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The general principle

Most tax authorities treat cryptocurrency as property or an asset rather than as currency. That single decision drives almost everything else, because disposing of an asset generally triggers a gain or loss that must be calculated and reported.

Actions that are usually taxable

• Selling crypto for ordinary money. The obvious one.
• Swapping one crypto for another. This surprises people most. In most jurisdictions trading Bitcoin for Ethereum is a disposal of the Bitcoin at market value, generating a gain or loss — even though no conventional money was involved and nothing was withdrawn.
• Spending crypto on goods or services. Normally a disposal at market value at the moment of spending.
• Receiving staking or mining rewards. Frequently treated as income at the value when received, and then subject to capital gains again when later disposed of.
• Some airdrops, depending on jurisdiction and circumstances.

Actions that usually are not

• Buying crypto with ordinary money and holding it.
• Moving crypto between wallets you control. Transferring is not disposing — though you should keep records showing the wallets are both yours.
• Holding through price rises. Unrealised gains are generally not taxed.

Why record-keeping is the hard part

To calculate a gain you need the acquisition cost and the disposal value of each unit, in your local currency, at the time of each event. That is straightforward for a handful of purchases and quickly becomes impractical if you have traded actively, used multiple platforms, or interacted with DeFi.

Jurisdictions also apply different matching rules for identifying which units were sold — some use average cost, others specific identification or same-day and short-window rules. Getting this wrong changes the calculated gain considerably.

Practical advice: keep records from the start. Date, asset, quantity, value in your currency, fees and which platform, for every transaction. Reconstructing three years of activity from exchange statements after the fact is genuinely miserable, and some platforms no longer exist to provide them.

Losses

Most jurisdictions allow capital losses to offset gains, and often to be carried forward. Given crypto’s volatility this can matter, but it usually requires the loss to have been properly realised and reported. Losses cannot generally be claimed on assets you still hold, and rules on worthless or inaccessible assets vary.

Reporting is increasingly not optional

Exchanges in many jurisdictions now report customer data to tax authorities, and international frameworks for automatic exchange of crypto account information are being adopted. The assumption that crypto activity is invisible is increasingly wrong, and penalties for non-disclosure are typically far worse than the tax itself.

What to read next

You have finished the Buying & Trading path. The learning hub shows what is next, and the glossary covers any term you are unsure of.

Dollar-cost averaging is probably the most recommended strategy in crypto, and it is usually recommended for the wrong reason.

What it is

You buy a fixed amount of money’s worth at regular intervals — say £50 every Monday — regardless of the price. When the price is low your £50 buys more units; when high, fewer. You never decide when to buy.

The honest evidence

The common claim is that DCA produces a better average entry price. That is not reliably true. Research on traditional markets consistently finds that investing a lump sum immediately beats spreading it out roughly two-thirds of the time, simply because markets rise more often than they fall, and money invested later misses that rise.

So if the goal is maximising expected return, DCA is usually not the answer.

Why it is still sensible

Because the mathematical question is not the one that determines most people’s outcomes. The real risk is behavioural: buying after a rise because it feels safe, refusing to buy after a fall because it feels dangerous, and abandoning a plan at the worst moment.

DCA addresses precisely that. It removes the timing decision entirely, which means it removes the opportunity to make it badly. An investor who dollar-cost averages consistently will very likely outperform one who tries to time entries and lets FOMO and fear drive them — even though the second approach has a higher theoretical ceiling.

It also reduces regret, which sounds soft but matters: someone who invests a lump sum the week before a 40% fall frequently sells at the bottom. DCA makes that scenario less likely to occur and less painful when it does.

What it does not do

• It does not protect against a permanent loss. Averaging into an asset that goes to zero simply means buying it at many prices on the way down. DCA manages timing risk, not asset-selection risk.
• It does not guarantee a profit. If the price is lower at the end than your average entry, you are down.
• It does not remove the need to think. Choosing what to average into is still the decisive decision.

Practical points

• Fees matter. Frequent small purchases incur fees each time. Weekly or monthly usually beats daily once costs are counted, and platform recurring-buy features often carry a wider spread than a manual limit order.
• Tax. In many jurisdictions each purchase is a separate acquisition with its own cost basis, which makes record-keeping considerably more work. See how crypto is taxed.
• Decide the end condition. DCA without a plan for when to stop, or when to take some off the table, is only half a strategy.

What to read next

Next: how crypto is taxed.

Every exchange offers both, most beginners use the first one without noticing, and it frequently costs them money.

Market orders

A market order says: fill this immediately at whatever price is available. It takes the best offers on the order book in sequence until your order is complete.

Advantage: it will fill, and it will fill now.

Disadvantage: you have no control over the price. In a deep, liquid market the difference is negligible. In a thin one, your order eats through each price level in turn and the average fill can be well away from the number you saw on screen.

The price displayed when you press buy is the last traded price. It is information about the past, not a promise about your fill.

Limit orders

A limit order says: fill this only at my price or better. A buy limit executes at or below your figure; a sell limit at or above it.

Advantage: you cannot be filled at a price you did not accept. This eliminates slippage entirely and often qualifies for a lower fee tier, since resting orders add liquidity.

Disadvantage: it may never fill. If the market moves away, your order sits unexecuted. When you are trying to exit a falling position, “not filled” is an expensive outcome.

Which to use

The hidden default

Simple “buy crypto” interfaces — the ones with a single amount box and a big button — are almost always executing a market order, with a spread built into the quoted rate. If a platform offers an “advanced” or “pro” view, that is usually where the actual order book and limit orders live, frequently at substantially lower cost for exactly the same purchase.

Switching from the simple interface to the trading interface is one of the easiest cost savings available to a beginner.

A note on stop orders

Stop-loss orders trigger a sale when the price falls to a set level. They sound like protection, and in fast crypto markets they behave less predictably than expected: a brief wick down can trigger your stop and sell at a poor price before the market recovers. They are a tool with real trade-offs, not a safety net.

What to read next

Next: dollar-cost averaging explained.

Crypto fees are unusually opaque, and the largest one is usually invisible. Here is the complete picture.

1. Exchange commission

The advertised trading fee, typically a percentage of the trade. Many platforms use a maker/taker model: adding liquidity with a limit order that rests on the book (maker) costs less than taking existing liquidity immediately (taker). Simply using a limit order can therefore reduce this fee.

2. The spread — usually the biggest

The spread is the gap between the best buy price and best sell price. Buy and immediately sell, and you lose that difference before any commission.

This is how “commission-free” platforms make money. A 2% spread on a purchase costs you 2%, whatever the advertised commission says. It is a real cost that simply is not itemised.

How to measure it: look at the buy and sell prices for the same asset at the same moment. That gap is your round-trip cost.

3. Deposit fees

Bank transfer is usually cheap or free but slower. Card deposits are instant and typically cost several percent — a meaningful bite out of a small first purchase. If you are not in a hurry, the bank transfer is almost always the better choice.

Watch for currency conversion too: depositing in one currency to trade in another can incur an exchange margin well above the interbank rate.

4. Withdrawal fees

Charged when moving crypto off the platform. Some exchanges pass through the actual network cost; others charge a fixed amount well above it and keep the difference. This is worth checking before you choose a platform, because it applies every time you self-custody.

5. Network fees

Paid to the blockchain itself, not to any company. Two properties surprise people:

They do not depend on the amount. Sending £10 and £10,000 can cost the same, because the fee prices block space, not value. This makes small transfers disproportionately expensive.

They vary with congestion. On Ethereum, gas is an auction: when demand is high, fees rise sharply within minutes. The same transaction can cost pennies or a great deal more depending on when you send it.

A third point that catches people out: a failed transaction still costs gas. The network did the work before the failure, so you can pay and receive nothing — for instance when a swap reverts because of slippage.

6. Costs that are not fees

• Slippage. Getting a worse price than quoted because your order moved the market. Real money, no line item.
• Conversion margins. The rate applied when your currency is converted.
• Tax events. In many jurisdictions each disposal is taxable — see how crypto is taxed.

Reducing what you pay

• Use bank transfer rather than card for deposits.
• Use limit orders where available — better price control and often a lower fee tier.
• Batch withdrawals rather than moving small amounts repeatedly.
• Check network conditions before transferring; fees fall considerably at quieter times.
• Compare platforms on round-trip cost, not advertised commission.

What to read next

Next: market orders vs limit orders.