Uk's Best Cryptocurrency Investment Options For 2023

Cryptocurrency is a digital or virtual form of currency that uses cryptography to secure transactions and verify the transfer of assets. It has gained significant traction in the UK, with nearly 4.97 million people, or about 10% of the population, holding some form of crypto asset as of 2023. The revenue in the UK cryptocurrency market is projected to reach US$1.89 billion in 2023, with an annual growth rate of 18.84%.

When considering which cryptocurrency to invest in, it is important to research the market, understand the technology, and be aware of the risks involved. Some popular cryptocurrencies in the UK include Bitcoin, Ethereum, Tether, Binance Coin, and Dogecoin.

There are several ways to buy cryptocurrency in the UK, including through crypto exchanges such as eToro, Coinbase, and Uphold, or via brokerages like WeBull and Robinhood. It is essential to carefully evaluate the features and security measures offered by each platform before choosing one that suits your needs.

Additionally, it is crucial to remember that investing in cryptocurrency carries risks, including price volatility, regulatory uncertainties, and the potential for fraud or hacking.

How to buy cryptocurrency in the UK

The following steps will guide you through the process of buying cryptocurrency in the UK.

Step 1: Choose a Cryptocurrency Exchange

Select a reliable cryptocurrency exchange such as Coinbase, Binance, eToro, Uphold, or Plus500. Compare the pricing, security features, and services offered by each exchange before making a decision.

Step 2: Create an Account

Register an account by providing your personal information, such as your name, email address, and password. You may also need to verify your identity by uploading a copy of your passport or ID.

Step 3: Fund Your Account

Link your bank account or add a payment method, such as a credit or debit card. Ensure you have sufficient funds in your account before making a purchase.

Step 4: Buy Cryptocurrency

Visit the exchange's website or app, click on the "Buy" option, and input the desired amount. The exchange will automatically convert the amount into the corresponding cryptocurrency.

Step 5: Store Your Cryptocurrency

Choose a secure digital or hardware wallet to store your cryptocurrency. Ensure that the wallet is compatible with your chosen exchange and offers robust security features.

Step 6: Monitor Your Investment

Keep track of your cryptocurrency's performance and make any necessary adjustments to your portfolio. You can do this by checking the exchange platform or using third-party tools.

It is important to note that investing in cryptocurrency carries risks, including price volatility and the potential for fraud or hacking. It is essential to do your research, understand the technology, and only invest what you can afford to lose.

Best crypto exchanges in the UK

When it comes to the best crypto exchanges in the UK, there are several options to choose from. Here are some of the top-rated platforms:

• EToro: Overall Best Crypto Exchange in the UK. eToro is a well-known and regulated platform that offers a wide range of cryptocurrencies, making it suitable for both beginners and experienced traders. It has a simple fee structure, with a 1% fee for buying or selling crypto assets. It also has a user-friendly interface and is trusted by millions worldwide.
• Uphold: Best for a Large Selection of Altcoins. Uphold offers more than 250 cryptocurrencies and fiat currencies, as well as stock and commodity trading. It charges a variable spread, typically ranging from 0.8% to 1.2%, but there is no commission for crypto trades.
• Coinbase: Beginner-Friendly UK Crypto Exchange. Coinbase is a popular and user-friendly platform that supports over 200 coins. It offers comprehensive educational materials and enhanced security features, such as two-factor authentication. However, its fees are relatively high, ranging from 0% to 3.99%.
• Kraken: Cheapest Crypto Exchange in the UK. Kraken is one of the oldest crypto exchanges, offering over 200 cryptocurrencies. It caters to both beginners and experienced traders, with Kraken Pro providing some of the lowest trading fees in the market.
• Revolut: Best for Mobile Banking and Crypto in One Place. Revolut is a British online banking app that allows users to buy, hold, and sell 21 different cryptocurrencies. It offers convenience and simplicity, although the fees are slightly higher, ranging from 0.5% to 1.5%.

Other notable mentions include Binance, OKX, Crypto.com, and Gemini, each offering unique features and catering to different needs. It's important to remember that investing in cryptocurrencies is a high-risk endeavour, and individuals should be prepared for potential losses.

Crypto wallets

There are two main types of crypto wallets: hot wallets and cold wallets. The main difference is that hot wallets are always connected to the internet, while cold wallets are kept offline.

Hot Wallets

Hot wallets are digital tools that are usually accessed via a phone or desktop computer. They are more convenient and easier to recover if you lose your private key. However, they are less secure and vulnerable to cyberattacks. Examples of hot wallets include:

• Coinbase Wallet
• MetaMask
• TrustWallet
• Electrum
• BlueWallet
• Exodus
• Crypto.com
• Zengo

Cold Wallets

Cold wallets store your digital keys offline, such as on a USB drive or a sheet of paper. They are deliberately designed to be hard to hack and provide a higher level of security. However, they are nearly impossible to recover if you lose your private keys. Examples of cold wallets include:

• KeepKey
• Ledger Nano S Plus
• SafePal

When choosing a crypto wallet, it's important to consider factors such as security, functionality, cost, supported currencies, accessibility, and hardware wallet compatibility. It's also crucial to follow safe practices and use a reputable company with good security to protect your digital assets.

Crypto investment funds

When investing in a crypto fund, individuals typically transfer cryptocurrencies or fiat into trust management by professionals. The fund's experts then buy and sell on behalf of the clients, aiming to generate profits that will go to the investors. The fund's primary activity is the sale of crypto tokens, and its profitability is linked to its capitalisation.

There are two main types of crypto investment funds: hedge funds and unit investment funds. Hedge funds manage investors' assets and receive a commission, while unit investment funds allow investors to withdraw their funds at any time.

When choosing a crypto investment fund, it is essential to consider the team's expertise, the presence of other investors, the fund's age and dynamics, profitability, and transparency.

• CoinShares: A London-based crypto hedge fund with over £2 billion in assets under management. It provides access to various products, including exchange-traded products and comprehensive services in capital markets.
• Isula Investments: A London-based crypto hedge fund offering a secure and decentralised platform for investors to purchase, store, and transfer their crypto funds globally. It has approximately 2,500 users and has managed a £50 million turnover.
• Nickel Digital: A digital currency manager founded by investment market experts, regulated by the Financial Conduct Authority (FCA). It offers digital fund management services, access to index-monitoring tools, and secure access to major crypto assets.
• Crypto Global Management: A London-based digital currency investment manager providing digital currency management, crypto portfolio management, and protection of digital funds.

Remember, investing in cryptocurrency is risky, and you should only invest what you can afford to lose.

Risks of investing in cryptocurrency

Investing in cryptocurrency carries several risks that potential investors should be aware of. Here are some key risks associated with investing in cryptocurrency:

Price Volatility

Cryptocurrencies are known for their price volatility. Prices can experience significant fluctuations within short periods, leading to potential gains or losses. Sudden market movements can be influenced by various factors, including market sentiment, regulatory announcements, technological advancements, or macroeconomic events. The unregulated and anonymous nature of digital asset markets, combined with the susceptibility of cryptocurrencies to sentiment, emotion, and publicity, makes prices volatile. Crypto exchanges, media owners, and influential investors can manipulate prices.

Regulatory and Legal Risks

The regulatory environment for cryptocurrencies is still evolving and varies across jurisdictions. Changes in regulations or government actions can impact the legality, usage, and value of cryptocurrencies. Regulatory interventions, such as bans, restrictions, or increased scrutiny, can affect market sentiment and liquidity. There are also significant inconsistencies among regulators regarding the legal status of digital currencies, and there is a concern that cryptocurrencies may be used by criminal and terrorist organisations.

Security Risks

Cryptocurrencies face security risks due to hacking incidents, scams, and vulnerabilities in exchanges or wallets. Cyberattacks targeting exchanges or individuals can result in the loss of funds. It is important to employ robust security measures, such as using reputable exchanges, implementing strong passwords, enabling two-factor authentication, and using hardware wallets to store cryptocurrencies securely.

Market Manipulation

The cryptocurrency market is relatively young and less regulated compared to traditional financial markets, making it susceptible to market manipulation, such as pump-and-dump schemes or price manipulation by influential actors. Manipulative practices can distort prices and mislead investors.

Operational Risks

Cryptocurrency platforms may face operational risks, including technical issues, system failures, or security breaches, which can lead to disruptions in trading, delayed transactions, or loss of funds. It is important to choose reputable and well-established platforms with a strong track record in security and reliability.

Lack of Fundamental Value

The value of cryptocurrencies is primarily driven by market demand and speculation. Unlike traditional assets such as stocks or bonds, cryptocurrencies may lack intrinsic value based on cash flows or underlying assets. Price movements can be influenced by market sentiment, media coverage, or hype, which can lead to speculative bubbles or rapid price declines.

Other Risks

Other risks associated with investing in cryptocurrency include the potential for forks or discontinuation, which can impact the value of the investment. Additionally, there is a risk of losing access to investments due to the loss or destruction of private keys. The off-ramps of crypto exchanges, such as limited withdrawal options and high minimum withdrawals, can also expose investors to exchange rates, fees, and risks.

Frequently asked questions