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5 Things to Know Before Buying Cryptocurrency in the UK

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You have finally decided to invest in cryptocurrency. There are many ways to get started, but you should first educate yourself on some things to know before buying cryptocurrency in the UK. Buying crypto in different countries has different regulations so it is important that you educate yourself ahead of investing.

If you want to do this properly, you have to learn about the different types of cryptocurrencies, the best methods to buy cryptocurrency, and the best ways to store it.

You will need to understand tax implications and pay

If you are buying cryptocurrencies like Bitcoin and Ethereum, you should be aware that the tax implications of your transactions are not being regulated. For example, if you buy a cup of coffee with a cryptocurrency, you could be liable for VAT on the entire value of the drink – including the coffee and the cryptocurrency.

If you are holding on to Bitcoin as an investment, it will form part of your overall capital gains for tax purposes. If you are making a profit, you will have to pay tax on it. If, however, the value of your overall Bitcoin holdings falls below the £11,300 threshold, you will not have to pay tax on it.

However, if you have traded your Bitcoin for other currencies, you might have to pay tax on the difference in value. If you are using a cryptocurrency for your business and you are making a profit, you will have to pay corporation tax on that profit.

Having a good understanding of how taxes work can be the difference between making a profit or loss on cryptocurrency investment. In the UK, the government expects people to pay capital gains tax on any profit they make on their investments, so it is important to know how to report your gains and losses.

The UK crypto market is still unregulated

The UK is a hotbed for cryptocurrency. London has become the global hub for cryptocurrency trading and blockchain startups, and in 2017 the value of the bitcoin market in the UK was estimated at over £8 billion.

However, despite the growing size and popularity of the market, the UK is still lacking in regulation. There are still many grey areas when it comes to what is permissible.

The UK government is currently debating whether to regulate the crypto market, which stands at an estimated £500 million.

Sign up for a UK crypto exchange

The UK is home to a number of cryptocurrency exchanges, and every single one of them has a slightly different offering. Before you sign up for a UK cryptocurrency exchange, make sure you know about its fees, security, and supported coins.

Keep in mind that different exchanges will work better depending on what you’re looking for. For example, if you want to buy cryptocurrency in the UK and hold it, you should look for a “wallet-friendly” exchange that charges low fees.

If you’re looking to trade crypto and make money, you should look for a “trading-focused” exchange that has low fees, high liquidity, and a good reputation. Here is how you can start trading with a crypto exchange to start trading cryptocurrency in the UK.

  1. Register for an account with a UK cryptocurrency exchange. There are plenty of exchanges to choose from, but there are some key points you should look out for.
  2. Choose your cryptocurrency and trading pair. Make sure you choose the cryptocurrency you want to invest in. For example, you could choose to invest in Bitcoin (BTC), Ether (ETH) or Litecoin (LTC). Once you have selected your cryptocurrency, you will need to choose your trading pair. For example, you could choose to invest in BTC/GBP.

Diversify your investments

One of the new investors’ biggest mistakes is putting all their eggs in one basket. No matter how high the hype is about a particular cryptocurrency, remember that it’s always a good idea to diversify your investments. Actually, diversification is even more important if you have a limited budget.

It’s critical to spread your investment across different platforms, so if you are planning to buy cryptocurrency, make sure you buy from different exchanges.

Cryptocurrencies are extremely volatile, and there is no guarantee of success. Therefore, it’s important to diversify your investments. The best way to do this is to invest in multiple cryptocurrencies. This way, if one coin tanks, you can offset your losses with another coin that’s doing well.

Stay updated on crypto news in the UK

Blockchain technology is rapidly changing the way we do business and transact money. Cryptocurrencies are the payment method of the future. They are the money of the future. In 2017, Bitcoin went from around $500 to over $20,000 per coin.

The rise of cryptocurrencies has sparked a global virtual money revolution. The UK government has been considering plans to create its own cryptocurrency since 2017, and a number of proposals have been made in the area.

There are also a large number of cryptocurrency users in the country, with some estimates putting the number as high as two million. With the UK being one of the most advanced countries for cryptocurrency, it’s important that you keep up to date on the latest news.

Finance

Crypto’s tipping point

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Chris George, Senior VP of Product at Somo argues that Crypto needs to improve its scalability to be taken seriously

Cryptocurrencies are no longer the exclusive domain of high risk financiers or tech Bitcoin jockeys, willing to ride a niche and volatile asset for good or ill. Today, neobank and mainstream banking apps alike offer crypto banking, helping them trade in Bitcoin or Ethereum from as little as one dollar(https://www.revolut.com/crypto/).

Indeed, in September 2022, Finbold reported that British citizens had invested nearly £32bn in cryptocurrencies, and additional research from HMRC would have it that one in 10 UK adults has bought crypto, double the number from the previous year. 

But even given the legitimacy lent to crypto by the fact that now 50% of UK banks allow customers to interact with these currencies as well as other digital assets, how can the asset management industry turn it into a significant – and mainstream – asset, particularly in today’s turbulent economic climate? With the collapse of FTX, this must be taken into serious consideration. FTX was sold as being a safe and stable way to trade digital currency, alas this has not been the case. It turns out Sam Bankman-Fried seriously over-promised and dramatically under-delivered, gambling away customer assets and ultimately prioritising fraud and malpractice.

First, we need to acknowledge that not all crypto is created equal. Some, such as Bitcoin or Ethereum, do function as a currency, are limited in volume and therefore can increase and (as 2022 amply showed) decrease in value. But other blockchain-based crypto doesn’t behave like what most people commonly accept as currency at all. 

For there to be significant uptake in crypto as an asset, there is going to have to be a far broader and deeper understanding of what it is and what it can do. As Christophe Diserens, chief compliance officer at SwissBorg has suggested: “Value and useability are going to be key. Metcalfe’s Law has been used to value tech and internet stocks so why not crypto?”. That value took a bit of a beating during the recent sell-off and crypto’s perceived volatility will need to be addressed if it is to achieve scale. Because that’s what it’s going to need if it’s ever going to be considered as a legitimate global payment alternative in the future.

 

The role of The Merge

Not the latest B-movie, sci-fi flick, The Merge in September 2022 saw the world’s second-biggest cryptocurrency, Ethereum, move from a ‘proof of work’ to a ‘proof of stake’ protocol. This was nothing short of seismic. 

Proof of work is how the vast majority of crypto has been mined to date. People solving complex equations to validate transactions (the ‘work’) uses masses of computer processing energy, accounting for a significant slice of the world’s electricity consumption. In today’s climate (in both senses of the word), that’s just not on. 

Proof of stake, on the other hand, relies on far fewer ‘miners’, fewer computers and less energy as a result. This so-called ‘Merge’ is not only expected to reduce worldwide energy consumption by 0.2%, but also boost the crypto economy as a whole, creating more opportunities for investors and allow developers to build more products and applications on Ethereum. Ultimately, it could be what drives the decentralised internet of blockchain, crypto and NFT – Web3 – mainstream. 

What does this mean in the ‘real’ world? This could present a real opportunity for the financial services sector as a whole. It will change the way it operates, speeding up transactions, creating new business models and generally just making the whole thing a more efficient way of working. Fully cashless payments for business would be a real boon, given the costs and potential losses involved in transacting in cash. Digitisation also makes transacting an altogether more intuitive experience. 

One thing crypto and its associated technologies and solutions needs to be wary of is becoming a solution in search of a problem. For a truly mainstream breakthrough, the industry needs to make sure it’s bringing the consumer along on the journey. For end users to be truly confident in crypto, it has to benefit from the same levels of governance and regulation that cover the rest of the financial services industry, building and maintaining consumer confidence will be extremely important as trust levels have been shaken by the recent lack of solid administration and “irresponsible lending practices” leading to the FTX implosion . It has to be simple to transact, but with all the protections that investors have come to expect. It can’t afford to take them on another rollercoaster ride like 2022’s. 

While 50% of the UK’s banks may be getting on board with crypto to some degree, there is still a wide open ocean of opportunity for asset management players to realise value for themselves and their clients. It will involve some reshaping and more investment in digitisation to manage the assets of the future, whatever they may be. 

Somo, part of the CI&T family, will be publishing a report titled ‘Assessing the Crypto Conundrum: Will cryptocurrency ever be a significant trading asset and how can digitalisation shape its future?’ in 2023. 

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Skedadle to change the game for advertising with Currencycloud partnership

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Currencycloud, the experts simplifying business in a multi-currency world, has partnered with Scottish start-up app Skedadle to provide its users an easy, secure and seamless way to transfer money earned in-app while playing games on public transport.

Skedadle rewards travellers for the time they spend playing on-the-go. They can earn £2 per day simply for playing games on the move. That’s an extra £60 in their pocket each month. This can be done thanks to a disruption in the advertising market, by using algorithms to verify and track the users’ engagement with ads, proven to be higher while playing than in traditional online advertising, which increases product and brand recall for advertisers. Thanks to the partnership with Currencycloud, Skedadle users can use the app on public transport and be reassured that all financial transactions and financial data comply with the highest standards of security and validations.

By connecting to Currencycloud’s API technology, Skedadle has been able to integrate in their app a state-of-the-art payments ecosystem that seamlessly bulk settles the money earned from advertisers into a secure account and then processes withdrawals from users fast. At the same time, Currencycloud also sets the infrastructure that will enable them to grow both geographically in the UK and globally, by providing access to 38 currencies and low cost, fast FX rates.

Says Nick Macandrew, CEO and Founder at Skedadle: “Trust and security are crucial, especially when it comes to people’s money. As we rapidly grow our platform, we need a solution that can keep up with our pace and Currencycloud do just that. Our cutting-edge technology requires a secure, stable, and simple way of managing payments, whilst guaranteeing the best user experience possible.”

Nick Cheetham, Chief Revenue Officer at Currencycloud commented: “Backing bold start-ups from day one has always been part of our DNA. Skedadle’s creation of new revenue streams for travellers and advertisers alike is an exciting business endeavour. We are eager to see how the  platform can grow and disrupt the market by integrating our seamless payment capabilities.”

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