A Beginner's Guide: Investing In Bitcoin Cash In The Uk

Bitcoin is a decentralised digital currency that operates independently of governments and institutions. It is the original cryptocurrency, and the most famous. If you want to invest in Bitcoin in the UK, you'll need to start by buying some on a cryptocurrency exchange. You can then sell, trade, or hold.

1. Research and understanding: Before investing in Bitcoin, it is important to understand the risks and volatility of this unregulated asset class.

2. Choose a Bitcoin exchange: Select a reputable cryptocurrency exchange such as Coinbase, Binance, or eToro. Consider factors such as transaction fees, security, user experience, and customer service.

3. Set up and secure an account: Create an account with your chosen exchange, ensuring you complete all identity verification steps. Enable additional security features such as two-factor authentication.

4. Fund your account: Deposit funds into your exchange account using a preferred payment method, such as a bank transfer, credit card, or payment platforms like PayPal.

5. Place a buy order: Navigate to the exchange's buying section, select Bitcoin, and choose between a market order (instant purchase at current prices) or a limit order (specifying a desired price).

6. Store your Bitcoin securely: Transfer your Bitcoin to a digital wallet, either a 'hot' wallet connected to the internet for easy access, or a 'cold' wallet for enhanced security.

7. Manage your investment: Monitor market trends and adjust your investment strategy as needed. Stay informed about market conditions and be prepared to rebalance your crypto portfolio to align with your financial goals and risk tolerance.

Remember, investing in Bitcoin and other cryptocurrencies is a high-risk endeavour. The value of Bitcoin is extremely volatile, and you may lose all your investment. Always do your research and carefully consider your financial situation before investing.

Choosing a reputable exchange

As crypto exchanges are a prime target for hackers, security is a key consideration when choosing a platform. It's also important to check that an exchange is compliant with regulations and has a good reputation. Here are some factors to consider when choosing a reputable exchange:

• Security measures: Look for exchanges that have robust security protocols in place, such as two-factor authentication, SOC 2-certification, and insurance of user funds.
• Compliance with regulations: Ensure the exchange is compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. It should also be registered with the Financial Conduct Authority (FCA) in the UK.
• User reviews: Read customer reviews and feedback to get an idea of other users' experiences with the exchange. Check for any complaints or issues related to security, customer support, or unexpected account closures.
• Payment methods: Consider what payment methods the exchange supports. Most exchanges accept wire transfers, while some also allow purchases with credit or debit cards, and other digital payment options.
• Fees: Research the exchange's fee structure, including trading fees, withdrawal fees, and any other transaction fees. High fees can eat into your investment returns.
• Supported assets: If you're interested in investing in a specific cryptocurrency, check that the exchange supports it. Some exchanges offer a wide range of cryptocurrencies, while others only support a few.
• Customer support: If you're new to crypto investing, you may want to choose an exchange that offers excellent customer support to help you get started.

Some reputable crypto exchanges that are popular in the UK include eToro, Coinbase, Crypto.com, Gemini, and Kraken. These exchanges offer a combination of strong security measures, a wide range of supported assets, beginner-friendly interfaces, and competitive fees.

Setting up and securing an account

Choosing a Platform

Select a cryptocurrency exchange that supports Bitcoin Cash (BCH) trading. Examples include Binance, CEX.IO, and Guarda Wallet. These platforms allow you to buy, sell, and trade Bitcoin Cash using different payment methods. It is important to research the fees, security features, and user reviews of each platform before making a decision.

Creating an Account

Once you have chosen a platform, create an account by providing your personal information and verifying your identity. This typically involves submitting proof of identity and address. Some platforms may also require you to verify your email address and phone number.

Funding Your Account

After your account is set up, you will need to fund it using your preferred payment method. You can use credit/debit cards, bank transfers, or deposit other cryptocurrencies that you already own. Each platform will have its own process for depositing funds, so be sure to follow the instructions carefully.

Choosing a Bitcoin Cash Wallet

A Bitcoin Cash wallet is essential for storing and managing your BCH. There are several types of wallets available, including mobile wallets, software wallets, and hardware wallets. Mobile wallets are convenient for beginners as they provide easy access to your cryptocurrencies on your smartphone. Software wallets allow you to manage your coins using a computer or laptop. Hardware wallets, such as Ledger Nano S or TREZOR, are physical devices that offer the highest level of security but come at a cost. Choose a wallet that suits your needs and experience level.

Receiving and Sending Bitcoin Cash

To receive Bitcoin Cash, you will need to provide the sender with your Bitcoin Cash wallet address, also known as your public key. This can be found within your wallet. When sending BCH, always double-check the recipient's address to ensure it is correct, as cryptocurrency transactions are irreversible.

Securing Your Wallet

To secure your Bitcoin Cash wallet, enable two-factor authentication (2FA) in the safety settings of your wallet. This adds an extra layer of protection by requiring a code sent to your device in addition to your password. Additionally, always write down your recovery seed, which is typically a sequence of 12 or 24 words, and store it safely offline. This will ensure that you can access your wallet even if you forget your password.

Funding your account

After creating an account with a crypto exchange, the next step is to fund your account. Most exchanges allow you to connect your bank account directly or link a debit or credit card. Some exchanges also let you use PayPal or other payment services like NETELLER to add money to your account.

While most exchanges will allow you to buy crypto with a credit or debit card, it's important to keep an eye on the fees as this convenience often comes with a price. Generally, funding your crypto account via bank transfer is typically the cheapest (and often free) method, but it can take 3-5 business days for the funds to land. It's also a good idea to check with your bank before buying crypto with a credit card, as this may be processed as a cash advance, resulting in high-interest rates and no interest-free grace period.

Once you've added funds to your account, you're ready to purchase Bitcoin. Most crypto exchanges offer both market and limit orders, and some also provide stop-loss orders. A market order is executed immediately at the current market price, while a limit order lets you specify the price you're willing to buy or sell at. A stop-loss order is designed to limit potential losses by automatically triggering a market order to close a trade when its price falls to or below a specified stop price.

It's worth noting that exchange fees, payment method fees, and withdrawal fees can all impact the cost of buying Bitcoin. Exchange fees are charged by the platform and can be a percentage of the total transaction amount or a fixed amount. Payment method fees may be higher for credit cards or PayPal compared to bank transfers or cryptocurrency deposits. Withdrawal fees may also apply when transferring Bitcoin to a personal wallet, along with network fees that vary depending on network congestion.

Placing a buy order

Once you have chosen a platform or exchange to purchase your Bitcoin, you will need to place a buy order. Here is a step-by-step guide on how to do this:

• Sign up for an account with your chosen platform or exchange.
• Fund your account with GBP using your debit card or via bank transfer.
• Research Bitcoin and other cryptocurrencies.
• Buy Bitcoin with GBP using the platform's or exchange's web or mobile app.
• Choose and configure a Bitcoin wallet, such as eToro Wallet or Bither Wallet.
• Transfer your Bitcoin to your wallet for safekeeping.

If you are using a platform such as eToro, you will be able to trade over 70 "real" cryptocurrencies, including popular coins like Bitcoin, Ethereum, XRP, Binance Coin (BNB) and Dogecoin.

If you are using a peer-to-peer exchange, you will need to list your buy offer, including the amount of cryptocurrency you want to buy and the price you are willing to pay. You can then negotiate with other users on the exchange, agree on an escrow method and payment times, and complete the transaction independently.

If you are using a Bitcoin ATM, you will need to take your wallet or address with you, and treat it like using a regular ATM. Be aware of your surroundings and be cautious of any suspicious characters.

Storing your Bitcoin in a wallet

Once you have bought Bitcoin, you will need to store it in a digital wallet. This is similar to a virtual bank account. A wallet is essential to the success of a crypto ecosystem due to its capability of holding and transacting assets.

There are several types of Bitcoin wallets, each with its own pros and cons. Here are some of the most common types:

Mobile Wallets

Mobile wallets are downloaded as apps on your smartphone. They are the most accessible option for storing Bitcoin and other cryptocurrencies as they are free and only require a mobile phone and an active internet connection. They are secured by multiple layers of passwords and are good for transactions. However, they are not recommended for long-term storage due to the high risk of being hacked.

Hardware Wallets

Hardware wallets are offline devices, such as USB drives, that store your private keys. They are believed to be the most secure way of storing cryptocurrency and are a top choice for long-term storage. They are not free, but the features they provide usually outweigh the investment.

Software Wallets

Software wallets are computer programs that are installed and run on a compatible PC system. They are one of the oldest types of crypto wallets and have been responsible for storing and transacting cryptocurrencies since 2009. However, they can be an easier target for cyberattacks and have slowly started losing relevance due to the influx of other wallet types.

Paper Wallets

Paper wallets are physical documents that contain a public address for receiving Bitcoin and a private key that allows you to spend or transfer Bitcoin. They are affordable and completely immune to hacking attacks, but there is a high risk of user error or wallet damage.

Exchange Wallets

Exchange wallets are provided by cryptocurrency exchanges. They are convenient and easy to use, but they lack total control over your private keys and are vulnerable to hacks and theft.

When choosing a wallet, it is important to consider your individual needs and use cases. For example, if you are holding large sums of crypto, you may want to prioritise security and choose a hardware wallet. On the other hand, if you are only holding small amounts, an exchange wallet might be more suitable as it makes it easy to send transactions.

Frequently asked questions