Yes, we’ve climbed aboard the great big cryptocurrency rollercoaster and bought us some bitcoin!

Loving every minute of the big bitcoin rollercoaster, honestly.

Why, oh why, oh why, would we do something as daft as that?

I’d love to tell you it’s a well-thought through move, with plenty of research gone in, and a sophisticated trading strategy behind it.

Unfortunately that couldn’t be further from the truth.

Why buy Bitcoin?

Simply, we decided to get some bitcoin because we had money sitting around in an account, unused. And, let’s be honest, we’re after more excitement than our humble bank was offering. Still, we know that this is nothing short of a monumental punt.

Actually, there is some small, but flimsy, rationale to this. We’ve noticed that there has been plenty of chatter again about bitcoin over these last few weeks. Could it be due for a summer surge?

Sure, it feels like only just over a year ago that every man and his dog was loading up on the stuff. And we know how that ended – lots of people are still nursing nasty burn injuries to the ends of their fingers.

But it seems that the general public wasn’t burned badly enough to completely purge everyone from another go at playing with fire. And who are we to pass up a bonfire party? Pass us the firelighters, we’re going in.

If buying bitcoin is playing with fire – we’re heading into the inferno.

A new global currency?

Have we invested in the next global currency that will ultimately change the way we transact with each other? Is bitcoin the currency that will mark the next great economic era? Is it a generational game changer?

Honestly, we’ve got no idea.

Quite simply, this is entirely a vehicle for a flutter on cryptocurrency, and to see if we’ll make any money out of it.

We wouldn’t even know how to spend it in a real transaction if we tried. Managing to actually invest in it was hard enough.

How have we invested in Bitcoin?

A quick internet search suggested plenty of ways you can hold bitcoin. You can mine it, hold it in a wallet, or let some sort of exchange hold it on your behalf. We opted for the latter.

Whilst letting an exchange hold it may sound less than 100% secure – especially given the shady stories you hear about cryptocurrency – there are reputable exchanges out there. Besides, we took the view that it’s a lot better than trying to figure out the technology to hold it directly ourselves, and then crying when it all goes wrong because we’ve no idea what we’re doing.

So, we went with one of the biggest and best established providers out there: CoinBase.

We didn’t spend too much time shopping around – CoinBase looks like it will do the job, and other providers either fell out of the reckoning for being too shady, too complicated, or too expensive. Sometimes a mixture of all three.

The security seems good on CoinBase. In particular, they have a 2-step login system where they will send a code to your phone each time. It all helps to protect your virtual piggy-bank from loss or theft.

If you’re also thinking of using CoinBase then don’t miss out on a bonus, like we stupidly did. If you use a referral link (and we’d love you to use our referral link if you feel generous), you can get a nice little bonus on signing up. That gives both us and you a £7 bonus if you buy £79 of bitcoin.

Transferring money to CoinBase.

Transferring money to CoinBase was simple in theory. You can do this a variety of ways, but the only one that makes any sense is by a direct bank transfer. It doesn’t feel very slick, or reassuring, but it does avoid a ludicrous 3.99% fee that they charge on buying cryptocurrency instantly using a credit or debit card.

Converting your cash to bitcoin – surprisingly tricky.

Although a direct bank transfer sounds ok in practice, it’s much less straightforward in real life. You first need to send them a payment of £2, following their exact instructions, including putting a specific code as the reference for the transfer.

After – and only after – you’ve had your account verified can you make larger transfers to find your account and start buying bitcoin. Again, those larger transfers take time to clear. So if you decide on impulse that you want to buy a huge amount of the stuff, you’ll need to wait around a little.

Taxes on BitCoin (UK)

Before diving in as a fully fledged bitcoin investor you should know how you’re going to be taxed.

In the UK, any gains you make in bitcoin are subject to capital gains tax. As you might know, each person gets a capital gains allowance each year which is untaxed. Anything over that amount gets taxed at a rate determined by your overall level of earnings (i.e. depending on your overall income, including your salary, etc).

If you don’t have any other capital gains, and you’re not making mega-money on bitcoin (at least not more than the £11k capital gains allowance in 2018/2019), it will be tax free. So we’re pretty safe from tax with our relatively small £712 investment.

If you want to do further reading on bitcoin taxes, we found this page on Bitcoin Direct useful.

Coinbase Fees (UK)

Unsurprisingly, CoinBase isn’t free. Each standard buy / sell will cost you 1.49% commission. That’s in addition to losing some money through something called the ‘spread’ (which is just the difference between what people are willing to buy and sell at).

The fees aren’t ridiculous, but they do need to be factored in to any investment. 3% buying and selling fees are a hefty cut on your returns.

So, what price did we buy into Bitcoin at?

The moment you’ve been waiting for, and the question on everyone’s lips: are we bitcoin millionaires yet?

When we first started looking into Bitcoin, we realised that we’d already missed some big gains on it. At that point Bitcoin was up:

• 4.39% in the last 24 hours
• 18.66% in the week
• 50.39% in the year.

Being kind, you’d consider us momentum investors. Being realistic, you’d consider us complete and utter chancers.

Due to some major complications actually getting money into CoinBase (tip: don’t transfer in from a joint account), we missed some further upward momentum. Lady luck was getting a thorough cursing at that point. After that, we decided to wait it out for another dip.

We had £712 to invest and eventually our purchases came in two tranches. Here are the confirmations:

In our first purchase, we jumped into the market initially when bitcoin was soaring around £10,090 per coin (remember, we only buy fractions of a coin for our £350 investment). In retrospect, that feels a bit toppy – it’s almost this year’s high. But it’s still nowhere near bitcoin’s all-time high which is near £16,000 per coin.

The thinking was that if new highs had been reached then maybe we were beginning a journey onwards and upwards to further new heights. A journey that we didn’t want to miss out on.

Sadly, the only thing that seemed guaranteed – backed by the full faith and credit of ‘sod’s law’ – is that when we made our first purchase the price would drop like a stone.

Predictably, a week later, bitcoin was down nearly 20%, at around £8,100 per coin and we decide it was time to dive in for a second purchase. So we bought a further £352 of it.

Across the two transactions we spent £702 buying bitcoin and lost £10.31 of that in fees to the exchange.

I’ve also calculated that, including fees (both buying and selling) our break even price for bitcoin is £9,253 per coin. Anything above that and we’re in the money. Below that, we’re firmly in loser territory.

Where’s the bitcoin price heading?

As of writing this post, nearly a week after our second purchase, here’s how things look (chart shows the price change over a year):

As you can see, Bitcoin has been on a wild ride this year. We’ll probably be saying that every year.

Maybe we bought at the top and things are going to crash back down. Or maybe summer euphoria will set in and bitcoin will break new levels. We just don’t know.

We invested £702 in bitcoin, which is today worth £599.73. We’ve therefore lost 15% of our initial investment through a combination of fees and price declines.

But we’re not terribly bothered by some initial losses. Bitcoin seems to move all over the place. It’s more volatile than Donald Trump using twitter.

The handy Coinbase app allows you to see the value of your portfolio at any time. It also sends you updates whenever there’s a considerable move in bitcoin – which seems to be all the damn time! Over the past month I’ve had more messages telling me that bitcoin is suddenly up or down 5% than I’ve had messages from my wife!

Let’s not kid ourselves, we don’t really know where bitcoin is headed next. But that’s part of the fun. We intend to ride this out for a while longer. Until we at least get a sniff of some gains. At that point we might decide that we’ve had enough of this white-knuckle ride and it’s time to get off the rollercoaster. Hopefully this thing stays on the rails…

If you’re interested in investing in bitcoin, CoinBase seems to be a good way for beginners to do that. If you’re opening a new account then please consider using our link – that way both of us will get a small bonus (around £7-8 when you invest a minimum amount)! Click here for our personal referral link to get your bonus.

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