Everything you need to know about digital assets, blockchain technology, and safe trading practices
Cryptocurrency is a digital or virtual form of currency that uses cryptography for security. Unlike traditional currencies issued by governments (fiat currency), cryptocurrencies operate on decentralized networks based on blockchain technology.
Bitcoin (BTC): The first and most well-known cryptocurrency, created in 2009. Often referred to as "digital gold."
Ethereum (ETH): A platform for decentralized applications and smart contracts, with its native cryptocurrency Ether.
Others: There are over 200 cryptocurrencies available for trading, each with different use cases and technologies.
Bitcoin was created by an anonymous person or group known as Satoshi Nakamoto. The identity remains unknown to this day, making it one of the biggest mysteries in the technology world.
Cryptoassets are volatile and can go down in value as well as up. You may lose some or all of your investment. Only invest what you can afford to lose.
A blockchain is a chain of blocks containing information. Each block has:
This creates an immutable chain that's extremely difficult to alter.
Blockchain is the underlying technology that powers cryptocurrencies. Think of it as a digital ledger that records all transactions across a network of computers.
Traditional financial systems rely on centralized intermediaries like banks to verify and process transactions. Blockchain removes this need by allowing peer-to-peer transactions that are verified by network participants.
Blockchain technology has applications beyond cryptocurrency, including supply chain management, healthcare records, voting systems, and digital identity verification.
Security is paramount when dealing with cryptocurrency. Unlike traditional banking, you are responsible for safeguarding your own assets. Here are essential security practices:
Hot Wallets: Connected to the internet, convenient for frequent trading but less secure. Examples include exchange wallets and mobile apps.
Cold Wallets: Offline storage, more secure for long-term holdings. Examples include hardware wallets and paper wallets.
Custodial Wallets: Managed by a third party (like an exchange). The exchange holds your private keys.
Non-Custodial Wallets: You control your private keys. More responsibility but greater control.
"Not your keys, not your coins" - If you don't control your private keys, you don't truly own your cryptocurrency. Choose wisely based on your needs.
DCA is an investment strategy where you invest a fixed amount at regular intervals, regardless of the asset's price. This helps reduce the impact of volatility.
Example: Instead of investing £1,200 at once, invest £100 every month for 12 months.
Benefits: Reduces timing risk, removes emotional decision-making, and averages out your purchase price over time.
"HODL" (Hold On for Dear Life) refers to buying cryptocurrency and holding it for the long term, regardless of short-term price fluctuations.
Strategy: Research projects with strong fundamentals and hold them through market volatility.
Best for: Investors who believe in long-term growth and want to avoid frequent trading.
Never Invest More Than You Can Afford to Lose: Cryptocurrency is highly volatile and risky.
Diversify Your Portfolio: Don't put all your funds into one cryptocurrency.
Set Stop-Loss Orders: Automatically sell if the price drops to a certain level to limit losses.
Do Your Own Research (DYOR): Always research before investing in any cryptocurrency.
Avoid FOMO: Don't buy based on fear of missing out - make rational decisions.
Market Order: Buys or sells immediately at the current market price. Fast but you may not get the exact price you want.
Limit Order: Sets a specific price at which you want to buy or sell. May not execute immediately but gives you price control.
Stop-Loss Order: Automatically sells when the price drops to a specified level, helping limit losses.
In the UK, cryptocurrency is subject to Capital Gains Tax when you sell, trade, or exchange it.
Keep Records: Maintain detailed records of all transactions, including dates, amounts, and values in GBP.
Annual Allowance: There's an annual tax-free allowance for capital gains (check current HMRC rates).
Consult a Professional: For complex tax situations, consult a tax advisor familiar with cryptocurrency.
The Financial Conduct Authority (FCA) is the UK's financial regulatory body. When a cryptocurrency exchange is FCA-registered, it means they comply with strict regulatory requirements.
Payward Limited (FRN 928768) has been registered with the FCA for cryptoasset activities since 23 November 2021.
Payward Services Limited (FRN 1010381) is authorized as an Electronic Money Institution since 20 February 2025.
Always verify that an exchange is FCA-registered before trading. Check the FCA Financial Services Register at register.fca.org.uk
Now that you understand the basics, take the next step with confidence