How to Buy Bitcoin in the UK

There are three main ways to get hold of Bitcoin - mine them, buy them or trade your goods/services for them. Gone are the glory days where you can spin up a computer, install mining software, and quickly get your hands on a usable amount of bitcoin. These days, the most time and cost effective method of obtaining bitcoin is to buy it.

Before going about buying your first bitcoin, you will want a wallet. Exchanges will provide you a temporary place to store your bitcoin once purchased, but for security purposes, you would want to transfer them to your own wallet. For added safety, you would want to consider using a hardware wallet.

Where to Buy?

There are two main categories of sites for buying bitcoin:

a) Exchanges
These sites automatically and anonymously match buy and sell orders. These sites typically require you to provide government identification before you can a purchase so they can comply with Anti Money Laundering (AML) & Know Your Customer (KYC) regulations. Examples of exchanges include Coinbase, Coinfloor, Kraken.

b) Over The Counter (OTC) Trading
These sites operate on a peer to peer basis where you buy and sell directly from other users. They operate escrow systems, which means the bitcoin get held by the site until sellers confirm that payment has been made. The sign up process for these sites is typically quicker, as the onus to abide by AML/KYC laws is on the Bitcoin seller, not the exchange. Examples of OTC trading sites include LocalBitcoins, BitBargain, Bittylicious.

Exchanges vs OTC: Which is Better?

For regular trading, exchanges are preferred as transactions are quicker and easier. However, OTC trading sites do have an advantage for certain users as they offer a much more diverse range of methods for depositing fiat currency such as cash deposit, PayPal, WesternUnion, Moneygram, Web Money, Perfect Money and so on.

UK Exchanges

1. Coinbase

Coinbase is one of the largest exchanges in the world and recently it became more attractive to use Coinbase as deposits can now be accepted via 3D Secure debit and credit cards. To sign up, you will need to provide basic personal details plus a form of government identification like passport or drivince license. Coinbases uses the Jumio identification system where users show their ID to the computers' webcam to take a picture so that verification can be conducted. Coinbase charges a fee of 1% for fiat to bitcoin conversion and vice-versa.

2. Coinfloor

Coinfloor is a London-based Bitcoin exchange. You can buy both directly from their exchange and through their recently opened peer-to-peer marketplace. New users who register with CoinFloor will need to provide an email address and password. Once the email address provided has been confirmed, you will need to set up two-factor authentication and then upload a valid photo identification. Upon completion of this step, you may then make a purchase. Read here for more information on the Coinfloor fees.

3. CoinCorner

CoinCoiner is based on the Isle of Man and allows you to purchase bitcoin through a credit/debit card, SEPA and bank transfer. CoinCorner's sign up process is relatively long, but once filled out, approval is instant. You do not need to provide passport or driving licence identification when signing up initially. At the start, you can only deposit £300 by debit card, and that amount increases the more you use the exchange. To verify card ownership, CoinCorner will debit an amount up to £1, and you will then verify the amount debited. Read more on CoinCorner fees.

Non-UK Exchanges

Whilst the exchanges mentioned above are perhaps the easiest to get up and running with, there are also international exchanges that can be used to buy bitcoins from the UK.

4. Kraken

Kraken recently started accepting deposits via SEPA and SWIFT. Kraken could be particularly interesting to users who also want to buy other cryptocurrencies, as they support a large number of altcoins.

5. Safello

Safello is a Swedish exchange that allow UK users to make deposits using SEPA or International Bank Transfer.

6. CoinJar

CoinJar is an Australian exchange that accepts UK credit and debit cards. CoinJar announced on 1 December 2014 that it has relocated its global headquarters to the UK so that customers no longer need to pay Australia's 10% Goods and Services Tax (GST) applicable on bitcoin trading. 

Over The Counter (OTC) Trading Sites

7. Bittylicious

Bittylicious puts you directly in touch with individuals looking to sell bitcoin. Bittylicious accepts payment via bank transfer, debit card, Paym, Barclays Pingit and Natwest/RBS PYC. After registering, there are limits in place as to how much you can purchase (0.22BTC initially). These limits get raised as you provide more identification. You can also purchase nine different altcoins such as Litecoin, Dogecoin and Blackcoin through the platform too.

8. BitBargain

BitBargain is a UK-based company and payment methods include bank transfer, debit cards, Paym, Barclays Pingit, Natwest/RBS PYC and some smaller payment types. BitBargain does not charge fees for transactions, but there are charges for other services such as SMS notifications and for holding bitcoin on Bitbargain-owned addresses.

9. LocalBitcoins

 

LocalBitcoins is a popular Finnish platform. As of December 2013, LocalBitcoins had 110,000 active traders with trading volume of 1400–3000 bitcoin per day. The LocalBitcoins platform offers the widest choice of payment methods, even connecting users to make cash transactions. Users tend to have different transaction criteria and LocalBitcoins is very flexible on this rather than fully dictating the transaction rules. The reputation system on LocalBitcoins is very helpful in building trust between buyers and sellers and is also very important when choosing who to transact with.

Bitcoin ATMs

The availability of Bitcoin ATMs is gradually increasing. Currently UK ATMs can be found in London, Brighton, Bristol, Cambridge, Cardiff, Manchester and Glasgow. See here for more details.

The majority of these ATMs only allow you to purchase bitcoin by depositing cash and receiving the bitcoin to an address you specify. A small number of ATMs also let you send bitcoin and receive cash from the machine.

Further Learning

If you’re interested in Bitcoin and want to talk to fellow enthusiasts, check out the Bitcoin events on Meetup.com. CoinScrum London hold regular events which are great for meeting like-minded people and discussing all things Bitcoin and blockchain. 

Embed this BTC-GBP widget in your blog by clicking here.