The value of the bitcoin has risen from around £300 in May 2016 to around £30,000 in May 2022, and has become a share of enthusiasts along the way. As a result, interest in cryptocurrencies is high.
If you are thinking about investing in bitcoin, you should know that there is no guarantee that you will see a return or break even. The value of cryptocurrencies fell from around £16,000 to £2,400 between 2017 and 2018. The record high is over £60,000, meaning its current value is half what it once was.
Such volatility has led the UK’s financial watchdog, the Financial Conduct Authority (FCA), to warn repeatedly that cryptocurrency buyers should be prepared to lose their entire investment.
If you are aware of the risks and still want to buy bitcoin, here is how you do it using a credit card.
Sign up with a crypto exchange
To buy bitcoin, you have to exchange some currency for it.
However you want to pay for your bitcoins, you will need to use a crypto exchange. Popular exchanges include Coinbase and Binance.
Choose an exchange with a bitcoin wallet built into its platform and you won’t need to sign up elsewhere. If you wish to keep your cryptocurrency in a wallet outside of your chosen exchange, make sure it allows withdrawals and check what, if any, fees apply.
If you intend to buy bitcoin with your credit card, check if the exchange accepts the brand you own (for example, American Express, Visa, MasterCard).
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pay by credit card
Once you have signed up for an account with an exchange, you will need to add funds to it.
Not all lenders allow you to use your credit card to buy crypto, for example TSB, Virgin Money and Tesco Bank block transactions with crypto exchanges. Some providers may allow you to use your card to buy crypto, but beware of any fees they may add to the cost of the transaction.
Here’s how some of the big lenders handle crypto purchases:
|the provider||Allows crypto purchases?||Transaction Type||charge|
|M&S Bank||Yes||Cash Advance||2.99%|
|Reverse||Yes||Cash Advance||up to 2.50%|
Although uncommon, there are credit cards that charge 0% on cash advances, such as the Barclaycard Rewards credit card. However, taking out a loan to buy bitcoin is not advisable. If you buy bitcoin with a credit card, you should try to pay off your balance as quickly as possible to minimize interest.
place an order
In the platform you are using, navigate to Bitcoin and enter the amount you wish to invest. Unless you’re investing north of £30,000, you’ll be buying a fraction of a bitcoin. For example, if the value of bitcoin is £30,000 and you have invested £1,000, you will have 3.33% of the bitcoin.
Store your bitcoins securely
You can store your bitcoins in the integrated wallet of your exchange or, if you prefer and the exchange allows it, a wallet provided by a third party. But, if you feel comfortable keeping your bitcoins online, you can use a ‘cold’ wallet instead, which is a storage device that is not connected to the internet.
Keep in mind that there may be a fee to pay to withdraw your bitcoins from the exchange, and if you go with a cold wallet, you will need to keep your access code secure or a lock of your own holdings. would be at risk.
how to sell your bitcoin
You can also sell your bitcoins through a crypto exchange, either immediately or when it reaches a certain price. Once sold, you can transfer the money back to your bank account – although in some cases you will have to wait a few days before withdrawing it.
If the profit you make from selling bitcoin is large enough, you will be liable for capital gains tax (CGT). Each has an annual CGT allowance of £12,300. If you have gained more than this amount in any year, you are likely to be taxed.
Credit: www.standard.co.uk /