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Cryptocurrency Trading

Which is the best cryptocurrency trading platform to buy and sell crypto in the UK? Our seasoned traders have, in January 2023, tried out all the major platforms for the best crypto exchange in the UK and we’ll give you all the answers. Also in this article, how does cryptocurrency trading work? Where can I buy and sell cryptocurrency? How do I trade cryptocurrency for cash? And how will cryptocurrencies and their unique features revolutionize the ways we exchange value and minimize trust?

The 2022 crypto winter saw aggressive declines in the price of all of the major cryptocurrencies, altcoins and meme coins. This has done little, however, to put off the retail trader and investor, with interest amongst the amateur and semi-professional trading communities still very much at elevated levels. In addition, the institutional world is slowly embracing the world of decentralized finance, cryptocurrency trading and investing. This means there should be many opportunities going into 2023 for profitable trading in cryptocurrencies.

Given the collapse of many cryptocurrency exchanges and companies in 2022, it is all the more important that traders and investors in this extremely volatile world of crypto exchange space and blockchain technology should be all the more vigilant about which broker to choose. That is why reading our reviews below is all the more important!

The 4 best cryptocurrency trading platforms in the UK are:

1. eToro Cryptocurrency Trading Platform
2. PrimeXBT Cryptocurrency Trading Platform
3. BlackBull Markets Cryptocurrency Trading Platform
4. CoinMama Cryptocurrency Trading Platform

Best Cryptocurrency Trading Platforms in the UK

Here you have the answer to where you, as a UK trader, can exchange and can trade cryptocurrency. The following crypto exchanges are solid trade and exchange brokers, that can be trusted and offer trading in both bitcoins and other major cryptocurrencies such as Ethereum and Litecoin. Take into account the quick facts of each crypto exchange trade broker in the top list and then read a more in-depth trade review of the exchange broker and trading platform by clicking on the “read review” link:

Best Trading Platform	Pros	Features
Founded: 2018 HQ: St. Vin... more 4.9/5 98/100	- Accepts Bitcoin payments - Available across the globe - Trade all Cryptocurrencies Regulated By: SVGFSA (Saint Vincent), ASIC	Min. Deposit: 0.001 BTC Pairs Offered: 50+ Withdrawal Process Time: Once a day, between 12:00 and 14:00 UTC Trust Score: 98/100	Read PrimeXBT Review Free Demo Sign Up
Founded: 2014 HQ: New Zea... more 4.5/5 90/100	Regulated By: FMA, FSA	Min. Deposit: $0 Pairs Offered: 300+ Withdrawal Process Time: Within 24hrs Trust Score: 90/100	Read BlackBull Markets Review Free Demo Sign Up
Founded: 2013 HQ: Ireland... more 4.8/5 95/100	- Very established cryptobroker - Trade, buy and exchange majority of all cryptocurrencies - Easy to use service - Helps customers recover lost crypto Regulated By:	Min. Deposit: Trust Score: 95/100	Read CoinMama Review Free Demo Sign Up
Founded: 2007 HQ: UK, Cyp... more 5/5 99/100	- Offers 17 Crypto Assets such as Bitcoin, Ethereum, LiteCoin etc. - Largest in cryptocurrency trading. - Market open 24/7 Regulated By: FCA, CySEC, ASIC, FSAS	Min. Deposit: $100(value may vary according to region) Pairs Offered: 47 Trust Score: 99/100	Read eToro Review Free Demo Sign Up 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 minutes to learn more.

How to choose the best cryptocurrency trading platform?

Our first recommendation is that you choose a trading platform that is regulated. You have to feel safe with your investment. The best crypto platforms in the UK are regulated in different jurisdictions as you can see in the top list above.

The second important criteria you should look at is what cryptocurrencies are offered by the exchange commission on the trading platform. And the third and very important criterion is how much it will cost you to trade on that crypto exchange or crypto trading platform and how, in a few minutes, you can withdraw your money from your trading account or crypto exchange account if you want to let go of your investment.

The cryptocurrency trading market

Cryptocurrencies surprised many people in 2015-2017, through the massive price-explosion many of them have gone through. Bitcoin is the first cryptocurrency obviously the foremost exponent of the crypto industry and its price evolution has been the most spectacular thus far, see the ups and downs of Bitcoin below.

High volatility has always been a sort of natural accessory of the cryptocurrency markets, and it, coupled with the unprecedented gains registered by the market as a whole, has turned cryptocurrencies into highly volatile and extremely attractive potential investment vehicles.

Is cryptocurrency trading a hype?

More and more people are interested in purchasing cryptos as an investment and more and more people are worked up about trading various crypto-based investments and financial products. The hype in the crypto space is understandable: while other asset classes yield absolute maximums around the 30% mark per year, with bitcoin and its ilk, we’re talking about growth in the neighborhood of 1,000%. Above and beyond the cries of “bubble” it elicited, this ridiculous accrual of value in crypto assets has caught the attention of hedge fund and mutual fund managers, who now see investing in cryptos as a very attractive way of investing and thus expanding their investment portfolios.

How to buy cryptocurrency?

The most rudimentary form of cryptocurrency trading is about purchasing and holding the digital currencies. Crypto exchanges provide the backdrop for this type of trading, which is essentially just a newer take on the age-old buy-low-and-sell-high angle spot trading. Such investors thrive under extreme volatility and the fact that many crypto exchanges say by nature, that bitcoin is a deflationary currency (there’s a limited number of BTCs that many of the best crypto exchanges say will ever exist), gives them a nice theoretical safety-cushion.

The difference between buying and trading cryptocurrency

Crypto Derivative trading is not available for retail clients in the UK

Based on the above-said, it is hardly a surprise that many crypto exchanges and existing online Forex/CFD markets have already gotten in on the ground-floor of cryptocurrency exchange and trading markets. Though most such crypto exchanges and exchange operators advertise that they support the full exchange and trading of bitcoin, what they offer are in fact bitcoin-based CFDs (Contracts for Difference).

CFDs are financial derivatives, which means that when trading them, traders don’t actually get to own or trade any cryptocurrency. Instead, they work with the difference between the exit- and entry-prices of their trades. With CFDs, the amount by which the underlying asset price goes up (or down) is crucial, as it determines the actual profits (or losses) traders will incur per trade.

Such crypto CFDs are featured by scores of brokers. In fact, the setup of crypto purchases has become a sort of fad among online brokers, and all those who sell and buy cryptocurrencies fancy themselves a cutting edge, have pinned them to their product selection, among other fees, as you can see above in our top list to buy and sell cryptocurrencies.

What is a Cryptocurrency and how does it work?

A cryptocurrency is a virtual/digital cash, payment, and settlement system, that is double spend- and counterfeit-proof. Most cryptocurrencies use a blockchain to achieve double-spend protection. The ones that are decentralized offer several other security features too, such as:

• Trust minimization.
• Censorship resistance.
• Permission-less nature.

How does a Cryptocurrency work?

Cryptocurrencies are virtual currency coins/tokens that people exchange online in a peer-to-peer manner, without an intermediary. The value of a crypto coin is defined by the market. More precisely, by what people are willing to pay for it.

On a deeper level, the value of a cryptocurrency also hinges on its utility. Scalability and transfer speeds are variables in the value equation as well.

Every cryptocurrency resides on a network. This network may be a decentralized or centralized one. In the case of bitcoin, we are talking about decentralization. The more people mine or stake a given cryptocurrency, the more decentralized its network becomes.

That raises the question: what is cryptocurrency mining?

Crypto miners are the backbone of PoW (Proof of Work) cryptocurrency ecosystems, engagin in a vital process called mining. Mining consists of the painstaking churning of data with the help of specialized hardware. In addition to solving complex mathematical problems, miners also verify and add transactions to the blockchain ledger. They transmit and log transactions. They also verify and maintain the ledger. Miners get newly minted coins as a reward for their efforts and the energy they expend through computing power.

PoS (Proof of Stake) networks require participants to keep set amounts of digital coins in special hardware wallets. The Proof of Stake method does not require computing power and it does not use up any energy to that end.

Pros and Cons of Trading Crypto

Pros:

Diversification and Portfolio Expansion

Cryptocurrency trading offers an excellent opportunity for portfolio diversification. Traditional investment assets such as stocks, bonds, and real estate can be complemented by including cryptocurrencies in one’s investment strategy.

Since cryptocurrencies have a low correlation with traditional assets, they can act as a hedge against market volatility, potentially reducing overall portfolio risk. By adding cryptocurrencies to their investment mix, traders can expand their exposure to different sectors and technologies within crypto markets, increasing the potential for long-term growth and diversification benefits.

Accessibility to a Variety of Cryptocurrencies

The cryptocurrency market hosts a vast array of various digital assets, popular coins and digital currencies, each with its unique features and functionalities. Traders can choose from buy cryptocurrency from popular cryptocurrencies like Ethereum (ETH), or explore alternative coins (altcoins) with promising potentials. This variety of popular coins allows traders to align their investments with specific strategies or interests.

Additionally, the ability of active traders to trade fractional amounts of cryptocurrencies enables entry into the market at various price points, accommodating investors with different budget constraints.

Removes Third Parties

Cryptocurrencies eliminate the need for intermediaries, such as banks or payment processors, during transactions. By leveraging blockchain technology, individuals can engage in peer-to-peer transactions without the involvement of centralized authorities. This decentralization empowers individuals with full control over their funds, reduces dependency on third parties, and minimizes associated fees and bureaucratic processes. Removing intermediaries not only streamlines transactions but also enhances financial sovereignty and fosters trust in the system.

Cons:

Volatility and Price Fluctuations

One of the prominent disadvantages of trading cryptocurrency is the inherent volatility of the market. Cryptocurrencies are notorious for experiencing significant price fluctuations within short periods. While volatility can present opportunities for substantial gains, it also poses considerable risks. Sudden price drops can lead to significant losses for traders who are not prepared or lack risk management strategies. The unpredictable nature of the cryptocurrency market requires a high tolerance for risk and careful monitoring of market conditions.

Lack of Regulation and Investor Protection

Cryptocurrencies operate in a relatively unregulated environment compared to traditional financial markets. The absence of comprehensive regulatory frameworks exposes traders to potential risks such as fraud, market manipulation, and security breaches. The lack of investor protection mechanisms, such as deposit insurance or recourse in case of losses, means that traders assume a higher level of risk when participating in cryptocurrency trading. It is essential for traders to conduct thorough research and choose reputable cryptocurrency exchanges and platforms to mitigate these risks.

Lack of Tangible Value and Market Manipulation

Unlike traditional assets such as stocks or commodities, cryptocurrencies often lack tangible value or underlying assets. The value of cryptocurrencies is primarily driven by market sentiment, speculation, and technological developments. This makes cryptocurrencies susceptible to market manipulation and pump-and-dump schemes, where unscrupulous individuals or groups artificially inflate prices, leading to significant losses for unsuspecting traders. Traders must exercise caution and skepticism when making investment decisions and be aware of potential market manipulation tactics.

What Does Trust Minimization/Censorship Resistance Mean?

According to some, bitcoin is trustless. What this means is that A can pay B without the need for a third party to provide trust. According to Nick Szabo, one of the fathers of the cypherpunk movement, bitcoin is trust-minimized. It is as close to being trustless as possible, but it is not completely trustless.

From trust minimization stem some other attractive features. Bitcoin is permission-less. Meaning that it can be transferred from one persons trading account to another, across the globe if needed, without the permission of an active trader, bank account or a third party.

As such, the cryptocurrency is also censorship-resistant. There is no trust-providing intermediary involved in wire transfers, which could censor certain payments. Bitcoin is a lot like cash: as long as A wants to hand it to B, there is nothing anyone can do to prevent the transfer.

Why is Bitcoin the Biggest Cryptocurrency and Why Is it Likely to Retain That Title?

As the first widely-known cryptocurrency, bitcoin enjoys something called “the first-mover advantage”. It has been around for more than ten years now. By simply being around, it has proven its feasibility to some degree. This is more than other cryptocurrencies can boast.

Furthermore, despite being somewhat clunky and cumbersome, bitcoin is not an inflexible contraption. It is programmable money. It enjoys the backing of some of the brightest minds in the industry. Bitcoin can change and incorporate changes necessary for its survival in the future. It could theoretically even adopt a PoS consensus model instead of the currently used PoW, although such a move is not likely.

Given these advanced features, some say it is futile to search for the “better bitcoin”. Bitcoin itself is capable of changing and improving, thus becoming the better version of itself.

The Ups and Downs of Bitcoin

Over its decade-long existence, bitcoin has been a highly volatile digital asset. It went through several boom-and-bust cycles. After each such cycle, however, it managed to hold on to some of its gains.

Interestingly, for many exchanges, these boom-and-bust cycles have coincided with bitcoin’s halving. Every four years or so, the mining reward for bitcoin is cut in half. Currently, miners earn 12.5 bitcoins every 10 minutes in the shape of block rewards. After May 2020, this reward will be just 6.25 bitcoins every 10 minutes.

The increasing scarcity of the digital asset explains these cycles up to a point. Beyond that, human greed and emotions step up and run away with the price.

Analysts have worked out predictions regarding BTC’s post-halving price, based on past data. Such exercises are hardly exact (or reliable), however. They predict massive price gains and another parabolic bull run, sometime after the halving.

Thus far, we have had four such cycles. The latest one, that of January 2021, took the price of one bitcoin to almost $70,000. If you want to trade bitcoin you can use one of the best crypto trading platforms in the UK above. For further reading, you can see our reviews of the overall best trading platforms in the UK here.

What is an Initial Coin Offering (or ICO)?

In the world of cryptocurrencies, an Initial Coin Offering (abbreviated to ICO) is similar to an Initial Public Offering (or IPO) in the world of stocks.

On the supply side of this equation, when looking to raise funds and creating a new crypto coin (or even a service or an app), a company would launch an ICO in order to raise capital. The coin or token could represent a partial ownership, share or stake in the project or company.

On the demand side, to receive the new cryptocurrency token being offered by the company, an investor may be interested in buying the new token at the offering. This could be to buy crypto on a easy to use platform, or sell the coin to purchase crypto, the token itself, or to profit from an increase in value of the coin/token.

In order to take part in an ICO, the investor will often need to purchase a digital currency, to have access to a cryptocurrency exchange and have a full account or cryptocurrency digital wallet.

Generally, most ICOs are unregulated, so if you are a potential investor, you should be cautious in any ICO investment and do your due diligence with your research.

How does an ICO work?

The first step in an ICO is usually for the project creators (the company) to issue a white-paper. This white-paper will often define the following:

• The overall concept of the the project
• The need that the project is looking to meet when completed
• The type of payment that will be accepted
• The length of time the ICO campaign will run for
• The size of the ICO (how much money is required)
• The number of coins/ tokens being retained by the founders

Potential investors then have the opportunity to purchase coins/ tokens during the ICO campaign. At the end of the campaign, given the funds are raised within the specified timeframe, the money raised is used to pursue the goals of the project. If the funds are not fully raised; the funding requirements will not meet the minimum required by the company or project manager or the issuer of user funds, the ICO would be viewed as unsuccessful and the funds would be returned to the investors.

Happy trading!

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