If you have been intimidated by the idea of buying bitcoin and other cryptocurrency, and you do not know where to start, we are here to let you know that to purchase bitcoin is really not that hard! In this article, we will provide the basic steps on how to buy bitcoin in Australia.
Introduction to Bitcoin
Invented by a person who goes by the pseudonym of Satoshi Nakamoto, Bitcoin emerged back in 2009 as a decentralized digital cryptocurrency. Same as fiat currency, bitcoin acts as a store of value, unit of account and medium of exchange. However, bitcoin is superior to fiat currency in many ways.
Bitcoin is not issued under any governing body’s authority, whereas fiat currencies are controlled by government authorities. This makes bitcoin a fully decentralized currency which is above the laws and regulations of any government. Decentralization of the currency also implies more security for the investor money.
Besides, bitcoin has a fixed supply which will eventually be in circulation. According to Satoshi Nakamoto, the number of units will be 21 million. Due to the fixed supply, this means that the value of bitcoin cannot be affected by the amount circulated worldwide. This makes it superior to fiat currency because their value can fall as the government prints more money.
The technology behind bitcoin is known as blockchain, which is basically a ledger of who owns which bitcoin. This ledger is a decentralized network whereby each bitcoin transaction will be sent to the network and attached to the blockchain. This is a complex system which is dependent on miners to verify transactions then add it to the blockchain. Hence, the transaction security is very high.
Nowadays, the places which accept bitcoin as payment in Australia have been increasing, as well as all over the world. The number of traders of this digital currency in Australia have also been increasing. Traditionally, Australian traders were composed of men ages 25 to 45. However, in 2020 it has been seen that early retirees at age 55 and more women have begun to start trading bitcoin too.
Best ways to Buy Bitcoin in Australia (Step by Step)
If you are keen on joining the increasing attention given to bitcoin, there are a few simple steps for you to get started off.
Step 1: Choose your bitcoin wallet
The first step to get started on buying bitcoin in Australia is to get a Australian crypto wallet in order to store the bitcoin that you buy as well as to receive or send out bitcoin. There are different kinds of crypto wallets which you can choose from. Namely, software wallets like mobile and desktop wallets, physical hardware wallets, and paper wallets.
Software wallets are very accessible because they come in mobile and desktop versions. Hence, you can carry around your bitcoin wallet on your phone or laptop wherever you go. While they provide ultimate convenience, they may not be that secure to store a large amount of bitcoin, so they are recommended if you want to store smaller amounts.
A physical hardware wallet is an external device which can be connected to your Linux, Windows or Mac. They are portable and provide the highest security of all the types of crypto wallets. They are recommended if you want to store a substantial amount of bitcoin in your wallet.
Paper wallets on the other hand, are basically in the form of physical paper. Typically, they are printed in QR code form. However, this option is a fragile one which requires much care.
Step 2: Select the cryptocurrency exchange of your choice
Next, you will need to choose the Australian crypto exchange by which you want to make your bitcoin purchase from. While there are plenty of crypto exchanges, the main categories of exchanges you can look out for are crypto trading platforms, peer-to-peer exchanges and bitcoin brokers.
Crypto Trading Platforms
Cryptocurrency trading platforms allow users to buy bitcoin from other traders on the open market, such as on Independent Reserve or Binance. Some of them allow you to buy bitcoin with fiat currency such as AUD, while others do not accept fiat and only allow crypto to be traded. Generally, these platforms require basic knowledge of trading concepts to use. They typically offer greater access to a diverse range of coins as well as better rates than brokers.
Peer-to-Peer Exchanges (P2P)
P2P exchanges allow buyers and sellers to directly contact one another to trade cryptocurrency. The exchange will directly match bitcoin buyers with bitcoin sellers. The sellers essentially are able to set their own price and the payment options they want to accept. Therefore, P2P provides access to more options for payment methods such as PayPal, credit card and even cash payment. They also provide better privacy to protect your personal information. However, due to the benefits enjoyed by users, the rates offered by P2P exchanges are usually higher than that of the market exchange rate.
A bitcoin broker is basically an online trading platform which allows users to buy and sell bitcoin. It is typically a user-friendly platform which has a process similar to the traditional online stockbroker whereby you will need to go through the process of opening an account, depositing funds then proceeding to buy the amount of bitcoin of your choice. Brokers typically accept fiat currencies through everyday payment methods like bank transfer, debit card or credit card and e-wallet payment method which makes the buying process very easy for you.
Step 3: Buy Bitcoin
Now, we finally get to buy bitcoin. After you have decided on the exchange you want to buy bitcoin with, the next step is usually to create an account by providing your email address. Depending on the exchange chosen, you may be asked to provide some basic information and details like your full name, contact information and proof of identification through id verification. Once the verification of your account is complete, you can finally proceed to buy bitcoin! However, the process to purchase bitcoin will differ based on which platform you decide to buy bitcoin on.
On Crypto Trading Platforms
If you choose to buy bitcoins on the open market through trading platforms, you will first be required to deposit funds into your account. Then, you can go to the market and find the section of the cryptocurrency you want to trade. In this case, you will search for the BTC or AUD section of the exchange website. Then, you will need to place a buy order. You will be given a choice to place different buy order types such as market or limit order, so you can choose depending on what your strategy is. If you plan to buy bitcoin at the current market price, you would place a market order. However, if you plan to wait for the price to fall to a specific price before buying, you can place buy limit orders which will execute your orders at the limit price or lower.
On P2P Exchanges
If you want to buy bitcoins on a P2P exchange, you can browse the different sell offers by bitcoin sellers to identify one that matches the budget you have to buy bitcoins and the payment method you prefer. After you have found a suitable offer, you will then contact the seller to make a deal with them. Since this deal will be just between buyer and seller, you should be careful of any scammers. A P2P bitcoin exchange usually will use escrow services to protect the buyers and sellers, but you should still play your part to be wary of anything suspicious.
Through Bitcoin Brokers
If you wish to buy bitcoins through a bitcoin broker, you simply need to enter the amount of bitcoin you wish to buy on the broker’s website. Then, you will be given the cost and options for payment methods. Once payment is complete, the broker will send you the bitcoin you have purchased and you can view it from your account. Then, you can either withdraw it to your bitcoin wallet, or choose to send it to someone else.
Where to Buy Bitcoin in Australia
Now that you know the steps required in buying bitcoin, it is time to put your knowledge into practice by purchasing bitcoin. Here are a few top bitcoin exchanges in Australia that users love, which you can check out.
CoinSpot is a famous bitcoin exchange which is locally based in Melbourne, Australia. This exchange is a peer-to-peer exchange, designed for all types of consumers and to provide them ease of use, for both beginners and experienced traders. It is one of Australia’s leading exchanges with the largest selection of blockchain assets compared to other Australian exchanges.
The purpose of CoinSpot is to enable people to enter the digital currency market by offering a trusting and easy-to-use service. They have been able to successfully deliver this value over the years, since it was founded back in 2013. There have been no major issues reported with regards to this platform, but rather plenty of positive reviews from users.
Furthermore, ease of use has definitely been enjoyed by CoinSpot’s users as well. Overall, the website is very easy to navigate, making it highly intuitive for beginners to understand and use.
The customer service by CoinSpot is also top notch, providing efficient services and quick responses. The customer support team is also available 24/7 so if you ever have any queries, do not hesitate to reach out to them for assistance. In fact, some customers even deem it the best of its kind in Australia.
Swyftx is one of the best crypto exchanges in Australia with the aim to empower Australians to trade cryptocurrency in the simplest and most convenient method. Among other exchanges, we find this platform to be one of the easiest to use, with their online wallet making trading virtually pain free. Usually, many exchanges would require you to move your bitcoin to an external wallet after buying them, which may be a hassle. However, Swyftx makes day trading easy by allowing you to swap or buy bitcoin instantly. This is all thanks to the integrated crypto wallet in the platform, providing a seamless experience.
Besides, the user interface of Swyftx provides ease of use, making it a good option for new users. The professional support from the team also aids in the process where you can always reach out to them for assistance. With these in place, Swyftx is able to move towards becoming the leading exchange for crypto coins for both the beginner traders and seasoned investors. This is evident from many positive customer reviews about this exchange, both by new users and experienced ones.
Another of the key features by Swyftx is the low fees offered. Usually, when an exchange offers lower fees, you will need to check whether this includes the spreads when you trade cryptocurrency or not. The reason why Swyftx is the choice for thousands of Australians is because with Swyftx, you can enjoy less spread charges as well.
Furthermore, Swyftx provides its users with safety through its multiple security layers. They have a partnership with Auth0 which specializes in cloud platform security to maintain the greatest level of password and account safety for your bitcoin wallet. Your account with Swyftx will also have a 2-factor authentication which provides additional security.
3. Independent Reserve
Independent Reserve was one of the first cryptocurrency exchanges in Australia, established back in 2013. It was voted as Australia’s best digital currency exchange in 2019, for good reason too. Independent Reserve aims to transform cryptocurrency technology into secure, robust and regulated financial services, and hold to integrity highly.
One of the key features of the exchange is the Cryptocurrency Tax Estimator. This feature was developed by KPMG which serves traders by estimating their tax obligations on their portfolio. This is an extremely helpful feature which can be used with just the click of a button. Based on the users’ bitcoin buy or sell transactions on the exchange, the tool will estimate the potential tax exposure in real-time. This applies not only for bitcoin, but other cryptocurrencies too.
Apart from Bitcoin, you can trade other cryptocurrencies on this platform such as Etherium and Litecoin. With the multicurrency order book offered by Independent Reserve, your orders can be converted into the currency of choice. This essentially allows you to enjoy the best possible prices when trading different digital currencies because you can view all the market orders regardless of what fiat currency they may be placed with.
In terms of trading fees, Independent Reserve follows a tiered level system. This means that the more you trade bitcoin, the cheaper it will be. At the high end, the fee will be 0.5%, while the lowest of the end reaches 0.1%. This incentivizes users to trade in higher volumes. This is good news if you are looking to trade bitcoin in larger amounts.
Binance started off in China but has exploded since then and is now one of the top crypto exchanges worldwide. It is clearly one of the favourites in Australia. Binance is not just an exchange platform, but also has its own crypto token which is an option for payment in the exchange. Furthermore, Binance provides an integrated wallet for users to easily store or transfer their bitcoins.
Purchasing bitcoin on Binance is pretty straightforward. You just need to deposit some funds, then select either the basic or advanced view under “exchange”. If you are new to trading bitcoin, the basic view would probably suit you best. The best way to learn is to try it out for yourself and explore how the platform works.
Binance offers one of the lowest fees available, at an average of 0.1% for each trade. If you choose to pay with the Binance token, you can even get a 50% discount off the fee, bringing it even lower.
Although Binance is one of our top picks of bitcoin exchanges in Australia, perhaps new users may not fancy the user interface much due to it being slightly more complicated. However, experienced users may enjoy the advanced features. Nonetheless, there is no harm to try it out and decide for yourself.
5. CoinJar Exchange
CoinJar deems itself to be Australia’s longest running cryptocurrency exchange. Being an award-winning and venture capital-backed exchange, CoinJar is proud to have served over 400 thousand users since its establishment back in 2013. Since then, they have been working with the digital currency community, government and regulators to bring cryptocurrency into the mainstream.
Note that on the official website, there is CoinJar for Institutions, CoinJar digital currency account for everyday and the CoinJar exchange for traders. As an individual trader, you can just bypass the CoinJar for institutions. When it comes down to the remaining 2 options, we would recommend using the CoinJar Exchange for traders, to buy and sell bitcoin. This is because of the lower fees offered and better features.
CoinJar offers fiat-crypto trading, which makes it an entry-level exchange which is friendly to new traders. This means that users can deposit their fiat currency into their account through cash, cards or bank transfer. Of course, the list of fiat currencies allowed includes the AUD. Typically, the usage of credit card or debit card is not accepted by a large number of exchanges, but it is made available by CoinJar. All of the methods mentioned can be used without any fee.
The CoinJar exchange has a clean and nice interface that has not given us any issues. It provides the graph of buyers and sellers, which is a nice added advantage over Independent Reserve. However, Independent Reserve will win over CoinJar in terms of the liquidity offered. Hence, for those looking to trade high volumes of bitcoin, CoinJar may not exactly be the best pick.
The CoinJar exchange also offers a free in-built wallet, and a separate payment service known as the CoinJar Swipe. However, the CoinJar Swipe is only accessible to Australian citizens or residents. There is also a mobile app which can be used to carry out money transfers, known as CoinJar Touch. These are all helpful features that you can check out. In terms of security, CoinJar uses a 2-factor authentication and password protection for their wallets. They also ensure that 90% of the digital currencies of customers are stored offline in secure places.
Where to Use Bitcoin in Australia
Considering the size of Australia itself, the use of bitcoin is actually pretty limited in the country. This is because a large part of the country is made up of remote areas which are not friendly towards cryptocurrency. However, the places that accept bitcoin are generally the biggest cities in Australia. This includes Melbourne, Perth, Sydney, Adelaide and Brisbane, with Melbourne and Sydney in the lead. In these places, merchants that accept bitcoin include hotels and even restaurants.
Frequently Asked Questions (FAQ)
Q: Is Bitcoin legal in Australia?
Yes, it is legal to trade bitcoin in Australia. In fact, one of the very first countries to join the crypto hype was Australia. AUSTRAC, which is the Australian financial intelligence regulator, has the authority to regulate all cryptocurrency exchanges across Australia so that all cryptocurrencies will need to be registered. However, there have been multiple incidences when the legality of bitcoin in Australia was questioned due to controversies involving illegal purchasing activities. But overall, based on the Australian laws governing cryptocurrency, there is no evidence labelling bitcoin as illegal. For the most part, bitcoin is considered as relatively safe to trade as long as it does not involve any illegal activities.
Q: Will I be taxed on Bitcoin in Australia?
Yes, you will be subject to tax. According to the Australian Tax Office, Bitcoin alongside other cryptocurrencies are not considered to be Australian currency or foreign currency. Instead, bitcoin is considered an asset for capital gains tax purposes. Therefore, for taxpayers, this means that any capital gain you make on the disposal of bitcoin will be subjected to tax. The bright side is that if you had held the bitcoin for 12 months or more, you might be able to enjoy a discount up to 50% on the capital gains tax.
If the bitcoin is used in business transactions instead of for personal gain, you will need to include the value of the cryptocurrency in AUD as a part of your ordinary income. Hence, you will only be subject to the standard income tax.