by Jamie Holmes
With Bitcoin’s popularity rising amidst mainstream media coverage, those new to the cryptocurrency scene have little knowledge of how to acquire and sell this digital asset. In an attempt to help newcomers to the ecosystem, BTCManager has prepared this guide outlining the choices you have when buying or selling bitcoin.
First, you will need a bitcoin wallet, whether it be hardware wallet like Trezor or KeepKey or one you can install on your desktop, mobile, or tablet such as Jaxx or Mycelium. Your bitcoin address will be a long string of numbers and letters, with a QR code associated with it. Once you have your wallet, then you can start to purchase bitcoin.
Exchanges, BTM’s or Peer-to-Peer Markets?
There are three way you can do this.
Firstly, you can use bitcoin exchanges. This is a cheap method but can be slow depending on how much you want to buy. Making bank transfers to put fiat currency, such as GBP or EUR on the exchange can take up to 12 business days, meaning you could miss out on a great buying opportunity for bitcoin. The advantages of using an exchange are great prices and you can buy a lot once you are verified.
Secondly, you can use Bitcoin Teller Machines (BTM), which may be quicker than using an exchange but will be more expensive. This method also involves costs of travelling and the BTM may be located far away, but if you live in a major city, there is a good chance one is nearby. However, there may be issues with liquidity and find out that there is not enough cash/bitcoin to be dispensed, so it is only recommended for small buys.
Thirdly, those interested in buying bitcoin can turn to the peer to peer market. LocalBitcoins.com serves both the UK and EU, where you must sign up, register and you can choose which bitcoin traders you want to buy from. Although this option can be quicker than buying from an exchange, prices are generally quite high but at least you will have a variety of sellers to choose from. Another website where you can quickly buy bitcoin in the UK is Bittylicious, making buying the cryptocurrency with bank transfers easy.
How to Buy and Sell Bitcoin Using an Exchange
In this guide, we will highlight how to buy bitcoin for individuals located in the UK and EU from one of the most reputable European exchanges, Kraken. Exchanges are the cheapest method to buy bitcoin and the most efficient; if you want bitcoin at a certain price without having to be glued to a computer screen, run to the nearest ATM or haggle with a bitcoin seller, buying via exchanges is the only option.
Kraken and Bitstamp are the most relevant exchanges in Europe. Kraken offers bitcoin, denoted XBT on the exchange, paired against Euro and the British Pound, as well as some other cryptocurrencies, such as monero and ether.
First, you must create a Kraken account. Depending on how much bitcoin you want to buy or sell, you may need to verify yourself and the image below shows the different limits. Proof of identity and proof of address are required to unlock the maximum tier that should suffice for most people.
Next, to buy bitcoin, you must deposit EUR or GBP onto Kraken’s platform. To do this, we choose the ‘Funding’ tab on the main page and then click on Deposit. Then we select either GBP or EUR deposit and then you can choose SEPA or Wire Transfer. Once this has been done, the details for the payments including IBAN number, Reference code and Bank name will be displayed. You must make a bank transfer with these details and wait for clearance. Once this has been completed, usually after five business days, your funds will be available on the Kraken platform.
Once you have GBP or EUR on the Kraken platform, you can now proceed to buy bitcoin. Click on the ‘Trade’ tab. If you have deposited euros, you must choose the XBT-EUR trading pair. If you deposited pounds, then you must choose the XBT-GBP trading pair.
Afer clicking on the ‘Trade’ tab, click on ‘New Order’. Now you have a choice; you can either buy at the market rate, i.e. the best available price at that moment or you can set a limit buy order, that will automatically execute your order at your desired price. For example, the screenshots below shows at present to buy 0.8 bitcoin at market, it will cost £576.107 but if a limit buy order is set at £650.00 for 0.8 bitcoin, it will only cost £520.00. Please note that a buy limit order will only execute once the price hits or is below your desired level.
At BTCManager, we analyse cryptocurrency markets and will often bring into focus key support or resistance levels where people are suggested to buy and sell bitcoin. So keep an eye out for our bitcoin price analysis and our commentary on the markets, as our price targets will serve as good limit buy or sell orders.
So you can buy immediately with the market order, at which you will trade GBP/EUR almost instantly for bitcoin. Or if you think the price may go lower or are not in a rush, then you can set a limit order below the current price to buy bitcoin.
Once you have bought bitcoin from an exchange such as Kraken, it is not a good idea to keep the bitcoin stored there. Exchanges get hacked and your funds will be at risk. That is why you need a bitcoin wallet and why this is the first step you take.
Now you’ve bought bitcoin on an exchange, you will need to withdraw your bitcoin. Again, return to the ‘Funding’ tab and click on ‘Withdrawals’ and then on ‘Bitcoin (XBT)’. To withdraw your bitcoin, you must add your bitcoin address, which is the address shown on your mobile, tablet or desktop wallet that you have installed in the very beginning. Once you have saved your address, you can then proceed to withdraw and after about an hour, the funds should appear in your bitcoin wallet.
Now your bitcoin are safely off an exchange, the best thing to do now is to backup your funds so in the event you lose your phone, or wallet malfunctions, you can use the 12 word password to restore your wallet and access your funds.
To sell bitcoin on an exchange, first go to the ‘Funding’ page and select ‘Deposits’ and then ‘Bitcoin (XBT)’. Once you have sent bitcoin to Kraken’s wallet, you will be able to sell your bitcoin for GBP or EUR.
Once the transaction has been confirmed, you will see the bitcoin balance on the main page of Kraken. Head to the ‘Trade’ tab and select ‘New Order’.
Again, when selling, we have a choice; do you want to sell at market prices or with a limit sell order? If you want to sell at the current price and do not have time to wait, then sell via a market order will automatically sell your bitcoin for EUR or GBP and you will be credited with EUR/GBP on your Kraken account. Alternatively, you can set a price at which you are comfortable selling with a limit sell order and wait for the market to reach this level. If the market reaches your desired price, the sell order will execute automatically.
Once you have GBP or EUR on the Kraken platform, the next step is to withdraw your money to to your bank account. Again, the process may be slow but with exchanges, you are getting the best price for your bitcoin. Go to the ‘Funding’ tab, click on ‘Withdrawals’ and then click on ‘Euro (EUR)’ or ‘British Pound (GBP)’.
Here, you must set up your bank account details and ensure you have verified yourself if you want to withdraw a large amount. Once this is done, you will be able to withdraw GBP or EUR to your bank account.
Don’t Have A Bank Account or Can’t Wait Around?
While exchanges involve lengthy banking checks and processes, another way to acquire bitcoin with cash is through BTM’s. If you want to buy more than £1,000, verification will be required. The map below shows 192 locations where individuals can buy bitcoin from BTM’s throughout Europe and Coinatmradar will allow you to locate these BTM’s.
However, be warned some BTM’s are buy only while some also support the selling of bitcoin for cash. However, a downside is that the prices can be quite expensive compared to the buying from an exchange such as Kraken. The advantage is that is should be a lot quicker.
Peer to peer marketplaces such as LocalBitcoins.com can also enable cash transactions for bitcoin but it is generally difficult to buy small amounts of bitcoin (less than £50) through these marketplaces. In this case, BTM’s would be a more attractive option. However, if you are looking to buy large amounts, then peer to peer marketplaces will be more ideal, as BTM’s are prone to running out of cash/bitcoin.
Now you can use this guide to buy/sell bitcoin. If you have any questions, please feel free to comment below.