There are numerous benefits of cryptocurrency, but how can you buy Bitcoin in the UK? The easiest way is through fiat-to-crypto exchanges. But to better understand these exchanges, you will need to know how they work. If you’ve been involved with investing in any form, you may be familiar with the term ‘exchange’ and the concept behind it.
A cryptocurrency exchange is an online platform that allows you to buy and trade cryptocurrency or digital currency, then sell it to convert it back to fiat money. These exchanges will either take a commission or simply charge usage fees for their service.
How to buy Bitcoin UK
If you’re familiar with placing buy and sell orders through stock brokers, you can safely assume cryptocurrency exchanges function in a similar, third-party manner to these brokers. Brokers take your desired cryptocurrency price and order quantity, wait for an order to be completed, and then typically collect a commission on your order.
Similarly, a cryptocurrency exchange is usually programmed to accept your digital buy and sell orders along with price and quantity, waits in a similar manner for your order to be triggered (which is met by a buyer or seller), completes the trade, and then updates your on-exchange holdings, all without human brokers.
A unique aspect of crypto exchanges is that there is the ability available to exchange one cryptocurrency directly with another. This a feature that is not possible when exchanging stocks – you’d have to liquidate your shares to fiat currency before you are able to buy new stock shares. Fiat-to-crypto exchanges can be used to buy Bitcoin in the UK.
Why fiat-to-crypto exchanges are attractive
All cryptocurrency exchanges involve the exchange of some type of fiat currency into cryptocurrency and vice versa. Some are compatible with different fiat currencies and cryptocurrencies, and others vary by language, transaction limits, or fees. Nevertheless, all of these types of exchanges give users one thing: freedom. Because of how accessible crypto exchanges are, they allow anyone with the means to buy crypto to make the change to digital currencies.
Cryptocurrency exchanges make for a simple and easy way to transfer fiat and digital currencies. Users don’t have to worry about the often complicated exchange process. They are the easiest way for crypto holders to sell or buy tokens.
Centralised exchanges allow customers to exchange fiat for crypto using various methods of payment. They also eliminate certain risks involved in the world of cryptocurrencies. Centralised exchanges do this by helping users to recover losses. Certain losses can occur when transferring money. This is because all addresses are hash codes and numbers, meaning people sometimes send money to the wrong address by accident. Since in crypto no banks are involved, it means this transaction is irreversible. However, this is where centralised exchanges come in. They keep a record of all transactions on the blockchain to ensure users and their money are safe.
With this, cryptocurrency immediately becomes more accessible to a wider audience. When people are able to trust a system with their money, they automatically want to jump on the bandwagon. This means more people will have the confidence to invest in cryptocurrencies, knowing they can exchange them back to the original fiat currency. Whether people sell, hold, or buy, they can dabble with cryptocurrency before deciding to make larger investments.
Benefits of crypto exchanges
Crypto exchanges create large pools of demand and supply. The bottom line behind creating Bitcoin was to establish a P2P system for money transfers. These payments would then happen without having any third parties involved. Bitcoin achieved this, but there were still real-world problems that brought around a number of challenges, including acceptance.
If you want to pay for an item of clothing in Bitcoin, the receiving party must be able to and be willing to accept Bitcoin as payment. This is a large problem as not many retailers accept Bitcoin or similar cryptocurrencies as payment. However, exchanges change all of this. They allow users to change their crypto assets over to fiat currencies, which enables them to use their Bitcoin to pay for things.
With this benefit in mind, fiat-to-crypto exchanges have the potential to encourage more people to get involved with cryptocurrencies. They are a convenient and simple way to exchange your digital assets into fiat currencies such as GBP, USD, and EUR, allowing people to use cryptocurrencies daily and allowing them to become more mainstream.