Upgrade from Windows 8.1- Do I need to buy a hard copy of Windows 10?

I assumed if I wanted a hard copy of Windows 10 that I could shove in my drive and do a clean install if I ever needed to do so, I would have to pay over my hard-earned cash in a computer shop.
However my mate told me yesterday that because Windows 10 was a free upgrade I can just download an ISO 10, burn to a disc or thumb drive, and use my old W8 install code. Can anyone please verify whether this is in fact the case or not?

Mostly, yes. Once you have successfully performed an upgrade install, you can then clean install from a DVD created by the Media Creation Tool which you can download from Microsoft.

You cannot (yet) use your old key to activate, you must activate on the same machine you upgraded from and activation will be automatic.

There is rumor that Microsoft is going to allow you to use your old code to upgrade in a future version, but we don't know if that will be the case yet.

Mystere said:

Mostly, yes. Once you have successfully performed an upgrade install, you can then clean install from a DVD created by the Media Creation Tool which you can download from Microsoft.

You cannot (yet) use your old key to activate, you must activate on the same machine you upgraded from and activation will be automatic.

There is rumor that Microsoft is going to allow you to use your old code to upgrade in a future version, but we don't know if that will be the case yet.

Did you say "Activation will be automatic"? I assume this is due to some fancy chip on the motherboard that registers the Pc with Microsoft when you first install it.
What if I also change my hardware substantially?

Maugli said:

Did you say "Activation will be automatic"? I assume this is due to some fancy chip on the motherboard that registers the Pc with Microsoft when you first install it.
What if I also change my hardware substantially?

No. When you upgrade, MS calculates a hardware hash and stores it with your activation certificate. When you reinstall later, the hardware hash is recalculated and looked up on MS's activation servers.

BunnyJ said:

From my understanding you can use your old key with version 1511 build 10586.

I have not actually seen this or heard it was actually implemented in this version. Maybe i'm wrong.

I remember now, I was referring to the TPM (Trusted Platform Module) chip on all Windows compatible hardware these days.

Maugli said:

I remember now, I was referring to the TPM (Trusted Platform Module) chip on all Windows compatible hardware these days.

The TPM is only used for encryption purposes. It's not use for activation.