The more you know, the better, so it is a good idea to familiarise yourself with selling bitcoin before you do anything risky. Understanding every part of the process, from the initial investment to the moment you sell bitcoin for the first time, will help you immensely.

But how do you actually sell bitcoin in the UK, and what kind of steps should you take to make sure that you are selling cryptocurrency correctly?

Getting Started with Selling Bitcoin

So, you want to sell bitcoin. Maybe you earned it from somebody else or bought some to play around with. No matter how much you know about bitcoin, it is important to understand how you can sell it - and which options are actually worth using over others.

There are multiple ways to sell cryptocurrency, but not all of them are equal, and some are much riskier than others. Even choosing the right platforms to sell your digital currency on can make a huge difference to how you actually sell it and how much you make.

Selling Bitcoin

It is important to understand that you do not just sell bitcoin to a vague void. When you sell bitcoin, somebody else is buying it - the same goes for trying to sell cryptocurrency of any type. Most crypto has a growing cap on how many coins can exist at once, and once those are all minted, there will not be any more in circulation.

Cryptocurrency can be bought and sold either for fiat currency (regular money) or other digital currencies. A crypto-to-crypto exchange is possible, as is deciding to sell bitcoin in return for fiat currency.

Sale Platforms

There are two main ways to sell bitcoin: either on an exchange platform or without an exchange. The most reliable option is using a cryptocurrency exchange, which is why we will focus on it so much here.

What is a Cryptocurrency Exchange?

Cryptocurrency exchanges are digital marketplace platforms where you can buy, sell and trade digital currency. If you want to sell bitcoin, then you will mostly be doing it through a cryptocurrency exchange.

These platforms are safer, simpler, and more convenient than trying to arrange one-to-one trades with strangers. Being able to sell bitcoin for fiat currency and turn fiat currency into more bitcoin means that you can also choose when to withdraw or keep your crypto stored for later.

These are trading sites, investment platforms, and even a place for crypto hobbyists to keep track of how well their bitcoin investment is doing. Since exchanges host a range of digital currency types, they can also buy and sell different crypto types - or even trade one for another.

All cryptocurrency exchanges are different, however. Most of them are distinct platforms that are completely different from other exchanges, offering their own unique designs and features that make them better for particular things than others.

This means that choosing the right crypto exchange is important. Selling BTC is easy on any exchange, but you want one that will let you sell crypto on your own terms. This could mean having a low withdrawal fee, a specific payment method, a built-in cryptocurrency wallet, or even just a specific legal status.

How to Choose a Cryptocurrency Exchange

Finding the right cryptocurrency exchanges for your needs means understanding how you actually want to sell bitcoin. Knowing how to sell bitcoin in UK territories is easy, but there are a lot of other factors that go into any kind of crypto sale.

For example, do you want your bank account connected to the platform? Do you want to use a bank transfer as your payment method? How often do you plan to sell crypto? Are you going to use an external wallet? Would you rather have a free account or a paid service that keeps spam accounts and bots at bay?

What makes a good cryptocurrency exchange?

Security

The more secure your money is, the better, and this goes for digital currency as well. A private wallet and a high level of malware protection help a lot, and these are both things that only good exchanges will provide.

Cryptocurrency is not backed by any major financial institutions, and it is not covered by insurance most of the time. The UK Financial Conduct Authority will not cover it, nor will the UK Financial Ombudsman Service - when you trade cryptocurrency, you do so at your own risk.

One of the best pieces of investment advice you can ever follow is to keep your assets safe. Taking a risk on a platform that you do not trust can sometimes go badly, and you need to be aware of the potential risks involved - as well as the ways that you can protect yourself, your assets and your bank details.

UK customers want security. Cryptocurrency sales need to be safe, and bank transfers need to not give your UK bank account details to strangers. A secure crypto exchange is the best place to turn - although focusing on improving your own security measures helps a lot too.

Fees

If you want to sell bitcoins UK-wide, then it is important to consider fees. A lot of these platforms can have fees attached to specific actions, like choosing to sell bitcoin in certain ways or going through with fiat currency withdrawals. These change the way that you engage with the site.

For example, a high fee on withdrawing fiat currencies means that you will not withdraw GBP to your preferred withdrawal method as often. When you do, you will withdraw funds to your GBP wallet in bulk. This alters how your bank account fits in with your regular trading activities.

The same goes for trading fees. High trading fees on each specific trade mean that you will buy and sell bitcoin in larger bulk amounts, preferring single trades with a lot of bitcoin to many smaller bitcoin trades. Lower fees mean that you spend less, which is better in almost all cases.

Keeping fees in mind matters a lot, especially withdrawal fees. If you buy Bitcoin to try and turn a profit, you do not want your fees to counteract the profit that you would have made. On the other hand, sites with no fees may have to turn to other sources of funding, which can beam invasive ads and intrusive promotions for other services that get in the way of your trading.

Accessibility

Not all platforms are going to be accessible to everybody. Some are restricted to certain countries, and others might even be meant for specific parts of the United Kingdom (although this is very rare).

Even more important is the fact that many platforms are designed for specific audiences. Some exchanges are meant for experienced traders, so they will be built around the idea that all users understand the deeper parts of investing in crypto. As a first-time seller, this is one of the worst places you can turn.

Not only can these really complex platforms be hard to navigate, but they often do not contain as much useful information for people just starting out. It also takes time to learn all of the added features and figure out how the market data works, and even then, you might still struggle with the basics.

A beginner trading platform is going to be a lot more restricted, but this can sometimes be a good place to try for absolute beginners. Ideally, you want something simple but versatile, a place that you can explore at your own pace and still trade without issues.

Crypto Variety

Not all exchanges are identical in terms of the crypto types they offer. Some only have a small number of cryptocurrency options, usually the more popular ones - this means that cryptocurrency sales can only happen using those currencies. Even if your crypto wallet has other coins inside it, you can't use them.

This means that popular coins like bitcoin are quite easy to trade since most sites and platforms will provide them. Even so, you might not want to commit to a platform that only has the bare minimum of coin options available.

The more coin types a platform can provide, the more you can experiment with trading different crypto options later. Retail investor accounts - individual investors using their own money - often prefer having more variety to let them adapt to the changes in the market and transfer funds to the coins that seem to be rising in value.

Even if you are just trading crypto for fun, this can be important. More variety gives you more options to play with, and some of those options might unexpectedly rise in value. Even if they do not, many coins have functions beyond trading, providing access to specific features on the blockchain or assisting with research in certain fields.

Storage

One of the biggest mistakes you can make when buying bitcoin is not protecting your own investment. The best way to do this, naturally, is to avoid storing them in places where they can be vulnerable - you do not want your money in publicly-available "digital bitcoin ATMs" that could be cracked open and emptied.

Storing your money in your own wallet can be a better idea than using the default wallets offered by some platforms, but sometimes using their wallets is just as safe. However, even so, it is a good idea to turn towards external wallets when possible.

More importantly, it is not a bad idea to prepare a "cold" hardware wallet, something that you can disconnect from the Internet. This means that you can store your crypto in a completely safe place until you need it, keeping it physically contained in a drive or USB stick.

However, if you choose to store your crypto, it is important to make sure that it is an option. Some platforms restrict you from moving your crypto to any other platform, something that can be incredibly risky given that you would have to withdraw to a UK bank account to do anything with the crypto's value.

If you select bitcoin platforms that require you to use their own wallet and no other wallet options, be prepared for the consequences. This might all be fine, but if something goes wrong - like a hacker attack or malware spreading through the site - it can be hard to set up card withdrawals in time to save your coins.

Information

A large part of trading cryptocurrency is getting information. There is no point in selling BTC if you do not know its value, and if you want to sell something, there should be a way to tell how much it is worth without having to use outside sources.

This means looking at the platforms to see what details they can actually offer. Understanding the UK market for bitcoin is vital if you want to sell bitcoin/BTC properly, and just having an account dashboard is not always enough to help you understand the exchange rate that you are working with.

An exchange is a service provider. If they can't provide the information you need to trade bitcoin at market price or sell crypto correctly, then you would have to rely on other platforms. At that point, you might as well try a different exchange anyway.

This becomes even more important with specific trading strategies, such as trading pairs. Trading pairs require in-depth knowledge of uptrends and downtrends in market price, and trading pairs will not work if you can't see how much you are going to sell BTC for.

Selling Your Bitcoin  

Hopefully, you know how to choose a platform that you can trust. Actually, selling your bitcoin is much easier, but you need to actually get established on a platform first - mostly by setting up all relevant account and payment information.

Here is a step-by-step guide on how to sell bitcoin - from the moment you decide to sell it to the moment you make your first proper trade.

Choose Your Platform

Make sure you know which exchange you want to use before you do anything else. This is the most important part of getting set up since the exchange you choose will directly impact everything else about the sales and trades that you make.

Sign Up

Get onto the platform itself and create an account, following the process in whatever way the site explains it. Remember that most platforms run on different software, so they are not all going to have the same account systems.

Be sure to keep usernames and passwords secure. Being careless with these details now can easily cause problems later if somebody manages to break into your account.

Get Verified

Exchanges require verification from new users who are just signing up. Until you get verified, you will not be able to access a lot of the platform's features. This is sometimes known as the KYC process or the Know Your Customer process.

Verification requires proving your identity, usually through a passport, utility bill or driver's license. Make sure you have documents like this on hand to get through the process quickly since it can take a while.

The KYC process is fairly straightforward, but it can take a while depending on the exact methods you are using to complete it. It might take a few days for verification, sometimes longer depending on the platform - but in most cases, it is very quick, near to an hour at most.

Set Up Your Payment Method Options

Get your bank account info or payment details ready to connect them to the platform. You might not have to connect them permanently, but you will still need to use your bank account (or a similar method) to use your cash balance to buy bitcoin.

If you do not already have an external wallet, be sure to set one up. The platform may provide one, but it never hurts to transfer crypto to an outside wallet for safekeeping.

There is not a single "best" payment option to use, so it all depends on personal preference. Some people like a direct bank transfer from their bank account, while others will want to send it through their debit card. More still might have particular online payment platforms that they like to use.

At the very least, all platforms should support bank transfer funds and debit card payments. Other options depend on the website and platform, so make sure you know what your options are ahead of time.

Begin Trading

Buying Bitcoin is often as simple as using the platform, going to the bitcoin section or page, and then choosing to trade directly. You can deposit BTC straight into your account on the platform and start selling it right away.

This also allows you to buy bitcoin as a crypto asset in seconds - minutes at most, depending on delays.

How you decide to trade is up to you. Feel free to explore your options and figure out your preferred methods of trading your bitcoin - once you deposit bitcoin. You can choose to just sell it normally or wait for a while to see if the value improves.

There are a lot of advanced trading strategies, such as trading CFDs or trading pair strategies, that most people will not focus on too much. If you know about the trading pair strategy and want to use it, then you can, but it is never a necessity.

FAQs

Should I use direct bank account transfers to buy and sell bitcoin?

A bank transfer is a perfectly valid way of buying bitcoin and works well as a preferred payment method. Using a debit card can be a nice way to retain some privacy while effectively still paying straight from your bank.

It is also one of the most reliable withdrawal methods since all platforms should - in theory - support it.

Which withdrawal methods are the best for bitcoin profits?

The money you earn from selling bitcoin is the same as any other online funds, meaning that it is all handled in the same way. You can withdraw it in whatever way you are most comfortable using. Keep in mind that there can be extra fees on certain methods, as well as extra delays. Sometimes it might be worth using one withdrawal option over another just for the time and money you will save.

Should I trade outside of an exchange?

Exchanges are like central market hubs, but they are not the only place you can trade. They are just the safest and most reliable option.

Trading bitcoin outside of an exchange requires somebody's BTC address - the buyer's BTC address, usually. However, while exchange trades do not get government protection, off-exchange trades do not even get normal protection.

Unless you know and trust the person, avoid trading outside of an exchange. It can be risky, and you are more likely just going to end up scammed or not getting the right amount of money for what you were offered.

Is Bitcoin subject to capital gains tax?

Bitcoin is an asset, meaning that you pay capital gains tax on it in the same way that you would any other asset. All of the same rules still apply.

Be sure to include bitcoin on tax documents. While it might not be a regular currency, it is still an asset, and that means that it has to be properly logged at the right value for each trade or sale.

The money you make from selling bitcoin is considered as money made from selling an asset, so that needs to be recorded, too. The idea that bitcoin gets around tax is a myth.

What is OTC trading?

The OTC desk (over-the-counter desk) is a system that handles trades that are not possible on exchanges. This is mostly to avoid price disruption in the public exchange market.

For example, the OTC desk might be useful for somebody who is making a specific deal, such as trading bitcoin for a physical asset. Posting this on the exchange would shift the value and disrupt the market, so relying on outside trades can be the smarter choice.