How to Buy Bitcoin – UK Guide
- October 4, 2018
- Posted by: CryptoCoach
- Category: Charities, Corporates, Understanding Bitcoin
A Guide to Buying Bitcoin from the UK
Before We Get Started
If you’re reading this post, I’d venture a guess that you’re interested in buying Bitcoin and possibly some other crypto currencies or digital assets. This post will help you by teaching you how to use a Bitcoin exchange and the steps you need to go through in order to buy your first Bitcoin.
Before we get started I should explain that there are countless ways to buy Bitcoin. To keep things simple this post will explain just one method. We will be buying Bitcoin using a well-known exchange called Bitstamp.
I’ve chosen Bitstamp for this mini-guide for 3 reasons:
- Their interface is simple, clean and easy to use.
- They don’t accept deposits in GBP. There are exchanges that do, which is easier, but this guide is a two for one, it will introduce you to another useful app for converting other fiat currencies instantly as well – very handy!
- I trust them. I have used them for years and they have been one of the best performing exchanges globally.
Finally, before we get started I should explain that I don’t offer financial or investment advice. Bitcoin is famously volatile and if you’re thinking of investing any money into Bitcoin or any other digital asset you should do so cautiously and based on your own thorough independent research.
I do however help people invest in their own knowledge and this guide will give you an understanding of how to use a Bitcoin exchange. Purchasing a trivial amount of Bitcoin to learn how it works and how to use it is an excellent investment of your time and there is plenty to read and learn before anyone starts chucking life savings around!
Step 1: Creating a Bitstamp Account
The first thing you’re going to need to do is head over to Bitstamp and create an account. Bitstamp will send a customer ID and password to your email address.
- If you Googled ‘BitStamp’ make sure you ended up on the right website: bitstamp.net. Sometimes scammers place ads in Google to take you to copycat sites that steal your information.
- Use your correct credentials to create an account. If you want to deposit money to the exchange to buy Bitcoin you will have to go through Know-Your-Customer (KYC) and Anti Money Laundering (AML) procedures – so no nicknames or pseudonyms.
- When you first login you should change your password. Don’t use the same password you have for anything else and make sure it’s secure. You might want to check this guide on how to use and save stronger passwords to improve your security. In future I will write my own guide that compares the various solutions out there and their weaknesses and strengths.
Setting Up Your Bitstamp Account
When you log-in for the first time you are going to be greeted by this message:
These 2 steps are important. You need 2 factor authentication (2FA) to better secure your account and you need to get verified to use Bitstamp’s services.
We will get to these steps next but the first thing you need to do is update your password from the one Bitstamp emailed to you to something new. This way you can be sure that you hold the only copy and it’s not just sitting in plain text in your email inbox. Make sure it’s unique and make sure you store it safely and ideally make a backup! For best practice with passwords you should really use a password manager. There is useful info on this here and it will improve your overall security – a worthy exercise to secure all of your accounts.
Once you have updated your password you can move on to the next step. Verifying your account.
Verify Your Bitstamp Account
Verifying your account provides Bitstamp with the necessary personal documents required to prove you are who you say you are. It allows them to comply with KYC/AML regulations and it’s a necessary step for you to gain access to using the exchange.
This guide assumes you are setting up a personal account rather than a corporate account, so we will select ‘Personal Account Verification’.
You will now be given a verification form to complete. It’s a self-explanatory form that you should be comfortable with. You need to complete it fully.
- Upload high quality images for your ‘ID Dcoument’ and ‘Proof of Residence’ documents. Use a scanner not a phone camera and capture the whole document. Poor quality images may be rejected.
- Verification can take time depending on how many new users are signing up. Typically, it will be around 1 week.
2 Factor Authentication
Next, we are going to setup 2 Factor Authentication on your account. This provides you with an extra layer of security and defence against people gaining access to your Bitstamp account and your Bitcoin!
Using 2FA makes your mobile phone a crucial part of your account security. An attacker would need both your password AND your mobile phone to get into your account.
So to set this up just follow these steps:
- Install Google Authenticator App – Follow this guide for android and this guide for iphone/ipad
- Once you’re up and running with the Google Authenticator app head back to Bitstamp and click ‘enable 2 factor authentication’. You’ll see this screen:
Before you do anything else do take note of the warnings on the screen. That authentication key? It’s your back-up. You might lose your phone, or it might crash. That code will allow you to get back to your verification codes on a new device. Keep it safe somewhere, ideally on a device not connected to the internet.
You can now use your authenticator app to scan the bar-code on the screen and create a verification code. This code refreshes every 30 seconds within your Authenticator app and must be entered whenever you login to your account. It means that you now need your phone AND a password to access the account and this makes you more secure.
Right, your account is all set up, you’re verified, and you’ve added better security to your account. Nice job.
Step 2: How to Deposit EUR to Bitstamp
If you’re from the UK it’s at this point that you’ll likely notice that Bitstamp doesn’t have a BTC/GBP currency pair, only EUR and USD is supported. There are exchanges that do support GBP but I chose this exchange for a reason. It adds an extra step, but it’s a really useful one.
Install the Revolut App
Let me introduce you to Revolut. This is a modern banking app that lets you easily exchange currencies directly on your mobile. It’s a useful app that allows you to exchange GBP into EUR instantly! This video explains it best:
Get yourself a Revolut account and get it setup. It’s nice and straightforward and once you’re done you will be able to convert and transact with multiple world currencies all from your phone, whilst getting the interbank exchange rate. Sweet!
Crucially, you’ll also have a seamless way to fund your Bitstamp account! They have a useful guide here that will help you with setting up your account and getting verified on their platform.
By now, you’ll be able to instantly convert your GBP into EUR in your Revolut account. This means we can deposit Euros to Bitstamp to fund our account and purchase some Bitcoin!
Deposit EUR to your Bitstamp Account with Revolut
Head over to the ‘deposit’ page on your Bitstamp account:
We want to select ‘EU Bank (SEPA)’ as that’s what our Euro based account in Revolut is and the method we are using to make a deposit.
You will now be presented with a simple form to fill out where you provide the details of the deposit you wish to make:
Once you have completed this form Bitstamp will provide you with the payment details you need to enter into Revolut to deposit Euros to your account:
IMPORTANT: Notice the ‘message’ section of this form. You need to include this message with any deposit you make to Bitstamp. It allows them to identify you and credit the transfer to YOUR account. Do not skip this step. I will show you where to enter this message in Revolut below.
Now you have this information you are ready to make a deposit to Bitstamp from your Revolut account. Open up Revolut, head to the ‘payments tab’ and select the ‘Bank Transfer’ button to start setting up the payment. You now want to add BitStamp as a new beneficiary using the details Bitstamp gave to you. You will only have to do this once:
Great. You’ve now added Bitstamp as one of your beneficiaries and you can complete a deposit. Select Bitstamp from your list of beneficiaries and enter how much you want to send!
IMPORTANT: Remember the message I highlighted earlier that Bitstamp provided you with? Don’t forget to include this message in your payment as shown in the screenshot above. It allows them to identify you and credit the transfer to YOUR Bitstamp account. Do not skip this step.
You should expect your deposit to arrive in 1-3 business days and you’ve now successfully funded your Bitstamp account with some Euros.
Step 3: A Quick Look Around Your Bitstamp Account
Finally, you’re all setup, verified and your Bitstamp account is funded with some Euros. It’s been a bit of a process to get to this point but the good news is you have jumped through all the necessary hoops now. What’s more you now have a Revolut account as well which is an incredibly handy thing to have whenever you travel.
Just one last thing before we jump in and start buying some Bitcoin. Let’s take a quick look around the interface to familiarise ourselves with the platform. Don’t worry, we won’t go through all the options, there are quite a lot and the majority won’t be relevant to you yet.
There are however some things that are important to show you now:
Your Bitstamp Account Screen
Your account screen is really useful. First and foremost, it’s where you can see your various balances denominated in various currencies and your overall account value.
It also gives you access to lots of settings on the menu on the left-hand side. Most of these you can look into later, but I want to draw your attention to a few now.
- Security – this is where you can manage your Two Factor Authentication and various other useful settings. I would suggest taking a quick look around. It takes two minutes to familiarise yourself with the settings you can update.
- Settings – this is where, if you choose, you can change things like notification emails. Personally, I leave them all ‘ON’ that way, if someone is using my account when I’m not present I’ll likely get alerts about their activity in my email inbox.
- Support – This is a useful place to head if you ever get stuck. In my experience Bitstamp’s support is excellent.
When you’re logged into Bitstamp you will be shown in the top left hand corner of your screen the currency pair you are currently viewing / trading. As we are using Euros to fund our Bitstamp account we want this set to BTC/EUR.
If it’s set to something else just click to open the currency panel and you can select from a variety of different currency pairs. You will notice that you can also use EUR to buy XRP, Litecoin, Ethereum and Bitcoin Cash (BCH).
For now, let’s just leave it set to BTC/EUR as those are the currencies we want to transact with. You can start exploring other currencies in the future.
Step 4: Buying and Selling Bitcoin
Ok, so let’s finish what we set out to do and make your first purchase of some Bitcoin. Head over to the buy and sell tab. Here you can place an order to buy some Bitcoin.
You’ll notice that there are several options here including:
- Instant Order
- Limit Order
- Market Order
- Stop Order
- Credit Card Purchase
For the sake of this guide and the fact we are just getting to grips with buying Bitcoin we are going to just focus on making a Simple Order. I will cover the other types of orders you can place in another post.
A simple order is just that… simple.
When you place an instant ‘buy’ order Bitstamp executes this for you on their exchange at the best current ‘ask’ price that a seller is willing to accept. If the lowest priced ask isn’t large enough to fill your whole order the exchange will move to the next best ‘ask’ price until your entire order is filled. This means that you may pay slightly different amounts until your order is filled but you achieve the best rates for exchanging your EUR to BTC at this current moment in time.
Conversely, if you have decided to sell some Bitcoin for Euros you can execute an instant ‘sell’ order. This works in the same way, selling your Bitcoin at the best possible bid price until your order is complete.
It’s really that simple. You can now use Bitstamp’s exchange to buy and sell Bitcoin and other currency pairs easily. Pay attention to your account page and the ticker across the top of your account to see how your balances are changing as you exchange between currencies.
Make a purchase and you now officially own some Bitcoin! Not really that complicated at all right?
Step 5: Storing Bitcoin
Well done, if you have made it this far through the guide this is what you’ve learned so far:
- You have created a Bitstamp Account, verified it and improved your security.
- You have enhanced your own personal security generally by starting to use a password manager.
- You have learned about 2FA and protecting online accounts better.
- You have learned how to use Revolut and now have a much simpler and cheaper method for switching between major currencies.
- You have bought your first Bitcoin.
But there are a few more things you should do to finish up and a couple more things to learn. The most important of which is:
DO NOT KEEP YOUR BITCOINS ON AN EXCHANGE!
This is something you should take seriously. A phrase you might hear ‘Bitcoiners’ use often is ‘Be your own Bank’. This is actually pretty good advice. Exchanges have access to a lot of Bitcoin and unfortunately, that makes them attractive honey-pots for hackers so it’s not advisable to store them there. Besides, with Bitcoin it’s easy to be your own custodian.
I’m going to labour this point a little because it’s so important. The main idea behind Bitcoin is it is a decentralised value network that doesn’t rely on 3rd party custodians like banks. By storing your Bitcoin on an exchange, you are reintroducing the need to trust a third party. But this is Bitcoin, it grants sovereignty to its users, so you don’t need a custodian.
You should now start thinking about using Bitstamp’s ‘withdraw’ facility to transfer your Bitcoin to a wallet YOU control.
In the next few posts I will be showing you more detail on how to ‘Be Your Own Bank’. We will discuss the pros and cons of various Bitcoin wallets and explore how to use them. This will enable you to store your Bitcoin in a wallet that you control, will allow you to withdraw your Bitcoin from exchanges and send Bitcoin transactions. To get you started I have already written a piece on how to use Copay’s wallet available on iOS and Android.
There are a few things to consider when using and setting up wallets so I’ll tackle these topics over a series of posts. I will then follow up with further content that will focus on security measures you can take, and other useful guidance.
Please comment if you found this useful and fire over any questions you may have. Stay tuned if you’re interested on going on a bit of a journey with crypto-currencies. I will be releasing lots of content designed to walk you through the world of cryptocurrencies. All of it. It would be great to hear from you if you’re following along.