Before you begin, here are a few important things you will need: a cryptocurrency exchange account, personal identification documents if using a Know Your Customer (KYC) platform, a secure Internet connection, and a method of payment are all required for newbie Bitcoin investors. It is also advised that you have your own personal wallet separate from the exchange account. Bank accounts, debit cards, and credit cards are all acceptable payment methods via this path. Bitcoin can also be obtained through specialized ATMs and peer-to-peer exchanges.
Important Things To Remember
Bitcoin’s value lies in its use as a store of value and payment system, as well as its limited supply and decreasing inflation. While it is nearly impossible for Bitcoin to be hacked, your wallet or exchange account could always face the risk of being compromised. This is why proper storage and security measures are essential when purchasing Bitcoin
Bitcoin can also be purchased using mainstream services such as PayPal. One way to indirectly hold bitcoin is to make investments in firms that have bitcoin on their balance sheets.
Before Purchasing Bitcoin
For Bitcoin investors, privacy and security are critical concerns. Anyone who obtains the private key to an individual’s Bitcoin wallet can authorise transactions. Private keys should be kept private and safe; if any unsavoury persons know about your large holdings, they may attempt to steal them.
Be aware that the balance of a public address you use can be seen by anyone. However it is anonymous, so no one will know who owns said public address. A disadvantage of this public information is that a person can create different public addresses for themselves. As a result, people can distribute their Bitcoin holdings across multiple addresses. You should keep large investments in public addresses that are not directly related to those used in transactions.
Anyone, including you, can view a history of blockchain transactions. The transactions that happen on the blockchain are public, but the information about the people who make them isn’t. Only a user’s public key appears next to a transaction on the Bitcoin blockchain, meaning these transactions are confidential but they are not anonymous. People can see and track all of the transactions made with Bitcoin, unlike private cash transactions that only the person who made them can see. Even so, Bitcoin transactions are designed with an element of anonymity in mind. On the blockchain of the cryptocurrency, tracing the transacting parties—that is, the sender and recipient of bitcoin—is extremely difficult.
Researchers from around the world, as well as the FBI, have stated that they can trace Bitcoin transactions back to users’ other online accounts, including their digital wallets, using blockchain technology. For example, if a person opens an account on CoinSpot, they must submit proof of identity. When that person buys bitcoin now, it will be linked to their name. Even if they transfer it to another wallet, it can still be traced back to the CoinSpot purchase associated with the account holder’s identity.
Investors should not be concerned because Bitcoin is legal in Australia and most other developed countries.
Before you buy or sell bitcoin, make sure you understand the legal, regulatory, and tax implications in your area.
How To Buy Cryptocurrency In Australia?
There are numerous cryptocurrency brokers and exchanges from which investors can purchase cryptocurrency, and it is critical to choose the most legitimate and secure one. Top-tier Australian crypto exchanges are always the best bets because they are registered with AUSTRAC, which aids in the prevention of money laundering and terrorist funding.
For example, CoinSpot is the best Australian cryptocurrency exchange, with a long history of providing world-class security, 360+ cryptocurrencies, Australia’s lowest trading fees from 0.1%, competitive spreads, staking services, an in-platform NFT marketplace, and 24/7 customer support. If you want to learn more about CoinSpot, check out our in-depth review.
Steps To Buying Crypto In Australia
To purchase cryptocurrency, follow the five simple steps outlined below:
Step 1: Research the best cryptocurrency exchanges
The first step is to compare exchanges and select the best one, which you can do by reading our review of Australian-based cryptocurrency exchanges. We’ll be using screenshots from a CoinSpot account to demonstrate how to acquire cryptocurrency, so if you want to follow along easily, I recommend signing up with CoinSpot.
Each person has unique investment preferences and trading objectives, so you choose which exchange to use based on these factors. Some prefer the largest selection of cryptocurrencies, while others prefer Australian-based and personalised customer service. Some people want all of the advanced trading features, while others prefer the simplest way to buy cryptocurrency and let it grow.
Before purchasing any cryptocurrency, the following factors should be considered:
- Number of coins/tokens supported
- Authenticity and security
- User-friendly interface
- Trading features and tools
- Trading fees, spreads and any additional fees
- Customer service
- Educational content and tutorials
- Payment methods
- Ability to purchase coins directly with AUD
Buying cryptocurrency in Australia used to be difficult. However, with so many Australian and international cryptocurrency exchanges to choose from, it can be difficult to find the one that best suits your trading needs. You can find a detailed guide on things to consider when choosing an exchange programme in Australia by clicking here.
In addition, if you live in Australia and want to buy cryptocurrency directly in AUD (without incurring costly and sometimes hidden conversion fees), you can join a local exchange that offers this service. Inquiring with customer support via live chat or email can help you figure this out, as well as test the quality and credibility of their customer service, which is critical if you’re new to the crypto world.
Step 2: Create an exchange account
Once you’ve determined which cryptocurrency exchange best meets your needs, you’ll need an account that includes a digital wallet where you can store your funds and make purchases. For example, to open a CoinSpot account, simply follow these simple steps.
To get started, click the “Register” button. You will be prompted to enter your email address, password, and referral or affiliate code on the registration screen (optional).
After that, check the reCAPTCHA box, read the terms and conditions, and then click “Create Account.”
Create a CoinSpot account. Source: CoinSpot
When you click Create Account, you will be notified that “Your account has been established” and asked to complete the account verification process. To continue, select “Complete Verification.”
Your CoinSpot account has been created. Source: CoinSpot
After receiving an email, click the “Confirm Email” button to validate your email address, and you will be directed to the registration page.
Verify your email address. Source: CoinSpot
Step 3: Enter your detailed information
Under the Account Type section, select “This is a personal account” and enter your account holder’s information. Check that you have entered your Australian mobile phone number correctly.
Account Holder Details. Source: CoinSpot
After completing the Account Holder Details form, you must submit your identity documents. Please keep in mind that these documents must be sent in .jpeg or.png format.
Please read CoinSpot’s Accepted Verification Documents for more information on how your documents are reviewed.
After you’ve uploaded your documents, click the “Submit for Verification” button. If you are unable to click Submit for Verification, please double-check that your Australian Mobile Phone Number was correctly entered.
Submit for verification. Source: Coinspot
Your phone number must now be validated and confirmed.
Verify your phone number. Source: CoinSpot
Following the completion of your mobile phone number verification, an on-screen notification indicating your Verification Status will appear.
CoinSpot account verified. Source: CoinSpot
When depositing or withdrawing AUD from CoinSpot, comprehensive identity verification is required under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Prior to your account being fully validated, you may receive a call from a CoinSpot employee to verify your account’s credentials.
Step 4: Depositing AUD into your account
POLi, PayID, BPAY, Direct Deposit or Cash Deposit can all be used to fund your CoinSpot account in AUD.
The daily deposit limit for low-level accounts will be $2000, which can be increased (you can contact CoinSpot customer support for assistance). Each deposit method has a 24-hour time limit. There are several ways to fund your CoinSpot account.
Step 5: Buy/Sell cryptocurrency on the exchange
By selecting “Buy [COIN],” you can search for and view information on over 360+ cryptocurrencies (current price, price change over the last 24 hours, etc.).
If you want to diversify your portfolio and save money on transaction fees, go to CoinSpot’s Bundles on the top menu bar.
After you’ve decided on your coins/coin bundles, enter the amount of AUD you want to spend. In the image below, Bitcoin (BTC) is used as an example of a cryptocurrency that can be purchased on Coinspot.
Purchase Bitcoin on CoinSpot. Source: CoinSpot
A confirmation window will appear. After reading and agreeing to the terms of the confirmation pop-up, click “Confirm Buy” to complete the purchase.
Confirm Buy on CoinSpot. Source: CoinSpot
To sell your coins, simply click the “Sell [COIN]” button and enter the desired AUD amount.
Sell Bitcoin on CoinSpot. Source: CoinSpot
A confirmation window will appear. After reading and agreeing to the terms of the confirmation pop-up, click “Confirm Sell” to complete the transaction.
Confirm Sell on CoinSpot. Source: CoinSpot
What Is a Popular Way To Purchase Bitcoin In Other Countries?
The steps to purchasing bitcoin are outlined below. Remember that you must still conduct research and choose the best option for yourself based on your circumstances.
Step 1: Select a cryptocurrency trading service or platform
The first step in purchasing bitcoin is to select a crypto trading service or platform. Cryptocurrency exchanges, payment services, and brokerages are popular trading services and platforms for purchasing cryptocurrencies. Cryptocurrency exchanges are the most convenient option because they provide a wide range of features and a greater number of cryptocurrencies for trading.
By registering with a cryptocurrency exchange, you will be able to buy, sell, and hold cryptocurrency. It is generally recommended that users use an exchange that allows them to withdraw cryptocurrency to their own personal online wallet for safekeeping. This feature may be irrelevant to those looking to trade Bitcoin or other cryptocurrencies.
There are numerous kinds of cryptocurrency exchanges. Since Bitcoin is all about decentralisation and individual sovereignty, some exchanges let users stay anonymous and don’t ask for personal information from users when they buy or sell Bitcoin. Such exchanges run on their own and are usually not centralised, which means they lack a centralised point of control.
While such systems have the potential to be used for malicious purposes, they can also be used to deliver services to the world’s unbanked population. For particular groups of people—refugees or those living in countries with limited or no infrastructure for government credit or banking—anonymous trades can assist them in integrating into the mainstream economy.
Most popular exchanges like CoinSpot, CoinJar, Swyftx and Binance still require users to submit their identifying documentation. The number of features available on these exchanges has increased significantly.
In the last decade, the crypto universe has expanded rapidly with many new tokens competing for investor dollars. Except for Bitcoin and a few other well-known coins, such as Ethereum, not all of these tokens are available on all exchanges. Each exchange has its own set of criteria for deciding whether to allow or prohibit the trading of specific tokens.
Bitcoin and a growing number of altcoins are available through CoinSpot, Swyftx, and CoinJar. CoinSpot caters to both new and experienced traders. It also offers over 360 coins, an extremely impressive number on its exchange. Compared to Swyftx, which supports around 320 coins and CoinJar with only 40+ coins, CoinSpot is truly the leading crypto platform for Australians.
When opening a cryptocurrency exchange account, it is critical to follow safe Internet practices. This includes two-factor authentication and a long, one-of-a-kind password containing lowercase letters, capitalised letters, special characters, and numbers.
Step 2: Link your exchange to a payment option
After you’ve decided on an exchange, you’ll need to gather all of your personal documents. These may include images of your driver’s licence or Social Security card, as well as information about your employer and source of funds, depending on the exchange.The information you require may be determined by the region you live in and the laws that govern it. The procedure is similar to that of opening a standard brokerage account.
As soon as the exchange has checked your identity, you will be asked to connect a payment method. Most exchanges allow you to connect your bank account directly or a debit or credit card. You can use a credit card to buy cryptocurrency, but it’s not a good idea because the price of cryptocurrency can change quickly, making it more expensive to buy a coin.
Deposits made with a bank account, debit card, or credit card incur varying fees. It is critical to research the fees associated with each payment option before deciding on an exchange or which payment option is best for you.
Exchanges also charge transaction fees. These fees can be either a flat fee (if the transaction amount is small) or a percentage of the transaction amount. In addition to transaction fees, there is a processing fee associated with credit cards.
Step 3: Place an order
After selecting an exchange and connecting a payment method, you can purchase bitcoin (or other cryptocurrencies). Cryptocurrency exchanges have gradually gained popularity in recent years. They have grown significantly in terms of liquidity and feature breadth. The operational changes at cryptocurrency exchanges correspond to the shift in the public’s perception of cryptocurrencies. An industry that was once thought to be a scam or one with questionable practices is gradually transforming into a legitimate one that has piqued the interest of all the major players in the financial services industry.
Cryptocurrency exchanges now have nearly the same level of features as their stock brokerage counterparts. Today’s cryptocurrency exchanges provide a variety of order types and investment options. Almost all cryptocurrency exchanges accept market and limit orders, with some also
accepting stop-loss orders. For instance, users on CoinSpot will have access to stop loss, take profit, and stop-limit orders.
Exchanges, in addition to offering a number of order types, also provide means for clients to set up recurring investments, allowing them to dollar-cost average their way into their investments of choice. CoinSpot allows customers to schedule recurring transactions for every day, week, or month of the year.
Step 4: Ensure safe storage
Bitcoin and cryptocurrency wallets provide a secure location to store digital assets. Keeping your cryptocurrency separate from the exchange and in your personal wallet ensures that only you have access to the private key to your funds. It also allows you to store funds away from an exchange, reducing the risk of your funds being stolen if your exchange is hacked.
While the majority of exchanges provide wallets for their users, security is not their primary concern. Generally, we do not recommend using an exchange wallet to store large or long-term cryptocurrency holdings.
Certain wallets offer a greater number of features than others. Some are Bitcoin-only, while others support a variety of cryptocurrencies. Additionally, some wallets allow for the exchange of one token for another.
When it comes to selecting a Bitcoin wallet, you have several options. The first thing you should know about crypto wallets is the difference between hot wallets (online wallets) and cold wallets (paper or hardware wallets).
Hot wallets
Online wallets are also referred to as hot wallets. Hot wallets operate on Internet-connected devices such as computers, smartphones, and tablets. Because these wallets generate the private keys to your coins on these Internet-connected devices, this can pose a risk. Though a hot wallet can be very convenient in terms of quickly accessing and transacting with your assets, storing your private key on an Internet-connected device makes it more vulnerable to a hack.
This may seem far-fetched, but hot wallet holders who haven’t implemented adequate security risk losing funds to theft. This is not an uncommon thing, and it can occur in a variety of ways. For example, bragging on a public forum like Reddit about how much bitcoin you have while using little to no security and storing it in a hot wallet is not a good idea.
However, if precautions are taken, these wallets can be made secure. Minimum requirements should include strong passwords, two-factor authentication, and safe Internet browsing.
These wallets are best for storing small amounts of cryptocurrency or cryptocurrency that you actively trade on an exchange. A hot wallet is analogous to a checking account. You should keep only your spending money in a checking account and the rest of your money in savings or other investment accounts. The same can be said about hot wallets. Mobile, desktop, web, and exchange account custody wallets are all examples of hot wallets.
Exchange wallets, as previously stated, are custodial accounts provided by the exchange. The owner of the private key to the cryptocurrency stored in this wallet is not the user of this wallet type. You would lose your funds if the exchange was hacked or your account was compromised. Within cryptocurrency forums and communities, the phrase “not your key, not your coin” is frequently heard.
Cold wallets
The most basic definition of a cold wallet is that it is not connected to the Internet and thus has a much lower risk of being compromised. These wallets are also known as offline wallets or hardware wallets. These wallets store a user’s private key on a device that is not connected to the internet and can include software that works in parallel so that the user can view their portfolio without exposing their private key.
A paper wallet is possibly the most secure way to store cryptocurrency offline. A paper wallet is a wallet that you can create using specific websites. It then generates both public and private keys, which you can print out on paper. You can only access cryptocurrency in these addresses if you have that piece of paper with the private key. Many people laminate these paper wallets and keep them in safe deposit boxes at their banks or in a home safe. Because you cannot immediately sell or trade bitcoin stored in these wallets, they are intended for high-security and long-term investments.
A hardware wallet is a more common type of cold wallet. A hardware wallet is typically a USB drive that securely stores a user’s private keys offline. They have significant advantages over hot wallets because they are not affected by viruses that could infect one’s computer, making them a safer option. By utilising hardware wallets, you can ensure that your private keys are never in contact with your network-connected computer or software that could be dangerous. Also, most of these devices are open source, which means that people can check the code to see if they are safe to use, rather than relying on a firm to declare that they are risk-free.
Cold wallets are the most secure method of storing bitcoin or other cryptocurrencies. They do, however, necessitate more technical knowledge to set up.
This is how you should set up your wallets. You should have: an exchange account for buying and selling, a hot wallet for small to medium amounts of crypto you want to trade or sell, and a cold hardware wallet for storing larger holdings for long periods of time.
How To Purchase Bitcoin Using PayPal
You can also purchase bitcoin from PayPal Holdings, Inc., a payment processor (PYPL). There are two ways to buy bitcoin with PayPal. The first and most convenient method is to buy cryptocurrencies with a PayPal account linked to a payment mechanism, such as a debit card or bank account. The second option is to use your PayPal account balance to buy cryptocurrencies from a third-party provider. This option is less convenient than the first because only a few third-party websites allow users to buy bitcoin using the PayPal button.
Bitcoin, Ethereum, Litecoin, and Bitcoin Cash are the four cryptocurrencies that can be purchased directly through PayPal.
To open a cryptocurrency account with PayPal, you must provide the following information: your name, physical address, date of birth, and tax identification number.
It is not possible to buy Bitcoin with a credit card through PayPal. During the purchasing process, PayPal will display the cryptocurrency’s price. However, due to the volatility of cryptocurrency markets, that price is subject to rapid change. It is a good idea to have more money in your bank account than the amount you budgeted for the purchase.
When you buy bitcoin directly from PayPal, the company profits from the crypto spread (the difference between Bitcoin’s market price and its USD exchange rate). In addition, the company charges a transaction fee for each purchase, which is calculated based on the purchase price. For purchases between $100 and $200, for example, a flat fee of $0.50 is charged. More than that amount, the fee will be a percentage of the total dollar amount. For crypto purchases between $100 and $200, for example, a fee of 2% of the total amount is charged.
One disadvantage of purchasing cryptocurrencies via PayPal is that the cryptocurrency cannot be transferred outside of the payment processor’s platform. As a result, you cannot transfer your purchased bitcoin from PayPal’s wallet to an external crypto wallet or your personal wallet.
Another disadvantage of using PayPal is that very few exchanges and online traders allow the payment processor to be used to make purchases. eToro is one of the few online traders that accepts PayPal for bitcoin purchases on its platform.
How To Buy Bitcoin With A Credit Card
Bitcoin can be bought with credit cards, debit cards, or through automated clearing house (ACH) transfers. The process is the same. When you trade on an exchange or online, you’ll need to give your credit card information to the company. As a general rule, it’s not a good idea to buy bitcoin with a credit card, though. There are a few reasons why this is the case.
To begin, not all exchanges allow credit card purchases of bitcoin due to associated processing fees and the risk of fraud. This decision may end up being in the best interests of the customers, as credit card processing can tack on additional fees to such transactions. As a result, in addition to transaction fees, you may be charged processing fees by the exchange.
The second reason is that using a credit card can be costly. Credit card companies treat bitcoin purchases as cash advances and charge exorbitant fees and interest rates on them. American Express and Chase, for example, both classify cryptocurrency purchases as cash advance transactions. Thus, if you use an American Express card to buy $100 worth of bitcoin, you will pay $10 (the current cash advance fee for such transactions) plus a 25% annual percentage fee. Furthermore, the credit card company limits your monthly bitcoin purchases to $1,000.
Obtaining a Bitcoin rewards credit card is an indirect method of purchasing bitcoin with a credit card. These cards function similarly to traditional rewards credit cards, except that the rewards are in the form of bitcoin. As a result, they invest the cash back they receive from purchases in Bitcoin. The BlockFi Bitcoin Rewards Credit Card is one example of a Bitcoin rewards card. 15 However, be aware that the annual fees for these cards may be prohibitively expensive, and there may be additional costs associated with the conversion of fiat currencies into cryptocurrency.
Alternative Ways To Buy Bitcoin
ATMs for Bitcoin
Bitcoin ATMs function similarly to in-person bitcoin exchanges. Individuals can insert cash into a machine to purchase bitcoin, which is then transferred to users’ online wallets. Bitcoin ATMs have grown in popularity in recent years; even retail giant Walmart Inc. (WMT) is testing a pilot program that will allow customers to purchase bitcoin. Coin ATM Radar can assist in locating the nearest machines.
However, ATMs are a costly choice. ATM bitcoin purchases are subject to two fees: a purchase fee and a conversion fee for converting a fiat currency to bitcoin. Both fees are relatively high in comparison to other options. For example, the global average purchase fee at Bitcoin ATMs is 8.4% (of the purchase amount), and the fee for sales at ATMs is 5.4%.
Keep in mind, however, that beginning in early 2020, Bitcoin ATMs will increasingly require a government-issued ID.
P2P exchanges
In contrast to decentralised exchanges, which anonymously match buyers and sellers and handle all parts of the transaction, there are various peer-to-peer (P2P) exchange platforms that allow users to communicate with one another more directly. LocalBitcoins is an example of a cryptocurrency exchange of this type. Users can submit requests to purchase or sell bitcoin, along with information about payment methods and pricing, after registering an account. Once logged in, users can browse through a list of available purchase and sell offers and select the trading partners with whom they wish to do business.
LocalBitcoins helps with some parts of the trade. Even though P2P exchanges don’t offer the same level of anonymity as decentralised exchanges, they give users the chance to shop around for the best deal. Many of these exchanges also have rating systems so users can check out potential trade partners before they do business with them.
How To Sell Bitcoin
You can sell bitcoin in the same places where you bought it, such as cryptocurrency exchanges and peer-to-peer platforms. The process of selling bitcoin on these platforms is typically similar to the process of purchasing it.
To conduct the sale, for example, you may only need to click a button and specify an order type (i.e., whether the cryptocurrency should be sold right away at available prices or sold to limit losses). The price of Bitcoin may change depending on the type of market and how much demand there is at the place where it is being sold. During the run-up in bitcoin prices in 2018, for example, South Korean exchanges traded it at a so-called kimchi premium.
Fees are charged by cryptocurrency exchanges as a percentage of the cryptocurrency sale amount.
Withdrawal limits on exchanges are typically set on a daily and monthly basis. As a result, cash from a large sale may not be available to the trader right away. However, there are no restrictions on how much cryptocurrency you can sell.
FAQ
What are the steps for purchasing Bitcoin?
There are four steps in the process of buying bitcoin: choosing a cryptocurrency exchange, choosing a payment method, and ensuring safe storage for your purchased cryptocurrency. There may be additional steps in the process depending on the platform chosen. For example, if you buy cryptocurrency through Robinhood, you may need to factor in additional costs for an online wallet and bitcoin custody because Robinhood does not provide these services.
What Are the Most Popular exchanges for buying Bitcoin?
Cryptocurrency exchanges and platforms such as CoinSpot are the most popular places to buy bitcoin. Bitcoin can also be purchased through peer-to-peer exchanges. You can indirectly own Bitcoin by investing in companies that have it on their balance sheets, such as Tesla, Inc. (TSLA) or MicroStrategy Incorporated (MSTR).
How Much Should I Expect to Pay to Purchase Bitcoin?
Typically, the cost of purchasing bitcoin includes a fee per trade as well as the cost of converting a fiat currency (usually dollars) to bitcoin. (This conversion spread is how cryptocurrency exchanges and payment services make money.) The fee per trade is determined by the dollar amount of the transaction. A larger trade amount will result in higher fees. The overall purchase price is also affected by the features provided by the platform. For example, Robinhood currently does not provide an online wallet for storing bitcoin. As a result, you will need to budget for online wallet costs when making your purchase.
Where Can I Buy Bitcoin Other Than Cryptocurrency Exchanges?
Bitcoin can also be purchased at the following locations:
- Bitcoin ATMs
- Online payment services like PayPal
Conclusion
The process of purchasing bitcoin is slightly more complicated than that of purchasing traditional equity or stock. This is primarily due to the fact that the cryptocurrency ecosystem and infrastructure are not as developed as those of traditional trading.
A bitcoin purchase involves four steps: selecting a service or platform for the purchase, connecting with a payment method, placing an order, and ensuring safe storage for your purchased cryptocurrency. Each of these steps necessitates research and a careful evaluation of the benefits and drawbacks of each service. Bitcoin can also be purchased at Bitcoin ATMs, through payment services such as PayPal, and through popular exchanges such as CoinSpot.
