How to Invest in Cryptocurrency UK

Cryptocurrencies have blossomed this year as more investors continue to invest millions of pounds into the nascent market. If you're looking to invest in cryptocurrency in the UK, this beginner’s guide has everything you need to get started. 

This guide explores the ins and outs of digital assets like Bitcoin, including the best places to invest in cryptocurrency in the UK and some crucial factors you should consider as a first-time investor. 

How to Invest in Cryptocurrency UK - Quick Steps 

You can follow these quick-fire steps to Invest in cryptocurrency in the UK on our recommended crypto broker, eToro. 

  • Upload ID - Upload a copy of your driver’s license and a recent copy of your utility bill 
  • Deposit - Fund your account with a minimum balance of 37.66 GBP using payment options such as bank wire transfer, credit/debit card, or e-wallet solutions like PayPal 
  • Invest in Cryptocurrency - Type in the ticker symbol for the crypto asset you want to invest in and click on ‘Trade’ to Invest in the crypto you want. 

Click here to invest in cryptocurrency on eToro.

How to Invest in Cryptocurrency UK - Step by Step Tutorial 

If you are looking for more details on how to invest in cryptocurrency in the UK using eToro, this should come in handy. 

  • Register with eToro 

To register on eToro, head over to the official eToro website and click on ‘Join Now’ to open the signup page. Here, you will be required to supply your full name, email address, mobile number and choose a username and a unique password. You can fasten this process by signing up with your regular Google and Facebook account found at the bottom. 

Click here to invest in cryptocurrency on eToro.

How to invest in cryptocurrency UK on eToro

  • Upload ID 

The next step is to complete the compulsory know-your-customer (KYC) process. All you have to do is upload a snapshot of your driver’s license or any government-issued ID card. This step also requires you to provide proof of address by uploading a copy of a recent utility bill or bank statement. Once these documents are submitted, eToro will verify your trading account. 

  • Deposit 

Deposit on eToro is easy, and you can choose between a standard bank transfer, credit or debit card, PayPal, Skrill, Neteller, and several others. eToro offers a reasonable minimum deposit bar of 37.66 GBP, enabling anyone to start with little capital. There are no deposit fees, so you can better maximise your invested capital. 

  • Invest in Cryptocurrency 

Investing in cryptocurrency is the final step that also takes little effort to complete. You can manually navigate to the crypto section by clicking on the ‘Discover’ button and then clicking on ‘Crypto’ to get the full overview of the digital currencies offered on eToro. Keep reading this guide to find out the best cryptocurrency to invest in UK right now.

If you know the ticker symbol, you can type it into the search bar and click ‘Trade’ on the message box.  

You will be redirected to the order page, where you can now input how much of the digital asset you want to invest in. Once done, click on ‘Open Trade’ to complete the transaction. 

How to invest in cryptocurrency UK on eToro

Best Places to Invest in Cryptocurrency UK 

1. eToro - Overall Best Platform to Invest in Cryptocurrency UK 

eToro was founded in 2007 and offers investment management and brokerage services to customers and crypto exchanges. eToro is home to over 20 million users globally due to its easy to use platform and the popularity of its social trading feature. 

The brokerage platform is regulated and licensed in the UK by top regulatory bodies such as the Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), the Cyprus Securities and Exchanges Commission (CySEC). eToro is also regulated in the US by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). 

eToro is regarded as the best place to Invest in cryptocurrency in the UK because the platform is very affordable to use and has a CopyTrade feature that makes trading easy. The CopyTrade function is designed to serve new traders on the platform by allowing new traders to observe the trading strategies of more experienced investors. The technology also allows them to imitate and implement the strategies, reducing risks. 

eToro grants users access to 27 top-performing cryptocurrencies to Invest in, sell and trade. The fees on the platform are low as stocks, and ETF trading is free. The platform requires a minimum deposit of £37.66 at current prices. Transaction fees vary within 0.75% to 5%, depending on the crypto asset. eToro also requires £3.7 to withdraw funds. 

Users can make payments on eToro using debit/credit cards, PayPal, bank transfers and other online everyday payment methods. 

Pros

  • Social trading technology 
  • Flexible payment options 
  • Low cryptocurrency trading fees 
  • Intuitive platform 
  • Heavily regulated 

Cons

  • Withdrawal fee of $5 

Click here to invest in cryptocurrency on eToro.

Choosing a Crypto Wallet 

A crypto wallet is a digital wallet that allows users to store, manage, and trade their cryptocurrencies such as Bitcoin, Ethereum, etc. Digital wallets have public and private keys required to Invest in, trade, or transfer any cryptocurrencies and provide digital signatures that authorise transactions. A crypto wallet can be a device, a program embedded on an app, or even printed out on a piece of paper. 

Exchanges and brokers provide the services of a crypto wallet for users to store their digital assets. Many crypto wallets have various crypto-to-crypto trading pairs for trading and conversion from one cryptocurrency to another. Users can transfer cryptocurrencies and convert them into a local currency with a crypto wallet. 

How to Choose a Crypto Wallet 

There are different types of crypto wallets available for use. However, before you choose a crypto wallet, you may have to consider the kind of crypto wallet that suits you, the fee charged, and the level of security that it offers. 

Hot Storage Bitcoin Wallets 

Hot storage crypto wallets are connected to the internet directly. This means that both the private and public keys are stored online. The risk with this is that hackers can gain access to it. 

Cold Storage Bitcoin Wallets 

A cold wallet is a small, encrypted portable device that allows you to download and carry your bitcoin and other cryptocurrencies. Cold wallets are considered more secure than hot wallets because your keys are stored offline. Examples of cold wallets include Trezor and Ledger Nano X. 

Mobile wallets 

Mobile wallets are apps that run on your smartphone to store and control your funds. They are convenient for quick payment.  

eToro Crypto Wallet 

The eToro Crypto Wallet is a very secure digital wallet that enables you to Invest in, send, receive, convert, and transfer over 120 crypto assets. 

A crypto transfer fee and a blockchain fee are charged using the eToro mobile wallet. Transactions involving Bitcoin and Ethereum attract a spread of 0.75% and 1.90%, respectively. 

etoro crypto wallet

eToro Crypto Wallet is also regulated by the Guernsey Financial Services Authority (GFSC) and offers a password recovery tool for lost private keys.  

Click here to invest in cryptocurrency on eToro.

Best Cryptocurrency to Invest in UK

You now know how to invest in cryptocurrency UK, but what is the best cryptocurrency to invest in? Well, several crypto projects have posted massive growth in the last year, and investors are likely confused about choosing the best cryptocurrency. Here, we explore some of the best digital currencies with long-term growth potential and are also seeing massive adoption at the moment. 

  • Bitcoin (BTC) 

Bitcoin has remained the flag-bearer for the entire crypto market. The premier digital asset is deflationary due to its hard-cap limit of only 21 million coins that will ever be produced. This feature makes the crypto bellwether a likely financial haven for several investors. 

Bitcoin has also continued to grow in the past year, with the foremost decentralised currency becoming a legal tender in the Latin American nation, El Salvador. The asset controls close to 45% of the entire crypto market. Bitcoin is also the most actively traded digital currency, with most crypto-to-crypto pairs facilitated with BTC. 

The growing global health crisis has continued to keep Bitcoin in the spotlight as several traditional financial markets struggle to keep their doors open. Bitcoin’s virtual nature makes the asset tradable anywhere in the world. Inflation fears have also contributed to Bitcoin’s growing popularity, with a recent report from the US Department of Labour pointing to a 6.2% increase for all items in the past year.  

Price-wise, Bitcoin has grown in leaps and bounds and dropped a ton. In the last 48 hours, the premier digital currency traded in a mid-month low of $48,302, dragging the entire crypto market alongside. However, Bitcoin is gradually welcoming back the bulls and is up 6.56% in the last 24 hours, although its weekly gains are still in the red zone. This rise sees BTC changing hands at $50,874.40 with a 12-month trailing increase of 177.80%.  

Bitcoin’s strong potential has attracted several investors, and the digital asset should feature in your portfolio. 

Click here to invest in Bitcoin on eToro.

  • Ethereum (ETH) 

Ethereum may serve as a sidekick to Bitcoin, but the second most valuable asset is already forging entire ecosystems for itself. The Ethereum network is host to some of the most revolutionary and fast-paced sub-sectors featuring the likes of decentralised finance (DeFi), non-fungible tokens (NFTs), metaverse, and Play2Earn. 

The flexibility of the Ethereum network has seen advocates tap the top altcoin as a suitable successor to Bitcoin in the coming years. However, Ethereum’s reliance on the archaic proof-of-work (PoW) consensus algorithm has seen its growth stunted. 

So far, a slew of Ethereum Improvement Proposals (EIPs) has been launched, with the latest being the Arrow Glacier upgrade. However, the development team behind the decentralised project is currently transitioning to a proof-of-stake (PoS) protocol in the coming year. The EIP hardfork is expected to push the difficulty bomb till next summer.  

The upgrade will take effect on December 10 and keep the Ethereum blockchain from freezing popularly called the ‘ice age.’  

Ethereum is picking up steam on the trading chart after seeing a negative trend in the past week. The digital asset is trading at $4,380, up 8.39% in the last day. ETH has also shown remarkable growth in the past year, with a 689.03% increase so far. 

Once the PoS status is attained, the Ethereum network will likely hit a new milestone in its price action. 

Click here to invest in Ethereum on eToro.

  • Dogecoin (DOGE) 

Dogecoin has been a revelation this year, with the popular parody coin becoming an internet sensation. Meant to poke fun at other alternative currencies (altcoins) that arose in the wake of Bitcoin’s popularity, Dogecoin has become crypto’s rallying ground for a common global goal among its fledgling community. 

One such outspoken backer is Tesla and SpaceX CEO Elon Musk, who has gone all out to push the meme coin as a Bitcoin alternative. His space company also received payments for its Falcon X space rockets with the digital asset. 

This development saw Dogecoin rally 15,000% to an all-time high (ATH) of $0.73 in the crypto boom of early 2021. However, Dogecoin has largely traded along with other cryptocurrencies, but the top meme coin remains the reckoning voice in the ever-expanding niche of joke currencies. 

At the moment of writing, Dogecoin is seeing bullish momentum. The Bitcoin knock-off is trading at $0.1800, up 9.31% in the last 24 hours. This increase is made even more impressive with a year-to-date (YTD) increase of 3,753.65%. 

Click here to invest in Dogecoin on eToro.

  • Aave (AAVE) 

Aave has come a long way in the past year. The decentralised applications (dApps) protocol is one of the top cryptocurrencies to invest in in the UK. Aave protocol is a DeFi-lending protocol that enables DeFi users to lend and borrow assets. 

Aave has been able to separate itself from the litter of crypto lending platforms due to its flash loan feature. Lenders are rewarded for providing liquidity, while borrowers are charged a certain percentage. This feature allows users to borrow digital assets and payback within the same trading window.  

The Aave protocol, primarily meant to facilitate ETH lending, has expanded to more digital tokens, with over 20 digital assets currently supported by the platform. The asset, which is looking to onboard more institutionalised corporations, announced a permissioned market on the Aave V2 market called Aave Arc. This project is expected to provide Web3-native experiences for financial institutions looking to tap into the DeFi space. The digital asset is currently up 8.61% and is trading at $191.2.  

Click here to invest in Aave on eToro.

  • Cardano (ADA)  

Another cryptocurrency you should add to your portfolio is the Ethereum killer, Cardano. Self-billed the blockchain for innovators, Cardano is a peer-reviewed blockchain protocol that aims to create a permissionless, secure, and highly scalable network to usher in the future of finance and Web3.0. 

Created by former Ethereum co-founder Charles Hoskinson, Cardano operates on a PoS consensus model, enabling the protocol to be faster, cost-effective, and energy-efficient. The Cardano network has also spread its tentacles into digital identity management for under-developed tech regions, with Ethiopia being the first country to key into the Atala PRISM solution. 

Price-wise, Cardano’s ADA has largely under-performed among its peers, only hitting an ATH in mid-September following the launch of smart contract capabilities. However, the crypto project is one for the future, following a remarkable value proposition. 

Given this, ADA is rallying with the top crypto dog Bitcoin and is trading at $1.467, up 11.98% on the last day. YTD increase stands at 708.43%, showing tremendous growth in the past few months. 

Click here to invest in Cardano on eToro.

  • Polkadot (DOT) 

The Polkadot protocol is a heterogeneous blockchain network that enables the seamless transfer of all asset types across several blockchain platforms. The asset that uses a modified version of the PoS process is an Ethereum rival and aims to become a development hub for other dApps. 

Polkadot also has strong affiliations with Ethereum through founder Gavin Wood and uses sharding technology to deliver high-performance assets. The protocol is currently running its parachain auctions, with Astar Network securing the third spot on the Polkadot parachains.  

This will give dApps a two-year tenure to plug into the robust framework of the Polkadot Relay Chain.  

Polkadot’s governance token DOT has seen an admixture of bulls and bears tussling over its price action. In the run-up to its parachain auction launch, DOT surged to an ATH of $54.98 on November 4.  

The utility token has since dropped 47.2% but is showing an impressive 12-month trailing increase of 512.46%. This data indicates a strong use case for Polkadot in which more dApps will look to plug into its secure protocol to launch varied DeFi and NFT services in the coming year. 

Click here to invest in Polkadot on eToro.

What to Consider When Investing in Cryptocurrency UK

Before you decide to Invest in cryptocurrency UK, it is equally important to consider certain crucial factors that could impact your investment. They include the following: 

  • Volatility 

Volatility refers to how frequently an asset rises and falls in price. All cryptocurrencies are generally volatile, and this has seen critics pointing to their unpredictable nature.  

For instance, Bitcoin sees several price swings in a 24-hour trading window and may rise and dip in the same period. Given this, you will need to consider your risk before delving into Investing in crypto assets. 

  • Growth potential 

It is also very important to consider the growth potential inherent in a crypto asset before Investing. Crypto assets are known to see exponential growth in a short period. Bitcoin, the foremost cryptocurrency, in the last 11 years has grown by a massive 9,000,000% from a base price of $0.08 in 2009. 

  • Value proposition of the crypto project 

Many cryptocurrencies are out to solve real-world issues. Polkadot (DOT) is out to solve the problem of scalability and interoperability. With DOT, different blockchains can communicate smoothly with each other. Cryptocurrencies that have value propositions will see an uptrend in price. You should pay attention to crypto protocols working on real challenges and not just social media hype. 

  • Track record (price-wise) 

Before investing in cryptocurrency UK, analyse the digital asset's track record. You can start by checking the all-time high (ATH) attained in the past. This research will give you some insights into how much the digital asset can still grow in the future. 

  • Fundamentals 

It is important to research an asset’s fundamentals. Fundamental news like, is the digital asset listed on a new exchange? Is the asset accepted as a means of payment? Is the crypto embarking on any new project? Crypto assets usually experience a surge in price once strong fundamental news surrounds them. 

Best Ways to Invest in Cryptocurrency UK 

Whether you’re looking for ways to invest in or sell in cryptocurrency, there’s an abundance of platforms available in the UK for such transactions. 

Crypto brokers like eToro offer safe and secure options to Invest in crypto UK which become available after signing up. Some of the ways you can Invest in crypto UK include: 

  • PayPal 
  • Debit/credit card 
  • Bank transfers 

1. Invest in Cryptocurrency with PayPal 

PayPal's customers in the UK can use the platform to invest in and sell cryptocurrency. The popular payment merchant is recognised and used as a payment option to Invest in cryptocurrency in the UK. 

This payment gateway is embedded in almost every popular crypto trading platform in the UK, such as eToro. 

2. Invest in Cryptocurrency UK with Debit/Credit Card 

Like shopping online for your favourite items, you can Invest in crypto with your debit/credit card. While you would be required to fill in sensitive card details, those details are safely encrypted and protected. 

In addition, some banks require security steps to authorise a purchase. These steps may include a text message, the bank provided security card or a security question.  

To use your debit card on eToro, your debit card must be able to receive funds and have a CVV (Card Verification Value).  We also advise ensuring that your credit card issuer has minimal fees attached when you use this payment option. 

3. Investing in crypto UK with Bank Transfers 

You can make payments when Investing in cryptocurrency directly through bank transfers. All you have to do is select ‘bank transfer’ when you want to deposit on eToro and follow the onscreen prompts. There's no need to sign up on third-party payment merchants or fill in sensitive card details with this option. 

Click here to invest in cryptocurrency on eToro.

Investing in Crypto vs Trading Crypto 

We’ve shown you how to invest in cryptocurrency UK, but it’s important to know that investing in crypto and digital trading assets are two different sides of the same coin.  

Investing in cryptocurrency can be seen as an investment move when people exchange fiat currencies for cryptocurrencies to hold the assets in a wallet, pending a hike in price. This is a common move adopted by those who do not have the technical expertise to trade the market or just hold the asset for a long time. 

On the other hand, trading cryptocurrency is the continuous Investing and selling of cryptocurrencies. Trading involves the deliberate timing and entry of a particular commodity market when the price is favourable and holding till the goal set as profit is reached, then the asset is sold to accrue profits.  

Trading is aimed at short-term profits based on technical indicators and short-term price behaviours. To trade, one must factor in many variables, including price patterns, indicators, and trading tools, to make good decisions that can yield profits. 

Bitcoin Trading Robots 

Bitcoin Trading Robots are machine programming tools that can automatically trade with little human supervision. With trading bots, crypto investors can automate Investing and selling of positions based on key technical indicators. Trading Robots can gather market data, interpret them, calculate the potential market risk, and execute the Investing and selling of cryptocurrency. 

Bitcoin trading robots have much higher trading accuracy than humans, likely resulting in executing more winning trades and raking in profits.Some of the prominent Bitcoin trading bots we have covered are: 

  • Bitcoin Prime 
  • Bitcoin Miner 
  • Cryptosoft 

Tax on Investing in Cryptocurrency UK 

Cryptocurrencies have become one of the most discussed topics in the world. However, the United Kingdom (UK) has moved a step forward in the adoption of digital assets. Crypto assets have become a steady and legal means of making money in the UK after digital assets were declared as properties liable to tax. Her Majesty’s Revenue and Customs ( HMRC) has issued guidelines that state in plain terms what is regarded as a crypto taxable event and what isn’t. 

Crypto income falls under the Capital Gains Tax (CGT), and stated in the guideline are the conditions that warrant tax imposition on a crypto asset. 

According to the guideline, citizens do not need to pay tax when they invest in crypto assets; however, their tokens may be treated as other taxable income when they Invest in crypto assets from mining. A self-assessment tax return is usually recommended unless the token amount received is worth less than £1,000.  

If one receives crypto assets from an employer as payment, you may need to pay Income Tax and National Insurance Contributions. One needs to affirm if the crypto asset received is classified as a readily convertible asset.  

Suppose the asset is a readily convertible asset which means it can be exchanged for cash. In that case, your employer must pay your Income Tax and National Insurance contributions through Pay As You Earn ( PAYE) before they pay you. To ascertain how much tax will be deducted, the UK employer will have to estimate the value of the tokens and then deduct them from the wages you receive that period. 

If the asset is not classified as a readily convertible asset, you will need to pay your Income Tax. To do so, you must complete a self assessment tax return in pounds sterling. 

How to Sell Cryptocurrency in the UK 

We’ve shown you how to invest in cryptocurrency UK, but you’ll also probably want to sell your crypto assets at some point. To sell cryptocurrency on eToro, you:

  1. Click on ‘Portfolio’ to see all crypto assets 
  1. Click on the asset you wish to sell 
  1. Click on the red ‘X’ next to the position of the asset 
  1. Click on ‘Close Trade’ 

Conclusion 

Cryptocurrencies are gaining mainstream adoption by the day, and more investments are pouring into the nascent space.  

Besides the digital assets reviewed here, you can still invest in thousands of others. However, we recommend using eToro as we consider the broker as the best platform to Invest in cryptocurrency UK. 

The social trading platform offers some of the most promising crypto trading services coupled with the fact that eToro is fully regulated by the FCA and other global bodies.

Click here to invest in cryptocurrency on eToro.

FAQs on How to Invest in Cryptocurrency UK 

How Do I Invest in Cryptocurrency UK? 

You can invest in cryptocurrencies by signing up on the recommended crypto broker eToro. Then complete the KYC process and fund your account to Invest in your preferred crypto asset. 

What Is the Best Site to Invest in Cryptocurrency UK? 

The best place to invest in cryptocurrency in the UK is eToro, given the tight security and low fees investors enjoy. Another advantage of using eToro is the CopyTrade feature that allows you to mirror the trades of more experienced investors for free. 

Is Investing in Cryptocurrency Safe? 

Although cryptocurrencies are still relatively new, you can invest in these digital currencies safely on the eToro platform. 

What Is the Best Cryptocurrency to Invest in UK? 

This is subject to each investor’s preference. However, several investors are more likely to Invest in Bitcoin due to the digital asset being a great store of value. 

Where Can I Invest in Crypto With the Lowest Fees? 

eToro offers some of the most competitive fees in the crypto trading scene. You get to enjoy zero deposits and a 0.75% fee for trading cryptocurrencies. 

Should I invest in Cryptocurrency?

Cryptocurrencies can be a valuable asset to an investment portfolio, but it’s important to understand their volatile nature and the fact that you can lose money at any time, so make any investment decision wisely and based on lots of research.

Subscribe