Home How to Invest in Cryptocurrency UK: A Comprehensive Guide for Beginners

How to Invest in Cryptocurrency UK: A Comprehensive Guide for Beginners

Cryptocurrency is a high-growth market that is increasingly popular with UK investors. Bitcoin, Ethereum, BNB, and Solana are leading digital assets to buy, but many others exist.

This guide explains how to invest in cryptocurrency in the UK, covering the safest and cheapest platforms, and what best practices to follow. Read on to build your cryptocurrency portfolio today.

Quick Guide on How to Invest in Cryptocurrency in the UK

Let’s begin with a quick walkthrough on how to invest in cryptocurrency in the UK:

  • Step 1: Choose a Regulated Cryptocurrency Exchange: The first step is to choose a cryptocurrency exchange that’s licensed by the FCA. eToro is a popular option for first-time investors seeking a safe and regulated environment.
  • Step 2: Open an Account: Now visit the eToro website and create an account. eToro requires some personal information and a government-issued ID, such as a driver’s license or passport.
  • Step 3: Deposit Funds: The next step is to deposit some funds, ensuring the $100 minimum (about £76) is met. eToro accepts Visa, MasterCard, PayPal, Skrill, bank transfers, and other convenient methods.
  • Step 4: Decide Which Cryptocurrencies to Buy: eToro lists almost 100 cryptocurrencies, including Bitcoin, Ethereum, Solana, and XRP. Research which cryptocurrencies align with your investment goals and risk tolerance. Complete beginners typically opt for Bitcoin, considering it’s the market leader.
  • Step 5: Buy Cryptocurrency: Search for the chosen cryptocurrency on eToro and click ‘Trade’. Type in the investment size, from $10 (about £7) upward. Confirm the investment by clicking the ‘Buy’ button.
  • Step 6: Store Cryptocurrency in a Wallet: Cryptocurrencies are digital assets, so they must be stored in a wallet. You can opt for eToro’s web wallet, which comes with institutional-grade security. Alternatively, you can withdraw your crypto holdings to a private wallet.

Best Places to Invest in Cryptocurrency in the UK: Our Top Picks

UK investors have many options when learning how to get into cryptocurrency. This section takes a closer look at the different ways to enter the market.

Cryptocurrency Exchanges

Cryptocurrency exchanges are the most common way to invest. They’re similar to online stock brokers but specialize in digital assets rather than company shares.

Put simply, users open an account, deposit funds, and choose which cryptocurrencies to buy. The purchased cryptocurrencies can be then withdrawn to a private wallet, or kept on the exchange for added convenience.

The best cryptocurrency exchanges in the UK are discussed below:

1. eToro – The Overall Best Place to Invest in Crypto in the UK

eToro is a popular trading platform with over 35 million registered users. It holds multiple licenses, including approval and regulation by the UK’s Financial Conduct Authority (FCA). This makes eToro a safe place to invest in digital assets. eToro not only lists Bitcoin but almost 100 other cryptocurrencies. This includes everything from Ethereum, Solana, and XRP to Dogecoin, Arbitrum, and Cardano.

The minimum cryptocurrency trade requirement is just $10 (about £7). This is ideal for beginners and those looking to build a diversified cryptocurrency portfolio. eToro does, however, charge 1% when buying and selling cryptocurrencies, which is considered expensive. That said, UK investors can deposit funds without being charged.

eToro UK review

Accepted payment methods include UK bank transfers, debit/credit cards, and e-wallets like PayPal. The minimum deposit requirement is $100 minimum (about £76). eToro also offers a passive investment tool called ‘Copy Trading’. This enables users to copy an experienced cryptocurrency investor automatically. It also offers professionally managed cryptocurrency portfolios at no extra charge.

Pros

  • Authorized and regulated by the FCA
  • Instantly buy Bitcoin with a UK debit card
  • Lists almost 100 cryptocurrencies
  • User-friendly platform that’s ideal for first-timers
  • Offers an in-built wallet with robust security tools
  • Copy successful cryptocurrency investors like-for-like

Cons

  • Cryptocurrency trading commissions are on the high side 
  • Minimum first-time deposit of about £76

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more

2. MEXC – Buy and Sell Thousands of Cryptocurrencies at 0% Commission 

MEXC is a global cryptocurrency exchange with a huge number of markets. It lists thousands of cryptocurrencies, including crypto market leaders like Bitcoin, Ethereum, and Solana. MEXC also provides access to new cryptocurrencies, ensuring all investor profiles and goals are catered for. Crucially, it’s one of the best options for building highly diverse portfolios on a single platform.

MEXC is also a top choice for UK investors seeking a cost-effective experience. There are no trading commissions to pay when placing limit orders. This is the case when buying and selling cryptocurrencies. MEXC also offers a wide selection of analysis tools, such as advanced charts and technical indicators. However, these are more suited for experienced traders.

MEXC review

Beginners might prefer MEXC’s copy trading service, which enables users to replicate the most successful cryptocurrency investors. MEXC also offers an instant buy feature. This enables UK investors to instantly buy cryptocurrencies with a debit/credit card. The minimum purchase amount is an affordable £22. Google and Apple Pay are also accepted.

Pros

  • Thousands of cryptocurrencies to choose from
  • Place limit orders to get 0% commissions
  • Minimum GBP deposit of £22
  • Accepts debit/credit cards and Google/Apple Pay
  • Popular features include copy trading and staking
  • Available on web browsers and a mobile app

Cons

  • Isn’t regulated by the FCA
  • Advanced charting suite might be intimidating for beginners

No KYC Exchanges

The next option when exploring how to invest in cryptocurrency is ‘no KYC’ exchanges. These are also cryptocurrency exchanges but with a unique selling point: users can trade cryptocurrencies anonymously.

This means users can avoid traditional KYC processes, such as uploading a government-issued ID and proof of address. However, no KYC exchanges are typically unregulated, so investors should consider the risks before proceeding.

Nonetheless, let’s take a closer look at the best no KYC exchanges in the market:

1. Margex – Instantly Buy Popular Cryptocurrencies With a Debit/Credit Card   

Margex is a great option for investors who want to buy cryptocurrencies without KYC requirements. The account opening process simply requires an email address and password. Margex users can then purchase cryptocurrencies instantly with a debit/credit card, issued by Visa or MasterCard. Some of the best cryptocurrencies are supported, including Bitcoin, Ethereum, TRON, Litecoin, and Solana.

The investment process is ideal for beginners; Margex offers a simple dashboard, accessible online or via the mobile app. The minimum investment requirement is just £4. Users can withdraw their purchased cryptocurrencies to a private wallet or keep them on Margex. Those opting for the latter can stake their cryptocurrencies and earn passive rewards of up to 5%.

Margex review

Margex also offers a copy trading platform. Users can choose the best traders to copy based on past performance, drawdown limits, and other important factors. Margex also supports instant conversions without additional fees. This enables users to swap cryptocurrencies without using the exchange, such as Bitcoin for Solana or Tether for Litecoin.

Pros

  • Instantly buy cryptocurrencies with a debit/credit card
  • A minimum purchase requirement of just £4
  • Offers a fee-free conversion tool for swapping cryptocurrencies
  • No KYC procedures when opening an account
  • Also offers copy trading and staking tools

Cons

  • Perpetual futures aren’t available to UK users
  • Limited support for popular meme coins

2. BloFin – A Great Option for Trading Cryptocurrencies on a User-Friendly Mobile App   

BloFin is one of the best options for UK investors who want to trade cryptocurrencies on a mobile device. Its Android and iOS app offers a great user experience, even for those investing for the first time. Best of all, BloFin supports hundreds of cryptocurrencies, from large caps to new projects with small valuations. This makes it seamless to build a diversified portfolio directly from a smartphone.

For example, those interested in meme coins will find Pepe, Dogecoin, Shiba Inu, and FLOKI. Alternatively, some investors will like BloFin’s support for AI cryptocurrencies. This includes Render, Artificial Superintelligence Alliance, and Injective. Market leaders like Bitcoin, Ethereum, and Solana are also readily available.

BloFin review

BloFin also stands out for its low-fee policy. It charges commissions of 0.1% per slide. This amounts to just £1 for every £1,000 traded. BloFin users get commission discounts when increasing their trading volumes. BloFin also offers passive investing tools. Users can earn 3% on Bitcoin and Tether, and 4% on Ethereum. Fixed and flexible terms are available.

Pros

  • Trade hundreds of cryptocurrencies on a smartphone device
  • The iOS/Android app offers a beginner-friendly experience
  • Pay commissions of just 0.1% per slide
  • Discounts are available when trading larger amounts
  • Passive earn interest on idle cryptocurrency investments

Cons

  • Some products aren’t available to UK users, including leverage
  • Operates without regulatory approval

Cryptocurrency Wallets

Cryptocurrency wallets are a core requirement when investing in digital currency. They keep cryptocurrency investments safe and enable users to send and receive funds. The two types of wallets are ‘Custodial’ and ‘Non-Custodial.’

Custodial wallets are offered by exchanges. This means the exchange is responsible for keeping the funds safe. Non-custodial wallets provide full control to the investor, meaning they’re personally responsible for safeguarding the funds.

Let’s explore the best cryptocurrency wallets for UK investors:

1. eToro Money Crypto Wallet – Custodial Wallet App for Storing, Sending, and Receiving Funds

eToro Money Crypto Wallet is a one-stop shop for all of your cryptocurrency needs. It comes as a mobile app for iOS and Android, and supports a wide range of digital assets. eToro Money Crypto Wallet enables users to send and receive funds in a user-friendly environment. No prior experience is needed and comprehensive learning materials are available.

The app can also be used to buy and sell cryptocurrencies in GBP. This ensures users can enter and exit positions no matter where they’re located. Do note that the eToro Money Crypto Wallet offers custodial storage solutions. This means you won’t have access to its private keys. On the contrary, these are safeguarded by the eToro team.

eToro Money Crypto Wallet

Nonetheless, this could be more beneficial for first-time investors. After all, if you lose the private keys, or they’re compromised by a hacker, the wallet funds could be lost forever. This can’t happen when using eToro, as it offers an ‘unlosable’ security key service. This ensures the wallet funds can be recovered even if you forget the PIN or lose the smartphone device.

Pros

  • One of the most user-friendly wallets available
  • Safely store Bitcoin and other popular cryptocurrencies
  • Send and receive digital assets directly on a smartphone
  • Enables users to deposit GBP for cryptocurrency investing
  • Backed by an established and regulated trading platform

Cons

  • Charges much higher fees than other wallet providers
  • Users don’t control the wallet’s private keys

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more

2. Exodus – Non-Custodial Wallet Supporting Over 50 Blockchains and Thousands of Cryptocurrencies

Exodus is the best option if you want full autonomy over your cryptocurrency investments. It’s a non-custodial wallet, so nobody, not even Exodus, can access its private keys. This means you can store, send, and receive cryptocurrencies without needing approval. The wallet can be accessed by entering a PIN.

And, if you forget the PIN or lose the device, the wallet can be recovered via a backup passphrase. This is provided when setting the wallet up. Exodus supports multiple device types, including web browsers (Chrome), mobiles (iOS/Android), and desktops (Windows/Mac). Free native software is available for each of these operating systems.

Exodus DEX review

Exodus is also a great choice for diversified cryptocurrency portfolios. It supports over 50 blockchains and thousands of cryptocurrencies. It also enables users to invest in cryptocurrencies directly from the wallet interface. This service is provided by partnered third parties. Payment options include debit/credit cards and selected e-wallets.

Pros

  • Non-custodial wallet offering complete autonomy
  • Send, receive, and store digital assets away from centralized providers
  • Available as a free application for desktops, mobiles, and browsers
  • Supports over 50 blockchains and thousands of cryptocurrencies
  • Users can buy cryptocurrencies without leaving the wallet interface

Cons

  • Fees are high when purchasing digital assets with GBP
  • No recovery service if the wallet is hacked

Step-by-Step Guide on How to Invest in Cryptocurrency UK

This section provides a step-by-step guide on how to invest in crypto in the UK. Read on to purchase your first digital asset in under five minutes.

Step 1: Choose a Cryptocurrency Exchange

Choosing the right cryptocurrency exchange is an important step. Just like selecting an online stock broker, it’s important to consider safety, regulation, and reputation. Other factors to explore include deposit and trading fees, available cryptocurrencies, and customer support.

Buy Bitcoin with debit card UK

In our view, eToro is the standout provider for UK investors.  eToro is authorized and regulated by the FCA. It’s also approved by licensing bodies in the US, Europe, and Australia. eToro lists almost 100 cryptocurrencies and offers free GBP payments.

Step 2: Open a Cryptocurrency Exchange Account

Once you’ve chosen an exchange, proceed to open an account with the provider. We’ll show the process with eToro for the remainder of this walkthrough. But the steps are similar with most exchanges.

So, visit the eToro website and click the ‘Join eToro’ button. A registration form will appeal, requesting some basic personal information. This includes your name, address, date of birth, and national insurance number.

eToro open account

Most UK investors can proceed without uploading a government-issued ID and proof of address. This is because eToro can verify your identity via third-party sources. However, these documents can be requested at any time, so you might consider uploading them anyway.

Step 3: Make a Deposit

The next step is to deposit funds into the eToro account. The minimum deposit requirement for UK investors is $100 (about £76). The fastest way to deposit funds is by using a debit/credit card or e-wallet. The latter includes PayPal, Skrill, and Neteller.

eToro deposit funds

eToro also accepts UK bank transfers, but this increases the minimum deposit requirement to $500 (about £380). What’s more, bank transfers can take several days to appear, so consider using an alternative payment method. Either way, no deposit fees are charged to UK investors.

Step 4: Search for a Cryptocurrency to Buy

You’ve now got some money in the eToro account, so you proceed to buy some cryptocurrencies. Use the search bar if you already know which cryptocurrency you want to purchase.

eToro buy Bitcoin

In our example, we’re searching for Bitcoin. Click the ‘Trade’ button next to the respective cryptocurrency when it appears.

You can also click the ‘Discover’ button followed by ‘Crypto’. This displays all the cryptocurrencies available on eToro, separated by key facts like performance and market capitalization.

Step 5: Decide How Much Money to Invest

It’s wise to evaluate how much money to invest before proceeding. After all, cryptocurrencies are a high-risk and volatile asset class.

We’d suggest keeping crypto investment sizes small until you’re more comfortable with how things work. Fortunately, eToro has one of the lowest minimum investment requirements at just $10 (about £7).

This is the case even when investing in high-value cryptocurrencies like Bitcoin. For example, suppose Bitcoin trades at $62,000 and you invest $62. This means you’ve purchased 0.1% of a full Bitcoin.

Step 6: Complete the Cryptocurrency Investment

Now it’s time to complete the cryptocurrency investment. All you need to do is type in the investment size in the ‘Amount’ box.

eToro buy Bitcoin

In our example, we’re buying $62 (about £47) worth of Bitcoin. Finally, click the ‘Buy’ button to confirm the investment. The purchased cryptocurrencies will then appear in your eToro web wallet.

Step 7: Choose a Cryptocurrency Storage Method

There’s one more step to consider before concluding: storage. Some UK investors will leave their cryptocurrencies in the eToro account. This is a safe and secure option, considering eToro is regulated by the FCA. Just click the ‘Portfolio’ button to view the purchased cryptocurrencies. This is also where you can sell the cryptocurrencies back to GBP.

eToro web wallet

However, some UK investors prefer keeping cryptocurrencies in a non-custodial wallet. This provides full control of the cryptocurrencies, private keys, and backup passphrases. It removes the cryptocurrencies from centralized providers, meaning no authorization is needed when sending and receiving crypto funds. Consider Exodus if this option sounds appealing.

What Is Cryptocurrency? The Basics

Cryptocurrencies are digital assets, with Bitcoin being the original and most valuable option in the market. Bitcoin launched in 2009 as a worthless and unknown concept. Today, Bitcoin has a market capitalization of over $1.2 trillion. This makes it more valuable than any company on the London Stock Exchange.

Crucially, Bitcoin is one of the best-performing assets of all time. According to CoinMarketCap, Bitcoin has increased by over 100 million percent since its inception. This means a £1 investment in 2009 would be worth over £100 million today. Bitcoin has also produced gains of over 120% in the past 12 months alone. And over 650% in the prior five years.

What is Cryptocurrency

Now compare this to the FTSE 100 – the leading index fund for UK stocks. The FTSE 100 has increased by 10% in the past 12 months, and 14% in the prior year. This is why many UK investors are looking at alternative asset classes like cryptocurrency. However, it’s important to note that Bitcoin is just one cryptocurrency from millions of options.

These are called ‘altcoins’, an abbreviation for ‘alternative coins’. Some of the best altcoins to buy include Ethereum, Solana, XRP, BNB, Dogecoin, TRON, and Cardano. Altcoins offer a higher upside potential than Bitcoin, considering they possess smaller market capitalization. However, the risks are also higher, so it’s wise to build a diversified portfolio to protect your capital.

Key Cryptocurrency Terms to Know:

  • Cryptocurrency: Also known as crypto, digital assets, digital currencies, and crypto assets.
  • Altcoin: Includes all cryptocurrencies other than Bitcoin.
  • Blockchain: The technology that cryptocurrencies like Bitcoin operate on.
  • Decentralization: Some cryptocurrencies, including Bitcoin, are decentralized. This means no single person or authority has control over the network.
  • Wallet: Cryptocurrencies are stored in wallets, usually via desktop software or a mobile app. Hardware wallets are also popular, which come as a physical device.
  • Fiat: Used to differentiate ‘real’ money like British pounds and US dollars, from cryptocurrencies like Bitcoin.

Most Popular Cryptocurrency Niches to Buy

Many cryptocurrency niches exist, and some cross into multiple categories. Specific niches often perform well collectively. For example, meme coins exploded in early 2024. While 2023 was the year for AI cryptocurrencies.

Here’s a quick overview of the main niches to know about:

  • Major Cryptocurrencies: Four cryptocurrencies (excluding stablecoins) dominate the industry, with Bitcoin, Ethereum, BNB, and Solana possessing the largest market capitalization.
  • Meme Coins: These are cryptocurrencies based on popular culture, internet memes, animals, or public figures. They have no use cases or utility but remain one of the best-performing cryptocurrency niches. The most valuable meme coins are Dogecoin, Shiba Inu, and Pepe – but millions of others exist.
  • AI Cryptocurrencies: These are cryptocurrency projects directly or loosely involved in artificial intelligence. This includes infrastructure projects like NEAR Protocol and Bittensor. Other popular AI cryptocurrencies include Injective, Render, and Golem.
  • Utility Coins: This niche covers a broad range of cryptocurrencies. It simply means the respective digital assets have a use case. For example, Ethereum is a utility coin as it provides a smart contract ecosystem for decentralized applications. We can additionally separate them into utility crypto coins that have built their own blockchain technology background and utility tokens that use other projects’ blockchains and work based on smart contracts.
  • P2E Tkoens: Play-to-earn (P2E) is another high-growth cryptocurrency niche. It covers games that offer tokenized rewards when completing certain levels or tasks. Some of the most valuable P2E tokens are Axie Infinity, the Sandbox, Decentraland, and Gala.

These are just some examples of popular cryptocurrency niches. Others include gambling, DePIN (decentralized physical infrastructure networks), layer-1s, RWA (real-world assets), and exchange-related tokens. The best strategy is to diversify into several niches.

Key Considerations Before Investing in Cryptocurrency

Let’s explore some key considerations that beginners should make before investing in cryptocurrencies.

  • Volatility: Cryptocurrencies have indeed outperformed UK stocks by considerable amounts since the industry was born in 2009. However, cryptocurrencies are highly volatile and speculative. Price movements are much wilder than stocks, and extended declines can last for multiple months. Consider these risks before entering the market.
  • No FSCS Coverage: Cryptocurrencies aren’t covered by the FSCS like stocks, exchange traded funds (ETFs), and other traditional investments. This means UK investors aren’t protected by exchange and brokerage collapses. The best safeguard available is using an FCA-regulated platform like eToro.
  • Taxation: Beginners should also understand that cryptocurrencies are taxed the same as stocks. So, if you make a profit from a cryptocurrency investment, you could be liable for capital gains tax. This is only triggered once the asset is sold. What’s more, UK investors get £3,000 in capital gains allowance in 2024/25, which includes cryptocurrencies.
  • Scams: Not all cryptocurrencies are legitimate; some are scams. Anyone can create a new digital token and sell it to the public. Independent research is crucial. It’s best to stick with established cryptocurrencies like Bitcoin, Ethereum, and Solana. While legitimate, even established projects are risky.
  • Storage: Investors should understand how cryptocurrency storage works before investing. It’s a choice between custodial (e.g. exchanges) and non-custodial (e.g. self-custody apps) wallets. Both have their pros, cons, and risks.

Potential Upside and Risks When Buying Cryptocurrencies

This section explores the potential upside and risks when investing in cryptocurrencies.

Potential Upside

The biggest attraction of cryptocurrencies is the upside potential. Especially when compared to traditional investment markets. For example, we mentioned earlier that the FTSE 100 has increased by just 14% in the past five years. Bitcoin has increased by more than 650% over the same time frame.

So, had you invested £1,000 into Bitcoin five years ago, your investment would be worth £7,500 today. The same investment in the FTSE 100 would be worth just £1,140. Other cryptocurrencies have produced even bigger returns.

Bitcoin price

Take Ethereum – the world’s second-largest cryptocurrency by market capitalization. Ethereum was trading at just $181 five years ago. Today, it trades at over $2,400, meaning growth of over 1,200% and Ethereum is a popular crypto to buy in the UK. We’ve also seen cryptocurrencies explode in a matter of weeks.

For example, Pepe, a popular meme coin based on a frog, increased by over 17,000% in just 17 days last year. This means a £1,000 investment would have been worth over £170,000 in less than three weeks. Pepe’s success highlights the speculative nature of cryptocurrencies.

Potential Risks

We’ve established that cryptocurrencies can produce unprecedented returns – often in a short time frame. However, this is far from guaranteed. On the contrary, many cryptocurrencies have generated significant losses and never recovered.

Ultimately, the value of a cryptocurrency investment can go to zero. This means you should never invest more than you can realistically afford to lose. For example, consider the Safemoon cryptocurrency, which exploded by over 23,000% in 2021.

Safemoon was eventually found to be a scam, meaning those who invested near its peak lost most of their money. Safemoon is just one example; many cryptocurrencies are outright scams, leaving investors with worthless digital assets.

From a risk management perspective, only the leading cryptocurrencies should be considered, such as Bitcoin and Ethereum. While still risky, these cryptocurrencies are established, legitimate, and possess large market capitalizations, meaning volatility is lower when compared to most projects.

Pros of Investing in Cryptocurrencies

  • The potential for high investment returns
  • Millions of cryptocurrency projects to choose from
  • Low barrier of entry – often just a few pounds is needed
  • The markets are open 24/7
  • Considerably more liquid than real estate and other alternative investments
  • Cryptocurrencies are still nascent, so an early-mover advantage is still possible
  • Store wealth away from banks and other financial institutions

Cons of Investing in Cryptocurrencies

  • Cryptocurrencies are volatile and speculative
  • Most cryptocurrencies have no use cases
  • The industry is fraught with scams and fraud
  • Some exchanges operate without regulation
  • Profits will be taxed as capital gains
  • UK investors can’t access cryptocurrency derivatives

Common Cryptocurrency Investment Errors to Avoid as a Beginner

Beginners should ensure they avoid the following mistakes when buying cryptocurrency for the first time:

  • Investing Too Much: First-time investors are often drawn to cryptocurrency for its high-growth potential. But only a small percentage of investors make substantial gains. Investing too much money is the biggest error newbies make. Consider stakes wisely and never invest more than you’re comfortable losing.
  • Using Credit: Another common error is using credit to invest in cryptocurrencies. This could leave you in debt if the cryptocurrency’s value declines and you can’t pay the money back. Failing to repay the full statement balance will also invite interest, further increasing the losses.
  • Failing to Diversify: Beginners often go all-in on a cryptocurrency they like, perhaps because it’s trending or it’s in a bullish cycle. Either way, being over-exposed to one cryptocurrency can be catastrophic if it fails. Instead, it’s best to diversify into multiple cryptocurrencies at sensible stakes.
  • Keeping Coins on an Exchange: While keeping cryptocurrencies stored on a crypto exchange is convenient, consider the risks. FTX is a prime example of why this can be an issue. FTX was one of the largest crypto exchanges when it declared bankruptcy in 2022. This meant many FTX customers were unable to recover their digital assets. Consider withdrawing the purchased cryptocurrencies to a private wallet to avoid centralized risks.
  • Failing to Report Gains: HMRC is stepping up its efforts to avoid cryptocurrency tax evasion. Don’t make the mistake of not reporting capital gains where relevant. This must be done if you make capital gains of over £3,000, which is the annual tax-free allowance for 2024/25. Or, if you sold £12,000 worth of cryptocurrencies, regardless of if it made a profit.

Best Practices When Investing in Cryptocurrency Safely

Investing in cryptocurrencies can be safe when best practices are followed. This will give you the best chance possible of avoiding costly errors.

Here are five considerations to make to ensure you’re investing safely:

  • Consider a Hardware Wallet for Large Crypto Investments: Hardware wallets enable investors to store cryptocurrencies in a physical device. Known as ‘Cold Storage’, this keeps the cryptocurrencies offline to avoid online hacking attempts. Prices start from about £50 depending on the hardware wallet. You can read our comprehensive guide on the best cold wallets here.
  • Set Up 2FA: If you don’t want to buy a hardware wallet, ensure you’re using a provider that offers two-factor authentication (2FA). This is possible via popular 2FA apps like Google Authenticator or Authy. The app will generate a random code, which changes every few seconds. That code must be entered when logging into the wallet provider.
  • Stick With Reputable Exchanges: Buying and selling cryptocurrencies is safe when using reputable exchanges. The safest option is to use an FCA-regulated platform like eToro. Other options that are popular with UK traders include MEXC and Margex.
  • Never Share Wallet Details: Scammers are prevalent in the cryptocurrency space, especially on social media. Never share your wallet details with anyone; even the provider. Scammers will often impersonate customer support teams in an attempt to obtain this information. Providing it will result in your cryptocurrencies being stolen.
  • Avoid Using Public WiFi: Another way for hackers to steal cryptocurrencies is by intercepting public WiFi networks. We’d strongly advise against using public WiFi when logging into exchange accounts or accessing wallets. It’s best to do this at home, or via a 4G/5G connection. Even better, use a VPN for added security, such as NordVPN or ExpressVPN.

The Verdict

This comprehensive guide on crypto investing for beginners has covered everything there is to know. This exciting investment arena continues to outperform traditional financial markets, with unprecedented growth seen since Bitcoin’s launch in 2009.

However, it’s also a risky industry, so avoid investing more than you can afford to lose. Using a regulated cryptocurrency exchange is also important. This is why eToro is the standout provider, considering its approval and regulation from the FCA.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more

FAQs

Is it legal to invest in cryptocurrency in the UK?

How much should you invest in cryptocurrency as a beginner?

How do beginners invest in cryptocurrency in the UK?

What is the safest way to invest in cryptocurrency in the UK?

How many cryptocurrencies are there, and what are they worth?

Can the government track your cryptocurrencies?

How do I convert crypto to cash UK?

References 

  1. Today’s Cryptocurrency Prices by Market Cap (CoinMarketCap)
  2. What are Cryptocurrencies and What Should I Know Before I Invest? (FSCS)
  3. Crypto Token SafeMoon Founders Spent Investor Cash on Sports Cars, US Claims (Bloomberg)
  4. Capital Gains Tax: what you pay it on, rates and allowances (UK Government)
  5. Cryptoverse: Every frog has its day as pepe pops 7,000% (Reuters)

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Kane Pepi
Crypto Expert

Kane Pepi is a financial and cryptocurrency writer who has written over 2,000 articles, tutorials, and market analyses. Kane's expertise in specialized domains such as asset appraisal and analysis, portfolio management, and financial crime prevention has earned him a reputation for providing succinct explanations of difficult financial subjects. He holds a Bachelor of Science in Finance, a Master of Science in Financial Crime, and is currently working on his Doctorate degree, which will focus on the challenges of money laundering in the cryptocurrency and blockchain technology industries. Kane's wealth of industry experience make him a valuable resource for traders and…

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