Currently, over 6 million Aussies have invested in Bitcoin. However, if you are considering joining their ranks, you might be doing so with a bit of uncertainty. Unlike other asset classes, crypto is unfamiliar territory. So, you’ll probably have questions about what it involves.
If you find yourself in this position, this post is for you. In it, we’ll cover what Bitcoin is, how you can buy it in Australia, and what to watch out for along the way. Hopefully, it will give you the knowledge and understanding you need to make your first moves with confidence.
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What Is Bitcoin and Why Are Australians Buying It?
Bitcoin is a form of digital money that runs on a decentralised network. As it is not controlled by a bank or a government, it gives users more control over how they store and transfer value. Crucially, every transaction is recorded on a public ledger known as the blockchain. Therefore, it adds transparency and security to the system.
While Bitcoin was launched as the first cryptocurrency in 2009, it has gained popularity in Australia in the last few years as an alternative to traditional finance. Some Aussies see it as a long-term investment, while others use it for global payments or to diversify their portfolios.
For beginners, some of its appeal comes from the fact that you can get started with a small amount. The process is also quite straightforward, once you know what’s involved.
Is Bitcoin Legal in Australia?
In case you were wondering, Bitcoin is perfectly legal to buy, sell, and hold in Australia. The government regulates cryptocurrency exchanges through AUSTRAC, which means platforms must comply with strict identity verification and anti-money-laundering requirements. This goes a long way towards creating a safer environment for users to trade this cryptocurrency.
From a tax perspective, Bitcoin is treated as property by the Australian Taxation Office. This means that any profit made from selling Bitcoin may be subject to capital gains tax. For this reason, it is essential to keep accurate records of your transactions. Especially if you plan to invest regularly.
How to Buy Bitcoin in Australia
While it might seem complicated on the face of it, getting started with your first Bitcoin purchase is actually much simpler than many people expect. Most beginners use a cryptocurrency exchange, which acts as a platform where you can purchase this digital asset using Australian dollars. For instance, you can easily buy Bitcoin with Independent Reserve.
Whichever platform you decide to use, the process of investing in Bitcoin will go something like this.
- Choose a reputable exchange that offers strong security, such as two-factor authentication, clear fee structures, and an easy-to-use interface.
- Sign up for the platform and verify your identity. This is a standard requirement for all regulated Bitcoin exchanges in Australia.
- Deposit funds into your account. Many platforms allow you to do this via PayID, bank transfers, and card payments.
- Once the funds are in your account, you can place your first order. This could either be a full Bitcoin or a fraction of one.
- After your purchase is complete, your Bitcoin will appear in your account. From there, you can choose to keep it on the exchange or move it to your own secure wallet (which is recommended).
What Is a Bitcoin Wallet?
You might be wondering what we mean by a secure wallet. Essentially, this is where you store your cryptocurrency. Overall, there are different types of wallets: hot and cold. Each offers different levels of security and accessibility.
Hot wallets are connected to the internet and are usually built into exchanges or mobile apps. They are easy to access and ideal for beginners who want to buy, sell, or move Bitcoin quickly. However, the downside is that because they are online, they are more exposed to potential security risks, especially if your account details are not well-protected.
Cold wallets, on the other hand, store your Bitcoin offline, often on a hardware device. This makes them much harder for hackers to access, which makes them much safer. Subsequently, they are suitable for people who plan to hold Bitcoin long-term. The trade-off, though, is that it takes a bit more effort to access your funds.
Many users operate both wallet types concurrently. They might, for example, keep the majority of their Bitcoin in a cold wallet and a small amount in a hot one. This gives them the flexibility to trade quickly if they want to.
What Fees Are Associated With Buying Bitcoin in Australia
You should be aware that if you want to buy Bitcoin, there will be fees associated with doing so. Typically, the amount will depend on the platform you use. However, here is a rough guide to what you might be charged.
- Trading fees (0.1%–1% of value)
- Deposit fees (free via PayID/bank transfer, ~1%–3% for cards)
- The “spread”, i.e. the difference between buy/sell prices – (0.1%–0.8%)
Some of the most popular exchanges include CoinSpot, Swyftx, Independent Reserve, and Binance. You should factor these costs into the equation when you are planning to make an investment.
What Is The Safest Way to Buy Bitcoin in Australia?
You’ve no doubt heard horror stories about buying cryptocurrency online. Well, thankfully, most of those stories date back to the early days of digital currency. Notwithstanding, it’s best to take precautions to protect your investment.
To start with, you should never purchase crypto from an exchange that is not AUSTRAC-registered because these platforms follow strict compliance standards. When you do sign up for one, you should also use strong passwords that combine letters and numbers, lowercase and uppercase, and enable two-factor authentication for your account.
Additionally, you should always keep your login details secure and never share them with anyone. Lastly, do not open suspicious links in any correspondence you receive, as this will reduce your chances of falling victim to scams.
