lots in the news about Bitcoin. But what exactly is it, how does it work, and what impact will it have in the wider world? Here’s everything you need to know

Invented inBitcoin is the world’s oldest and best-known cryptocurrency.

What is Bitcoin?

People once traded physical assets such as gold and silver for goods and services. But these were hard to carry and vulnerable to theft and loss, so banks offered to hold them for us, issuing notes that proved the wealth we had in the bank.

Eventually, the link between these notes and the commodities they represented was broken. Instead, governments said the notes themselves had value.

We trust banks to honour the value of our currency so that we can accept cash as payment and trust others will accept it from us.

A cryptocurrency is essentially a digital version of cash that exists outside the established framework of national governments and central and private banks. It enables two people to exchange it or buy and sell with it without the likes of Barclays or PayPal needing to facilitate the payment.

In other words, each party to the transaction trusts that the asset being exchanged has inherent value.

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How do Bitcoin payments work?

Making bitcoin investment uk university Bitcoin payment is as simple as sending an email. You transfer Bitcoins from your digital wallet (obtained when you buy the currency from a crypto exchange) to someone else’s using an app or website and the person’s unique Bitcoin address.

Payments are processed and verified by a network of ordinary people with computers running specialist software.

These volunteers are called Bitcoin miners. They use high-end computer hardware to crack increasingly complex, mathematical verification problems generated by Bitcoin’s source code – its computing DNA.

The hardware is expensive, immensely powerful and uses huge amounts of energy. More on this later.

Once a payment is verified, the miner adds a record of the transaction to a shared online ledger. The record includes the sender and recipients’ Bitcoin addresses and the amount transferred.

Entries into the ledger cannot be amended or deleted. And since everyone’s copy of the ledger must match, it makes it extremely hard for someone to claim they have more Bitcoin than they really own, bitcoin investment uk university, as everyone else’s copy of the ledger would contradict them.

Miners don’t verify one transaction at a time. Transactions are grouped into ‘blocks’ which have a limited amount of space. When a block is ‘full’, rs2022 money making new, empty block is created.

Each new block links back to the previous block containing information about older transactions. The blocks form a chain that links back all the way to the very first Bitcoin transaction.

This public ‘blockchain’ ledger provides an indelible, definitive and transparent account of which wallets hold Bitcoin and how much each holds at any given time – with the receipts to prove it.

What is Bitcoin Mining?

A Bitcoin miner who adds a block to the bitcoin investment uk university is issued with 1 new Bitcoin worth thousands of pounds. It sounds like free money, but the investment required to build and run a machine capable of processing a block is significant and increases over time.

Around Bitcoins are ‘minted’ every day. At today’s prices, their total value is more than £30 million. The total supply of Bitcoins is limited to 21million. Once the limit is reached, it won’t be possible to mint any more.

Also, the reward for mining a Bitcoin halves every four years, bitcoin investment uk university. At the current trajectory, it’s predicted the last Bitcoin will be mined by unless current protocols are changed.

How to use Bitcoin?

You can buy it, sell it and use it to purchase goods and services wherever it’s accepted. You don’t have to spend in whole Bitcoins – each one can be subdivided (see below).

Bitcoin payments aren’t exactly mainstream, but big names like Microsoft, Express VPN and Wikipedia take Bitcoin payments. In London, there are even hairdressers and plumbers who accept the cryptocurrency.

Many people simply invest in Bitcoin investment uk university in the hope that it will go up in value. The average price of 1 Bitcoin was around £9, in December At the time of writing, 1 Bitcoin is valued at around £30,

That represents an increase of more than % &#; but it hasn’t all been plain sailing. In January, Bitcoin’s value nosedived by around 22% in 24 hours. The cryptocurrency continues to fluctuate in value today.

This kind of market volatility has raised regulators’ eyebrows. The UK’s financial watchdog, the Financial Conduct Authority (FCA), warned in January: “If consumers invest in these types of product, they should be prepared to lose all their money.”

Who can buy Bitcoin?

Anyone can buy Bitcoin from crypto exchanges such as Binance and Coinbase. Around million people in the UK hold cryptocurrency, according to the FCA.

Unless you fork out more than £37, however, you’re going to be buying a share of one Bitcoin.

Smaller denominations of Bitcoin are called Satoshis after the pseudonym used by its anonymous inventor(s), bitcoin investment uk university. One Satoshi is worth Bitcoin.

Bitcoin and the cryptocurrency market are unregulated. This means there are no rules in place to protect you from losing everything, and no watchdog to ensure everyone involved plays fair.

What do I need to mine Bitcoin?

According to Bitcoin expert and journalist Connor Sephton, miners need three things to succeed: access to cheap electricity, bitcoin investment uk university, hardware known as application-specific integrated circuits (ASICs), and mining software that connects them to the Bitcoin network.

The most capable ASICs can cost thousands of pounds to buy and run, making them prohibitively expensive for the average person.

Is Bitcoin the only cryptocurrency?

There earn extra money working from home countless other cryptocurrencies, collectively referred to as altcoins.

They include well-established altcoins like Ethereum and Litecoin, as well as fledgling altcoins like Elrond and Clover. Each currency has different values and rules, but they all follow the basic precepts of cryptocurrency.

What are the benefits of Bitcoin?

With no intermediary, there’s nobody to take a cut of each transaction. Bitcoin is a global currency that’s also easier to move across borders and, as a relatively anonymous currency, it makes transactions truly private.

What are the drawbacks of Bitcoin?

It’s unregulated, bitcoin investment uk university, volatile and can’t be used as widely as traditional currencies.

The amount of energy used globally to make Bitcoin work is also massive. It has the same carbon footprint bitcoin investment uk university the entire country of Argentina, according to Oxford University researchers.

This has raised questions about the long-term sustainability of the phenomenon, especially as global economies strive to reduce their greenhouse gas emissions in line with international environmental agreements and associated &#;green&#; targets.

In the space of just over 12 years &#; Bitcoin has gone from a developer’s pipedream to a global marketplace that is now worth over £1 trillion. And as such, you can now invest in thousands of different cryptocurrencies from the comfort of home.

If you’re thinking about entering this marketplace today &#; this beginner’s guide will explain how to buy cryptocurrency in the UK in under five minutes with an FCA-regulated broker.

How to Buy Cryptocurrency UK &#; Quick Guide

To get the ball rolling, the quickfire walkthrough below will show you the basics of how to buy crypto in the UK via FCA-broker eToro.

If the above quickfire guide is a bit too brief for your skillset &#; you will find a more comprehensive walkthrough further down in this article.

Where to Buy Cryptocurrency in the UK

Where can I buy cryptocurrency? A question that runs through most crypto-hungry investors. With so many UK crypto exchanges out there, choosing the right one for your needs can be like trying to find a needle in a haystack.

Some of the key metrics to consider before making a decision include, payment methods, fees, supported bitcoin investment uk university, and customer service.

If you need pointing in the right direction &#; below you will find a list of pre-vetted brokers and exchanges that allow you to buy cryptocurrency in the UK.

Note: Brokers allow you to buy cryptocurrency in the UK directly from the provider, while exchanges offer a platform for you to trade with other market participants.

1. eToro &#; Best Place to Buy Cryptocurrency UK (FCA Regulated)

In terms of regulation, fees, supported markets, and many other important metrics &#; eToro stands out as the best place to buy cryptocurrency in the UK and the best Bitcoin broker. The platform was first launched in and is largely favored by inexperienced investors. You can open an account in under two minutes here and instantly deposit funds with a UK debit/credit card or an e-wallet like PayPal.

When you have completed the registration and deposit process &#; you will then have access to over 40+ cryptocurrencies. Some of the most popular tokens hosted at eToro include Ethereum, Ripple, Cardano, Dogecoin, and of course &#; Bitcoin. All of the digital currencies available at eToro can be traded from just $10 &#; and all orders are executed on a spread-only basis. For example, you can buy Shiba Inu with a minimum spread of %.

bitcoin investment uk university platform screenshot" width="" height="">

In simple terms, this means that you only need to cover the difference between the ‘bid’ and ‘ask’ price of the respective cryptocurrency. In addition to digital assets, eToro also offers thousands of commission-free shares and ETFs, as well as forex and commodity markets. Best of all, eToro allows you to invest passively through its CopyPortfolio and Copy Trading tools.

The former allows you to gain exposure to diversified portfolios that are managed by the eToro team. The CryptoPortfolio, for example, covers more than a dozen leading digital assets &#; which you can invest in through a single trade. The Copy Trading tool, on the other hand, allows you to copy the portfolio of an experienced trader. Finally, eToro is regulated and authorized by the FCA.

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2. Huobi &#; Buy Cryptocurrency UK With MasterCard

Another cryptocurrency exchange to consider is Huobi &#; which is home to hundreds of tradable markets. This platform is arguably more suited to MasterCard holders &#; as Huobi does not support Visa.

You can, however, also deposit funds with digital currency. Either way, once your Huobi account is funded and ready to go &#; you can trade cryptocurrencies from just % per slide. For large-scale traders, this commission is reduced once you surpass certain day volume thresholds.

At Huobi, you can also deposit your crypto assets into a savings account &#; which allows you to earn interest.

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3. Margex – Best Platform to Trade Crypto Derivatives Markets

Margex is another of our recommended cryptocurrency brokers, offering a wide selection of derivatives markets to trade on. Featuring an order book depth of $40 million and over 12 liquidity providers, Margex prides itself on executing trades faster than anyone else – averaging only eight milliseconds per order. In addition, Margex provides up to x leverage on the platform&#;s six trading pairs, significantly increasing the potential profits that investors can attain.

In terms of security, Margex ensures users&#; holdings are as safe as possible by storing % of customer assets in multi-signature cold wallets. The platform also employs two-factor authentication and SLL encryption to greatly reduce the chance of cyberattacks occurring. Aside from the platform&#;s high security, Margex will also appeal to users who wish to trade anonymously, as there is no need to complete KYC checks when setting up a trading account.

Although Margex currently only offers six trading pairs, including BTC/USD, ETH/USD, and XRP/USD, the platform’s fees are very low. Margex employs a maker/taker model, which will cost % in maker fees and % in taker fees. Finally, bitcoin investment uk university, the trading experience at Margex is incredibly user-friendly, with the web-based platform featuring real-time price charts from TradingView and in-depth order book bitcoin investment uk university Buy Crypto on Margex Now

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4. www.oldyorkcellars.com – Best Platform to Buy Cryptocurrency on Mobile

If you&#;re looking to buy cryptocurrency on your smartphone, then www.oldyorkcellars.com is an appealing option. www.oldyorkcellars.com is one of the fastest-growing crypto exchanges globally, boasting over 10 million registered users. Much of the platform&#;s appeal is due to its user-friendly nature, as www.oldyorkcellars.com allows traders to invest on the browser-based platform or the mobile app.

The latter features a sleek design, complete with price charts, real-time data, and price alerts. Users can invest in cryptocurrencies from only % per position, which can be reduced bitcoin investment uk university 10% if these trading fees are paid in CRO – www.oldyorkcellars.com’s native token. Alternatively, www.oldyorkcellars.com also allows users to buy cryptocurrencies using a credit or debit card. This removes the need to deposit and is completely free for the first 30 days of using the platform.

www.oldyorkcellars.com users can add to their trading balance easily via crypto or FIAT – with both options accruing no fees whatsoever, bitcoin investment uk university. Notably, UK-based traders can fund their accounts in GBP instantly using Faster Payments. In terms of features, www.oldyorkcellars.com offers a free DeFi wallet app and a dedicated &#;University&#; section, complete with educational materials for beginners.

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5. Coinbase &#; Popular Place for Beginners to Buy Cryptocurrency UK

In a similar nature to eToro, Coinbase is a popular place for beginners to buy cryptocurrency in the UK. The Coinbase website bitcoin investment uk university simple and free of complex jargon &#; and you can typically open an account in less than 15 minutes.

bitcoin investment uk university, many UK users have reported that the verification process can be challenging &#; as Coinbase will bitcoin investment uk university state that it cannot validate uploaded documents. Nevertheless, once your account is verified, you can proceed to buy cryptocurrency in the UK with your Visa or MasterCard.

The transaction will be processed instantly at a rather high fee of %. UK bank transfers are an alternative option &#; as this deposit method is fee-free. But, once the money arrives, you will still need to cover the % standard commission.

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Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

6. Binance &#; Largest Exchange to Trade Cryptocurrency in the UK

With more than million using this popular cryptocurrency exchange, Binance is a market leader in this industry. The platform offers huge levels of liquidity too &#; not least because it facilitates trading volumes in the billions of pounds &#; each day.

Furthermore, UK residents can buy and sell cryptocurrency here at a commission of just %. Another benefit of using Binance is that you will have access to over 1, digital currency markets. However &#; there are also drawbacks with Binance.

At the forefront of this is the FCA’s ongoing investigation into the exchange &#; which has resulted in Binance being unable to directly accept UK debit/credit cards or bank transfers. Instead, you need to go through a third-party processor &#; which can result in fees of up bitcoin investment uk university 10%.

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7. Mode &#; Buy Bitcoin in the UK via a Bank Transfer

Mode is a UK-based broker that offers a safe and relatively simple way to invest in cryptocurrency. However, we should note that Mode only supports bitcoin investment uk university digital asset &#; Bitcoin.

As such, this won’t be a good option if you are looking to diversify across several different coins. Nevertheless, if you do want to buy Bitcoin via Mode &#; the broker allows you to deposit funds fee-free via a bank transfer.

In most cases, the payment will arrive in your Mode bitcoin investment uk university in less than a minute. In terms of fees, Mode claims that it charges % per Bitcoin trade, bitcoin investment uk university. However, you also need to keep an eye on the spread &#; which Mode doesn’t advertise.

Should I Buy Cryptocurrency?

Many first-time cryptocurrency investors will jump straight into this industry without having a firm understanding of the basics. This is a high-risk approach to take &#; not least because cryptocurrencies are both speculative and volatile.

As such, in the sections below, we explain some of the fundamental points you need to be aware of when learning how to buy cryptocurrency in the UK.

Benefits of Buying Cryptocurrency

In terms of the benefits, many investors in the UK look to buy cryptocurrencies for the following reasons:

Cryptocurrency Growth vs UK Stock Markets

The overarching objective of investing your hard-earned money is to make a profit. Plenty of options exist in this respect, albeit, many investors in the UK will turn to the traditional stock markets.

However, in comparison to cryptocurrencies, growth in the UK stock market has been virtually non-existent in recent years.

For instance, the FTSE &#; which is bitcoin investment uk university UK&#;s bitcoin investment uk university index that covers the largest domestic companies, has grown by less than 3% over the prior five years. This is potentially less than what you would have made by keeping your money in a conventional savings account.

However, over the same period, Bitcoin has increased in value by more than 4,%. Other cryptocurrencies have grown by an even more impressive rate &#; with the likes of Shiba Inu and Safemoon up in the millions of percentage points since they were launched.

Although cryptocurrencies are undoubtedly much riskier than the UK stock market or a savings account &#; there is no denying that this asset class offers huge upside potential.

Asset Diversity

When you invest in the stock markets &#; you have thousands of companies of all shapes and sizes to choose from. This ultimately allows you to create a diversified portfolio. This sentiment is also true in the cryptocurrency industry &#; with more than 16, digital tokens now available to buy, sell, and trade online.

This means that you can attempt to reduce your exposure by investing in a wide range of cryptocurrencies &#; as opposed to only buying one or two.

Decentralization

Not all cryptocurrencies are decentralized &#; but many are, bitcoin investment uk university. For those unaware, this simply means that the cryptocurrency project is not and cannot be controlled by any single person or entity.

This also means that no central bank or government can influence the supply of a decentralized cryptocurrency. Bitcoin is a perfect example of a decentralized project &#; not least because its total supply will be capped to 21 million tokens by the year And much like gold &#; this finite supply of Bitcoin gives the cryptocurrency intrinsic value.

This is why many people invest in Bitcoin and other leading cryptocurrencies as a store of value.

Beginners are Welcome

In a nutshell, since cryptocurrencies have become mainstream, the investment process is now fully catered to the Average Joe. That is to say, in less than five minutes &#; you can open an account with an FCA-regulated broker like eToro and buy cryptocurrencies from just £7-ish.

Not only does this mean that the investment process is straightforward &#; but you don’t need to risk a large sum of money to get started. Furthermore, when you use an FCA-regulated broker, you don’t need to worry about the safety of your funds.

Cryptocurrency is Still in its Infancy

Both cryptocurrencies and blockchain technology are still defined as emerging phenomena that are still in their infancy. As such, you still have the opportunity to invest in the cryptocurrency landscape early.

In theory, this gives you the best chance possible of entering the market at a favorable price. In many ways, this is no different from buying shares in Apple or Tesla when they were first starting out.

Easy to Cash Out

Oftentimes, inexperienced investors that are just learning how to buy cryptocurrency in the UK are hesitant because they are worried about being able to cash out in the future, bitcoin investment uk university. After all, this is the primary goal of investing in digital assets &#; as, at some point, you bitcoin investment uk university hope to withdraw your profits.

This sentiment is, however, a misconception &#; as cryptocurrencies can be sold for pounds and pence on a 24/7 basis. And, as cryptocurrencies now operate in a trillion-pound industry, you will never need to worry about finding a buyer.

The selling process is made even easier when you use a broker like eToro &#; as the digital tokens remain in your portfolio until you are ready to cash out. When you do, the cryptocurrency will instantly be converted to real money &#; which you can withdraw back to your UK bank account or debit/credit card.

When to Buy Cryptocurrency

Experienced cryptocurrency investors will often look to ‘time to market’ with the view of maximizing their returns. In simple terms, this follows the age-old thesis of buying a cryptocurrency when it is going through a market dip.

For example, during the pandemic in earlyBitcoin went from highs of $10, to lows of $5, in the space of a couple of weeks.

Had you purchased Bitcoin at this level, and held on until Aprilyou could have cashed out at a market price of over $63, After hitting highs of $63, Bitcoin then hit lows of $31, in July

Again, had you invested at this level, you would have been able to sell at almost $69, in November However, unless you are a seasoned investor with a solid understanding of technical and fundamental analysis &#; timing the market in this manner is no easy feat.

With this in mind, the best strategy that you can take when learning how to buy cryptocurrency in the UK is to dollar-cost-average your investments.

Buy Cryptocurrency via a Dollar-Cost Average Strategy

Dollar-cost averaging isn’t unique to just cryptocurrencies &#; it’s a strategy that has been used in the traditional stock markets for many decades.

In its most basic form, the process involves buying cryptocurrency at set intervals, at fixed investment stakes. Bitcoin investment uk university a basic example, you might decide to invest £ into cryptocurrencies at the end of every month.

On each purchase, you will invariably be buying digital assets at a different cost price. That is to say, when the markets are going well, you will be investing at a higher price and vice versa.

With time, this will allow you to forget about short-term market volatility &#; bitcoin investment uk university you will be averaging your investments out across many different cycles. Ultimately, as long as cryptocurrencies continue to increase in value on a long-term basis &#; dollar-cost averaging is potentially the best strategy to take.

What are the Best Cryptocurrencies to Buy?

We mentioned earlier that when you learn how to buy cryptocurrency in the UK &#; you will have thousands of digital tokens to choose from.

This can, of course, make it very difficult to know what cryptocurrency to buy for your portfolio. To fast-track the process for you, below we discuss five cryptocurrency projects that you might want to consider in Always do your own research, bitcoin investment uk university, however, before parting with any money.

Bitcoin

   If you’re a complete newbie in the world of digital currencies and want to keep things as simple as possible &#; it might be worth just sticking with Bitcoin.

In doing so, you will be investing in the original and still de-factor crypto asset of choice &#; with Bitcoin since surpassing a market capitalization of over a trillion dollars.

This digital asset is not only held by millions of people around the world &#; but even hedge funds and companies like Tesla.

Those that invested in Bitcoin when it was first launched would have paid less than $ per token. Since then, the digital currency bitcoin investment uk university grown to highs of nearly $69, This translates into growth of almost million percent.

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Ethereum

In addition to Bitcoin, Ethereum could also be one of the best crypto to buy now if you are a complete beginner in this industry. Etehreum was launched in &#; six years after Bitcoin.

Since then, bitcoin investment uk university, this digital currency has grown in value by over 25,% and it has solidified its status as the world’s second-largest crypto asset in terms of market capitalization.

Ethereum is, however, different from Bitcoin in terms of what the underlying blockchain can do. For instance, while Bitcoin focuses on decentralized payments, Ethereum can facilitate smart contract technology.

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Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Binance Coin

Another digital asset to think about purchasing when learning how to buy cryptocurrency in the UK is Binance Coin. As the name implies, this is the native cryptocurrency of the previously reviewed exchange Binance.

Initially, Binance created its digital token as an incentive to its users to save money on trading commissions. Although this commission structure is still in place, Binance Coin has since opened to new markets. In particular, users that buy and sell digital tokens on the Binance Smart Chain have to pay their transaction fees in Binance Coin.

As such, bitcoin investment uk university, this increases the use case by a considerable amount &#; especially when you consider that the Binance Smart Chain hosts billions of dollars worth of trading activity on a day-to-day basis.

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Shiba Inu

All digital tokens carry a significant amount of risk &#; not least because pricing trends are often based on hype and FOMO (Fear of Missing Out). This sentiment is especially the case with Shiba Inu &#; which was one of the best-performing cryptocurrencies of

In fact, this digital currency went from a price of $ in January to $ by November of the same year, bitcoin investment uk university. This means that in just 11 months of trading, Shiba Inu grew in value by almost 80 million percent.

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XRP

XRP is the native digital currency of Ripple &#; a cross-border payments system launched in Since then, Ripple has partnered with over + financial institutions which are now trialing or using the Ripple network to send funds overseas.

The overarching selling point of the Ripple framework is that cross-border and cross-currency transactions take just seconds to process. Moreover, fees amount to less than $ per transfer &#; which is significantly cheaper than any other network in the market.

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Ways of Buying Cryptocurrency

This beginner’s guide has so far discussed where to buy cryptocurrency in the UK, alongside a discussion on the best digital tokens in the market right now.
Next, we can talk about the many different ways to buy cryptocurrency in the UK &#; based on your preferred choice of payment method.

Buy Cryptocurrency With PayPal

If you’re looking at how to buy cryptocurrency in the UK with Paypal, the best way to do this is with FCA-regulated broker eToro. This is because you only need to deposit $10 or more to get started &#; and fees are super-competitive at just Your Paypal deposit will be processed securely, as eToro offers institutional-grade encryption protocols.

Buy Cryptocurrency With Credit Card or Debit Card

If you want to use your credit or debit card to buy cryptocurrency in the UK, the process is fast and simple when using eToro. Once again, you only need to deposit $10 and your payment will be processed instantly.

With that said, it is important to note that some financial institutions have since banned cryptocurrency purchases with a credit card. The reason given for this is that buying digital tokens on credit is extremely risky &#; due to the volatile nature of the industry.

Note: While Coinbase charges % on debit/credit card deposits &#; and Binance up to 10%, bitcoin investment uk university, eToro is one of the cheapest options in the market at just %.

Buy Cryptocurrency With Neteller or Skrill

Once you have opened an account with FCA-regulated broker eToro &#; you can also buy cryptocurrency with Neteller or Skrill. The same deposit minimums and fees as mentioned above apply.

Buy Cryptocurrency With Bank Transfer

Many brokers in the UK also allow you to buy cryptocurrency via a traditional bank transfer. If your chosen provider supports the Faster Payments network &#; the funds should arrive relatively quickly.

How to Buy Cryptocurrency Safely

Over the past decade, billions of pounds have been stolen from cryptocurrency exchanges. Moreover, during the same period, significant amounts of money have been extorted via scams and malware attacks &#; with Bitcoin seemingly the preferred currency of choice for cyber-criminals.

You then have the threat of cryptocurrency wallets &#; which are vulnerable to hackers when sub-par security practices are undertaken. To ensure you understand the risks &#; below we explain bitcoin investment uk university you can buy cryptocurrency in the UK safely.

Unregulated Brokers and Exchanges

As you now know &#; the best way to buy cryptocurrency in the Bitcoin investment uk university is to use an online broker or exchange. However, although there are hundreds of platforms active in this industry &#; the vast majority operate without a regulatory license. And as such, you can never be % sure that your money is in safe hands.

Without a doubt, the most effective safeguard here is to only use an online broker that is authorized and regulated by the FCA. Ultimately, this is why we argue that eToro is the best place to buy cryptocurrency in the UK &#; as its FCA-regulated status will ensure that you can trade in a secure environment.

Cryptocurrency Wallets

When learning how to buy cryptocurrency in the UK &#; you also need to think about wallets and crypto cards. This is because digital tokens are stored in wallets that either come in the form of software or a hardware device.
Unfortunately, wallets can be a complex thing to understand if you’re a complete newbie &#; which further adds to the risk of buying cryptocurrency.

After all, if your cryptocurrency wallet is hacked or you lose your private keys &#; you will likely never see the funds again. The good news, however, is that by using an FCA-regulated broker like eToro to buy cryptocurrency in the UK, you don’t need to worry about wallets.

This is because upon making your purchase, the digital tokens will be kept secure by eToro. Therefore, the tokens will remain safe and sound until you decide to cash out.

Cryptocurrency Regulation UK

Although the first cryptocurrency &#; Bitcoin investment uk university, was launched back inthe UK is yet to enact any cryptocurrency-specific legislation.

With that said, online brokers and exchanges that are regulated by the FCA must still follow anti-money laundering regulations. This is why you are required to upload a copy of your passport or driver’s license when you sign up with eToro.

Furthermore, FCA-regulated platforms are also required to make the risks of investing clear and restrict access to cryptocurrency derivatives &#; such as CFDs or futures.

How to Buy Cryptocurrency UK &#; Tutorial

This make money online fast and legit guide has explained everything you need to know about investing in digital currencies in a safe and risk-averse manner. And to conclude, we are now going to show you how to buy cryptocurrency in the UK with FCA-regulated broker eToro.

Simply follow the walkthrough below to invest in your chosen digital asset in under five minutes.

Step 1: Open an eToro Account

The process of registering an account with eToro is extremely easy and should take you no time at all, bitcoin investment uk university. First, click on the ‘Join Now’ button via the eToro homepage to populate a registration form like in the image below.

Enter your personal information and contact details as prompted &#; and choose a suitable username and password.

Step 2: Verify Your eToro Account

Once you have opened your account, bitcoin investment uk university, UK residents can actually deposit up to bitcoin investment uk university, (about £1,) without uploading any ID.
However, you won’t be able to make a withdrawal until you meet this requirement &#; so it’s best to get the KYC (Know Your Customer) process out of the way now.

Crucially, all you need to do is upload a clear copy of your passport or driver’s license &#; alongside proof of address, and eToro will verify the documents in minutes.

Step 3: Deposit Funds

Before you can buy cryptocurrency on the eToro website, you must first make a deposit, bitcoin investment uk university. Your choice of payment method includes:

• UK Bank Transfer
• Debit Card
• Credit Card
• Paypal
• Neteller
• Skrill
• WebMoney

In avoiding a UK bank transfer, your eToro deposit will be processed instantly. The minimum deposit required is $10 and you will only pay a transaction fee of %.

Step 4: Search for Cryptocurrency

At this stage, you should now have an eToro account that is funded. If so, you can now click on the ‘Discover’ button followed by ‘Crypto’. This will bring up every digital token that the eToro website supports.

If, on the other hand, you know which cryptocurrency you want to buy &#; you can use the search box at the top of the page. In our example above, we are searching for XRP.

Step 5: Buy Cryptocurrency UK

Once you have decided which cryptocurrency to buy on eToro &#; click on the ‘Trade’ button. In doing so, you will see an order box like in the image below.

To complete the process &#; enter the amount of money that you want to risk. Take note, this needs to be entered in US dollars and the minimum trade size allowed at eToro is $

Finally, once you click on the ‘Open Trade’ button &#; eToro will debit your account balance and subsequently add your newly purchased cryptocurrencies to your portfolio.

How to buy crypto on eToro UK

Expert Crypto Guides

If you want to learn all there is about buying crypto in the UK, bitcoin investment uk university, check out these expert guides.

Conclusion

If you’re looking at how to buy and sell cryptocurrency in the UK &#; you first need to ensure that you have considered the risks. You also need to do some research in terms of choosing the best cryptocurrencies for your financial goals and risk tolerance.

To get the ball rolling right now &#; you can buy cryptocurrencies in the UK at an FCA-regulated broker in less than five minutes. The minimum deposit and trade size required is a very affordable $10 (about £7) and the platform offers over 40+ digital tokens.

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Frequently Asked Questions when Buying Cryptocurrency

What is the best app to buy crypto with Paypal?