Last updated: 16th December 2014
So, you've heard all about the advantages of this amazing new financial technology called bitcoin, but how do you go about buying it in the British Isles?
While bitcoin makes sending payments between countries – or even continents – quick, cheap and easy, traditional banking systems have yet catch up. As a result, users buying bitcoin through a bank account report frustration with complex procedures, delays while funds arrive and high fees for international transfers.
Credit and debit cards will often incur charges too, and not all companies will accept them due to the risk of fraudulent chargebacks.
As a result, if you're not paying with cash at a bitcoin ATM or from an individual at a meetup, buying bitcoin is best done by fast and free domestic bank transfer – if you can find a bitcoin business offering that option, that is.
The banking issue
The problem is, British banks are reluctant to service bitcoin companies so many exchanges are having to bank elsewhere in the EU. In these cases, you'll have to put up with charges on international transfers like SEPA and often wait 2–5 days for your funds to arrive.
The British government has made some noises about turning the country into a cryptocurrency-friendly environment. However, as it stands, a UK exchange providing SEPA bank transfers offers few advantages over any exchange in the EU – apart from being able to deposit in GBP, perhaps.
However, new banking partnerships are being forged that allow bitcoin exchanges add local deposit options for UK customers.
A note on price
Bitcoin is notoriously volatile – that is, the value can climb and drop significantly over short timeframes.
As a result, bitcoin buyers would do well to keep an eye on the price charts in order to make, hopefully, a timely purchase when the value is low. Indeed, many people earn money trading bitcoin, making the most of its volatility.
CoinDesk's guide to understanding price charts can be found here.
All that aside, for would-be owners of the digital currency, where can you buy bitcoin in the UK?
First things first, you'll need to register and provide proof of residency (a copy of recent utility bill) and identity (a photo ID scan) for anti-money laundering (AML)/know-your-customer (KYC) compliance procedures before you can use the platform's services.
Once that's done, you'll need to set up a bank payment using the details provided by the exchange, at which point you can fund your account and buy some bitcoin.
Note that it's worth avoiding using the word 'bitcoin' in the payment reference too. While this may sound odd, jittery banks have been known to balk at anything to do with the digital currency, even closing some accounts in the past.
Bitcoin exchanges in the British Isles:
A London-based bitcoin exchange with an emphasis on security, claiming 100% multi-signature cold (offline) storage for all its bitcoin holdings. Notably, Coinfloor is an HMRC-approved bureau de change. Currently, sterling deposits can be made only via SEPA bank transfer. Charges £5 to deposit GBP and £10 to withdraw. Fees for other currencies can be found here.
An Isle of Man-based exchange that is something between a full exchange and a peer-to-peer (p2p) marketplace. Users deposit funds in a CoinCorner account and then buy and sell bitcoin, litecoin and dogecoin with other users. The exchange started accepting 3D Secure-enabled Visa and MasterCard credit and debit cards on 23rd October. Otherwise, fiat currency deposits are made via SEPA bank transfer. No fees are charged on deposits, but there is a £10 fee for GBP withdrawals.
The exchange recently introduced a mobile wallet app for iOS and Android devices.
A new London-based exchange. Users can buy, sell and trade with bitcoin, litecoin and dogecoin. Deposits can be made in cryptocurrencies or euros and British pounds by bank transfer. Charges £3 to withdraw GBP and €3 to withdraw euros.
Other exchanges to consider:
Although based in the US, Kraken recently partnered with a bank in Luxembourg to bring customers the option to deposit in pounds sterling, while dollars and euros are also accepted. Deposits are made via SEPA or wire transfer.
Safello is a European bitcoin exchange that offers multiple payment options in a variety of currencies including GBP. Safello has a banking partnership that has seen it add local deposit options for UK customers, including UK Faster Payments.
Circle is also US-based and currently only offers bank transfers from that country. However, the company caters to the global bitcoin market by allowing users to pay with debit or credit cards.
For other options, see our general guide to buying bitcoin.
These are peer-to-peer platforms that match individuals who wish to buy, sell or trade bitcoin and altcoins. They do not buy, sell or necessarily even hold cryptocurrencies themselves, unless as part of an escrow service.
Provides a peer-to-peer platform for individuals to buy, sell or trade bitcoin and 11 altcoins such as dogecoin, litecoin and feathercoins. Payments can be made via SEPA bank transfer or Visa/MasterCard, provided the card is 3D Secure enabled.
Facilitates purchases of bitcoin and litecoin between individuals. A number of domestic banking transfer options are available, including: standard UK bank transfers, Barclays Pingit mobile payments, RBS Pay Your Contact, and Paym mobile payments (this is possible because transactions are between individuals and do not involve a bitcoin company). Fees are only charged on 'extras' like SMS messages.
Matches bitcoin buyers and sellers to facilitate over-the-counter deals, offering an escrow service to protect the buyer. Users are charged small fees for wallet use and bitcoin transfers only.
A price comparison website that is updated every five minutes to show online traders from UK bitcoin merchants and marketplaces. Displays information such as the rating of the buyers and sellers, and the payment types accepted.
All these machines allow you to insert cash and receive bitcoin in your digital wallet (buying BTC). Some models also let you send bitcoin and take out cash (selling BTC).
Visit CoinDesk's up-to-date map of the world's bitcoin ATMs here to find the installation nearest you.
If you're in London, New Goulston Street to be precise, Azteco offers a unique service selling bitcoin vouchers over the counter.
The customer decides how much bitcoin they want to buy and hand the attendant cash. The attendant then prints out a voucher containing a code that can be redeemed at the Azteco website. A 3% commission is charged on each transaction.