Use our comparison table of Bitcoin accounts to compare costs and the different ways to buy and sell Bitcoin. Please Note: Investing in Bitcoin and other cryptocurrencies is very high risk and not regulated by the FCA. There is a very high chance you may lose all your money.
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How to choose an account for investing in Bitcoin
Here are three tips and things to consider when deciding which provider to buy Bitcoin through:
Look for a regulated provider who also offers Bitcoin
Even though Bitcoin is an unregulated digital currency, many providers that offer Bitcoin investing are regulated by the FCA for other things such as stocks, bonds, bank accounts and trading. By choosing a Bitcoin account that is attached to a regulated entity, you will be dealing with a provider who is responsible for treating clients fairly (although not directly for cryptocurrency investing).
Compare the costs of investing in Bitcoin
The costs of investing in Bitcoin can vary dramatically. The key things to consider are:
- Bitcoin commission- some Bitcoin accounts will charge a fee when you buy and sell Bitcoin on their platform.
- Bitcoin currency exchange fees- if you are buying Bitcoin against the USD (BTCUSD) but depositing GBP into your Bitcoin wallet, there will be a fee for converting the GBP into USD. It is possible with some exchanges to buy Bitcoin against GBP where you do not need to convert Fiat currencies.
- Bitcoin price spread- this is the difference between the buy and sell prices. As with investing in stocks, there is always a spread between where people are prepared to buy and people are prepared to sell. The Bitcoin spread varies, depending on how active the market is (liquidity) and how much the price is moving (volatility), as well as which Bitcoin platform you are investing through.
Understand the risks involved in investing in Bitcoin
Before you start investing in Bitcoin, decide if you should be investing in Bitcoin. The major risks of investing in Bitcoin are:
- Sudden price moves- the price of Bitcoin can drop and rise quickly and for no apparent reason.
- High investment costs- compared to investing in stocks, it is still expensive to buy and sell Bitcoin.
- Bitcoin scams- there are lots of scammers using fake Bitcoin ads to scam potential Bitcoin investors, so always research Bitcoin accounts before investing.
How do you invest in Bitcoin?
The world's most famous crypto-currency is an obvious target for investors and traders due to its history of rapid gains and falls in value. This volatility makes it both very risky and potentially very lucrative as an investment.
How to get started investing in Bitcoin
If you are buying Bitcoins, then you will require a Bitcoin address. This is a code to which the Bitcoins that you buy will be allocated. You can acquire an address by downloading a Bitcoin client to your computer or setting up an online wallet.
What to avoid when you start investing in Bitcoin
When using CFDs or placing spread bets, it is possible to lose more than your initial stake. This will be amplified if you use leverage. Don't risk more money than you can afford to lose when you take a position. Placing stop loss orders, which automatically close down your position when Bitcoin hits a particular value, are an essential way to limit the risk that you face.
What to look for when choosing an account to buy Bitcoin in
The various Bitcoin exchanges and CFD/spread-betting companies have different fee structures for their services. Make sure that you're not being overcharged and that the trading platform on offer is to your liking. As with any investment, the more you know about factors that will impact the price of Bitcoin, the more likely you are to profit.
To invest in Bitcoin, you need a Bitcoin wallet or account. You can compare Bitcoin accounts with our Bitcoin account comparison table.
Here are some of the most frequently asked questions people ask before they invest in Bitcoin:
What is Bitcoin?
Bitcoin is a digital currency. It was launched in 2009, can be mined, bought and sold against many Fiat currencies, and is the largest cryptocurrency by market capitalisation.
How much is Bitcoin worth?
The price of Bitcoin moves all the time and is priced most commonly against the USD. See our Bitcoin price chart for the current price.
How does Bitcoin work?
Bitcoin works as a digital currency where a record of all transactions are kept on the block chain. Each Bitcoin is stored in a digital wallet where it can be spent or sent.
How to get Bitcoins
There are two ways to get Bitcoin. You can either mine them or buy them through a Bitcoin exchange platform.
Is Bitcoin safe?
This is undermined yet and the safety of Bitcoin is one of the major risks of investing in Bitcoin.
Is Bitcoin regulated by the FCA?
No, Bitcoin is not regulated by the FCA. However, there are FCA-regulated providers that also offer options for buying and selling Bitcoin.
Are Bitcoin adverts real?
From Peter Jones to PSY, new scam adverts advertising get-rich-quick Bitcoin schemes are flooding the internet. Despite a global ban from Google on non-regulated brokers advertising derivatives products, they are still getting through. Amazingly, you see them in the header of the DailyMail and other mainstream media websites. Martin Lewis, the money-saving-guru from Money Saving Expert, recently sued Facebook because they failed to stop scammers using his image in scam ads for get-rich-quick Bitcoin schemes. Martin Lewis settled with Facebook for a £3m charitable donation in the end.
Is Bitcoin a scam?
If you see an advert for Bitcoin investing, it may well be a scam as Google and Facebook have banned cryptocurrency advertising. If it looks like a scam, it's a scam. And always check the FCA register for any broker you deal with.
Keep in mind too though that the scammers make clone websites of real brokerages to scam you. So, double and triple-check any broker before sending money. A quick google search can save you from becoming a victim.
How to make money with Bitcoin
It is possible to make money investing in Bitcoin in the same respect that it is possible to make money investing in high-risk stocks. If you buy low, sell high, you will make money. But unlike investing in stocks where a company generates revenue and profits, Bitcoin has no underlying value so it is also possible to lose money very quickly by investing in Bitcoin.
Where to buy Bitcoin
For more information on where to buy Bitcoin, read our guide to choosing a Bitcoin account.
Is Bitcoin legal?
Bitcoin is not illegal.
How to use Bitcoin
Bitcoin is becoming more usable every day. Some online merchants accept it as payment and recently, PayPal announced that it would accept Bitcoin as a payment source.
Is Bitcoin a good investment?
Whether or not Bitcoin is a good investment is relative to your investment objectives. It is a very high-risk investment.
How to sell Bitcoin
When you choose a Bitcoin account, make sure there is also the option to sell the Bitcoin on it as well.
Where can you get Bitcoin investing ideas?
Never believe anyone who says they can make you rich or adopt trading as a career if you are a complete beginner. However, if you do want trading ideas, you can find news and analysis on Bitcoin here:
- TradingView provides excellent crypto charts and lots of users post trading ideas.