Bitcoin has received a great deal of attention in the last decade, especially in Australia. Due to its rapid rise in popularity, buying bitcoin has become a lot easier than people realise. This guide will provide a breakdown of several ways of how and where to buy bitcoin in Australia.
Here's what will be explained in the guide:
• What is bitcoin, and why should I care? • Quick tips on how to buy bitcoin • How to buy bitcoin online • How to buy bitcoin in person • How to earn bitcoin • Things you can do with your bitcoin • Keeping your bitcoin safe
What is Bitcoin, and Why Should I Care?
Bitcoin is a digital currency, a.k.a cryptocurrency, that allows people to efficiently send and receive money across the internet to anyone. In more technical terms, it is a decentralised digital currency. Without a central bank or single administrator, funds can be sent from user to user on the peer-to-peer blockchain network. People around the world are becoming increasingly reliant on the internet. Bitcoin is open to everyone - anyone can access it.
It represents exciting opportunities for many people worldwide. Even among the likes of Jack Dorsey (Twitter's CEO), Steve Wozniak (Co-Founder of Apple) and Bill Miller (Wall Street investor). Buying or investing in bitcoin is often a terrifying task for first-time buyers. Whether you're purchasing bitcoin as a potential investment or to spend as an alternative currency, it takes effort and time to fully grasp how bitcoin works and how to safely buy it.
Many people question the price of bitcoin, why is one bitcoin a few thousand dollars?
Bitcoin's scarcity (only 21 million bitcoin) makes it valuable. As time goes on, they become harder to mine, and their value goes up, much like gold, therefore earning its nickname' digital gold'. People also often don't know that one bitcoin can be broken down into satoshis, much like dollars and cents.
One bitcoin = 100,000,000 satoshis
So at any point of time, one does not need to hold an entire bitcoin but can hold a fragment of, e.g. 150,000 satoshis (roughly around 20 AUD).
• Register for an account with a trusted cryptocurrency exchange. (Remember to do your research! The guide will lead you through the steps below.)
• A bitcoin wallet is the easiest way to store your bitcoin. Install a trusted wallet on your device and protect it by setting up a strong password. You can even buy what's known as a hard wallet, which is a USB looking device that stores your Bitcoin offline.
• Did you know that you choose from a wide range of payment methods to purchase bitcoin? You can use bank transfers, credit cards, Paypal, or even pay in person.
Disclaimer: The information provided in this article is not sponsored, or endorsed by any cryptocurrency or any specific provider, service or offering. It is not to be interpreted as financial advice or recommendation to trade.
How to buy bitcoin online
Step 1: Choose your preferred cryptocurrency exchange.
If you've decided to go ahead and buy bitcoin, you'll need to choose where you'll make your purchase. With many platforms to choose from, you'll be wondering which one would be right for you.
Here are the 3 Types of exchanges explained:
• Cryptocurrency Exchanges
These platforms connect buyers and sellers while taking a small fee from each transaction.
Platforms: CoinSpot, CoinBase, BinanceLite AU, BTCMarkets, Independent Reserve, etc.
• Direct trading platforms (a.k.a P2P Exchanges)
These platforms offer peer-to-peer trading where individuals from all over the world can exchange currency. Each seller sets their own exchange rate, with no fixed market price on the platform.
Platforms: BitStamp, Coinbase, LocalBitcoins, WazirX, etc.
These are sites where anyone can purchase cryptocurrencies operated by a broker, similar to foreign exchange dealers. Prices are set by the said broker.
Platforms: Coinbase, BinanceLite AU, eToro, MarketsX, PrimeXBT, WCX, etc.
What to look out for when choosing an exchange:
• Regulation: To make sure your funds are well protected, make sure you trade/exchange bitcoin on a regulated platform. Not every exchange is regulated, so make sure to do your research.
Platforms like CoinSpot are registered with Australian finance and anti-money laundering regulators such as AUSTRAC.
• Fees: Most exchanges have information on how fees are charged for transactions. Make sure you understand how fees are calculated for deposits, transactions and withdrawals as fees differ from platform to platform.
See an example from Binance’s fee schedule.
• Verification Requirements: Most exchanges worldwide require a form of ID verification in order to start making deposits and withdrawals. Some may let you remain anonymous, but verification is an essential step for the exchange to protect against scams and money laundering.
LocalBitcoins updated their identity verification system back in 2019.
• Geographical Restrictions: Some specific services/functions are only accessible from certain regions or countries. Check to make sure the exchange you choose allows full access to all tools and functions on the platform in your location.
• Exchange Rates: Exchange rates vary from platform to platform too. If you’re a budget-conscious individual, it might be worth it to shop around for the best rates.
CoinBase’s list of exchange prices.
• Payment Methods: Payment methods vary among exchanges, so make sure to check if they offer your preferred payment method before you choose a transaction to purchase bitcoin on. Some custodial exchanges even let you withdraw your bitcoin into your own wallet. A non-custodial wallet does not allow you to withdraw your bitcoin into your wallet.
Paxful allows users to purchase bitcoin with Paypal.
Step 2: Get a bitcoin wallet.
A bitcoin wallet is a secure software that sends, receives, stores and manages your bitcoin in a secure location. This software may be an app on your phone, desktop or a website on the internet. Here’s a quiz you can take to help choose the right wallet for you. Download your preferred wallet and move on to Step 3.
Bitcoin Wallets: Wallet of Satoshi, Samurai Wallet, Coinbase, Trezor, Blockchain.com etc.
Step 3: Locate your bitcoin address.
A bitcoin address is generated every time you make a transaction - much like a bank account number, which is how you can send or receive bitcoin.
Step 4: Choose your payment method.
Paying for bitcoin is no different than the purchases you make in your daily lives. As mentioned earlier, you can use a credit card, Paypal, or bank transfers. In essence, it all depends on the exchange/platform you choose to buy bitcoin from. Check if the exchange you chose has your preferred payment method.
Step 5: Buy bitcoin, stack sats!
If buying bitcoin online isn’t your thing and you have a wad of cold, hard cash you want to turn into cryptocurrency, read on to learn how to buy bitcoin in person.
How to buy bitcoin in person
Simply choose your preferred cryptocurrency platform.
Here are 3 ways you can make purchase bitcoin in person:
1. Bitcoin ATMs
These ATMs offer bitcoins by depositing cash, and the user then obtains bitcoin in their chosen bitcoin wallet. The process is instant and straightforward, just like a regular ATM.
2. Buy bitcoin in person with cash
In Australia, you can purchase bitcoin through an extensive network of newsagents.
You can also decide to meet the seller in person by mutual agreement. Do be wary of being robbed or scammed and always meet people in a public area.
Australian Platforms: BinanceLite AU, Bitcoin.com.au, etc.
2. Cash deposit
Some exchanges or platforms provide this option - buyers can deposit cash into a seller's bank account to purchase bitcoin. Sometimes banks are linked to these sites, where users can deposit some money into a specific bank. However, this method can be risky, as there is the possibility of the seller not sending the bitcoin after you deposit.
How to Earn Bitcoin
There are many ways one can stack sats (the accumulation of bitcoin or satoshis overtime), one of the easiest ways is through bitcoin rewards. Gone are the days of bitcoin mining - anyone can obtain some cryptocurrency by merely shopping online. Companies are looking at fun and rewarding ways to give back to their customers to further push cryptocurrency growth.
1. Cryptocurrency Cashback Programmes
Take advantage of your everyday shopping experience to earn bitcoin by using cash-back systems like Lolli, Bitcoin Rewards or Foldapp. With over 500 merchants on Lolli, you’ll receive a reward in bitcoin after purchasing from them online. Simply download the Lolli browser extension or the Foldapp on your device and start shopping.
1. Cryptocurrency Cards
When you spend bitcoin or regular currency online, why not double your rewards by spending with a cryptocurrency backed debit card? Crypto.com’s MCO card offers significant cash-backs when you use the card to make purchases.
TravelbyBit is launching the Binance card (a crypto-backed, VISA debit card), along with a free mobile wallet app this March 2020. You can load the VISA travel card with multiple cryptocurrency options. There are exciting features and exclusive travel deals coming to you in the future, so look out for that!
Things to do with Your Bitcoin
Now that you’ve got your bitcoin, there’s a number of things you can do with it.
• HODL it. A notorious and popular meme in the bitcoin space, the term refers to buy-and-hold strategies in a cryptocurrency context. HODLers (a.k.a 'crypto or bitcoin holders') can be compared to people who hold gold. Bitcoin holders believe that it is unwise to spend their bitcoin because of its scarce nature.
• Spend it. Frowned upon by a large number of HODLers in the bitcoin world (as per above). You can spend your bitcoin at numerous merchants across Australia - or even pay your bills with bitcoin at the Living Room of Satoshi! TravelbyBit lets you spend cryptocurrency on flights and hotels too. The possibilities are endless.
• Donate it. Many NGOs face issues in the complicated process of accepting donations transparently. Using a blockchain donation system skips past middlemen and high overhead fees. It also enables users to track their contributions and holds organisations accountable for making sure it reaches and helps the intended recipients. Numerous cryptocurrency companies such as Binance (Blockchain Charity Foundation), BitHope, Pinkcoin amongst many others have adopted blockchain-based donation systems.
They support and encourage transparent fundraising systems to make the world a better place through blockchain technology.
Keeping Your Bitcoin Safe
Now that you have your bitcoin, it’s important to keep it safe just like you would for a personal bank account.
Here are some things to keep in mind:
• Backup your private keys
• Never give your private keys to anyone
• Never keep your private keys online (e.g., email, messaging apps, cloud storage, etc.)
• Always keep wallet software up to date to prevent viruses or potential hacks
• Backup your digital wallets often to prevent losing your bitcoin