Bitcoin Experiment

After reading an excellent article about Bitcoin in the London Review of Books, I have become interested in cryptocurrencies.  In order to learn more I decided I needed to get some practical experience, so I bought some Bitcoin.  Here are my experiences and observations, which I hope will save you some time and energy if you are looking to buy a small amount of Bitcoin from the UK.

TL;DR

If you want to get your feet wet with Bitcoin from the UK, use Circle to buy up to £200 a week worth of Bitcoin.

Registration woes

Buying Bitcoin proved to be quite complicated, partially due to banking requirements known as AML/KYC (Anti Money Laundering/Know Your Customer) which means setting up an account with a bitcoin exchange can be quite arduous.  They all require proving your identity, and different exchanges take this to different levels. This can mean you will have to wait up to a week before you can buy any bitcoin.  Even more frustrating is other costs and delays aren’t always apparent until after you have completed the registration process.  You can waste an awful lot of time going through a registration process only to find the exchange isn’t worth using in your circumstances.

Transfer fee woes

When buying a small amount of Bitcoin, you don’t want to lose much in fees when you buy them.  This can occur in a couple of places.  The exchanges may charge transaction fees – usually a small percentage of the transaction value.  In many cases this may not be a problem, since those Exchanges may offer a better exchange rate – depending on your volume this difference may more than make up for a fee.  Do your maths!

A bigger obstacle is that a number of exchanges no longer operate UK based bank accounts and don’t accept debit cards in GBP.  This means using international bank transfers.  Even within Europe this is going to mean your bank charges you for SWIFT or SEPA transfers – Nationwide charge £20 for this.  So buying £100 of Bitcoin this way is going to cost you £120.

If you are buying a small amount of bitcoin avoid exhanges that don’t accept credit cards.

Bitcoin exchange rates

The website bittybot.co gives relatively up to date rates for most exchanges and marketplaces, as well as other information including which places accept UK bank transfers or credit cards.

Summary

The following table summarises my experience with different exchanges.

Exchange Registration difficulty Transfer fees Transaction fees
Kraken Straightforward – upload scan of ID and proof of address  SEPA or SWIFT transfer only  Yes
ANX Lengthy.  Registration isn’t too bad, but they send a code by mail to confirm address which means up to a week before you can buy. SEPA or SWIFT transfer only, and conversion to CAD or HKD  Yes
Uphold  Relatively straightforward – accept upload of scans or photos of ID documents. SEPA or SWIFT transfer, or credit/debit card with 2.75% fee
Solidi Currently in Beta, so you have to get accepted into the Beta before you can register.  On acceptance simple upload of scanned ID and address docs gets you verified.  No fee  No fee
Circle Very simple upload of scans/photos of ID docs gets you verified in a single session.  UK credit/debit card accepted with no fee  No fee
Coinbase Horrible – they use a video system based in Germany where you video chat with someone who may not speak English who tries to take a clear photo of your passport via a webcam – this failed every time for me, till I gave up.  Their Android app can be used to take a photo of your drivers license, which is better, but you need to disable any screen dimming apps like Twilight for the app to work. However, after going through this it turned out they don’t allow bitcoin purchase from the UK – frustrating!  3% fee for credit or debit card, but unclear if you can use UK debit or credit cards.  Their app says you can’t.

I ended up using Circle for buying my bitcoin.  The registration process was simple and quick, they accept account top-up via UK debit card with no fees from them or my bank up to a limit of £200 per week.

I’m sure there are reasons to use any of the other exchanges listed above – but for experimenting with small amounts of Bitcoin Circle is the one I would recommend.  At some point I may do the maths and figure out what is the most cost effective way to buy Bitcoin for different spending levels.