How to Buy Bitcoin in Australia: A Primer
The first of its kind, Bitcoin remains the embodiment of decentralised cryptocurrency, and it's in high demand. For people new to digital currency or investing in general, buying and trading Bitcoins may seem daunting. That’s why we’ve put together this helpful step-by-step guide for those who want to buy Bitcoin in Australia.
If you want to skip to the end and pick the best Australian crypto exchange, then click here
What Is Digital Cryptocurrency?
To better understand Bitcoin, you need to understand what cryptocurrency is. Defined by Oxford dictionary as any electronic money that is used to buy and sell bitcoin without the need for a central bank, cryptocurrency is created and maintained by systems that:
Define whether and how units are created, how to determine ownership, and how to transfer ownership
Are not under the authority of any government body
Choose a Bitcoin wallet
Cryptocurrency is not issued by a bank or other central authority but is managed over networks based on blockchain technology. Because of its nature based in cryptography, it is almost impossible to counterfeit and to, say, “double spend”. Critics have expressed concern about the use of digital currencies for illegal activities, potential vulnerabilities in the infrastructure, and the possible disruption of different industries (such as finance).
Understanding Blockchain
Think of blockchain as a chequebook or ledger in which transactions are recorded in blocks of code that link together in a chain with the prior transactions. This information is openly distributed to users/owners across many, many computers around the globe. As new transactions occur, they are logged by software, and every copy of the blockchain out there is updated simultaneously. In terms of security against fraud, every transaction undergoes a verification process.
Where Does Bitcoin Fit In?
Bitcoin was created in 2009 by Satoshi Nakamoto – supposedly a genius from Japan, but also suspected to be a pseudonym – and was the first blockchain cryptocurrency. Notably, despite there being thousands of cryptocurrencies, Bitcoin is still the most popular – and the most valuable. Alternate cryptocurrencies can be clones or “forks” of Bitcoin or built from scratch.
Every Bitcoin user has an account address called a “Bitcoin wallet”, which has a public key. The owner gets a private key used to sign bitcoin transactions. Because transactions don’t have to be cleared with a central authority, transfers, exchanges, and payments can be made quickly and with low fees.
At the time of writing this article, the value of a single Bitcoin is more than $60,000 AUD. While this appears to be an onerous amount, especially for a first-time investor, it is actually possible to buy just a fraction of a Bitcoin, as Bitcoins are divisible by up to 8 decimal points.
Risks and Regulation
More and more places in Australia and around the world are accepting Bitcoin as a payment method. Since digital currencies are a relatively new, unregulated currency, many public sector agencies have expressed concern about the risk of organised crime involvement and exploitation. That is why financial intelligence agencies, such as the federal Australian Transaction Reports and Analysis Centre (AUSTRAC), have been given the power to police Bitcoin and other cryptocurrency exchanges. Additionally, Bitcoin transactions can be subject to tax liability – treated like capital gains, for example. How much further cryptocurrencies will – or can – be regulated remains to be seen.
How to Purchase Bitcoins
Choose a Bitcoin Wallet
Many cryptocurrency exchanges require you to already have a Bitcoin wallet of your own before you can transact. There are different kinds of cryptocurrency wallets, and we recommend doing your research before choosing the type and company.
Online wallets are web-based – hosted on a server and controlled by a third party. The data is encrypted and this method may seem the least cumbersome, but online wallets are probably the least secure way to store your cryptocurrency.
Paper wallets are created online to be printed out. They contain the public and private keys and may have QR codes in case you want to scan them and put the keys into a software wallet. The nature of paper wallets means that you don’t have to worry about hardware problems or cyber attacks...but remember that ink can fade and paper is fragile. If lost or illegible, the paper wallet is useless and you cannot access the currency.
Software wallets are downloadable to desktop computers and/or mobile devices – usually consisting of an app that is connected to the interface. Software wallets are the most commonly used cryptocurrency wallets in Australia, and include:
- Bread (for mobile devices only)
- Electrum
- Exodus
Hardware wallets are devices – similar to a USB thumb drive or even custom built – that are portable and connect online for transactions. They are seen as the safest type of cryptocurrency wallet because they don’t reside online, minimising the prospect of hacking, and you can keep them on your person or in a secure place. Hardware wallets include:
- KeepKey
- Ledger Nano S
- Ledger Nano X
- Trezor Model T
Choose a Bitcoin Exchange
Bitcoins are bought and sold on Bitcoin exchanges, which are websites and services that allow you to convert “fiat currency”, such as Euros and Australian dollars, into/from Bitcoins at the current market rate.
Bitcoin brokers are retailers selling Bitcoin and/or other cryptocurrencies. You usually just have to enter the amount you want, then pay with AUD or other "fiat currencies" through your credit, bank transfer, or other payment methods. The Bitcoins are then sent to your account, at which point you can send them to your wallet. Trading through Bitcoin brokers is usually the easiest and quickest, but may charge higher fees.
Examples: Coinspot and Coinjar
Cryptocurrency trading platforms basically allow you to buy from other traders. Some work with fiat currency; others only let you trade in/with other cryptocurrencies. You are required to deposit funds into your account, after which you navigate to the Bitcoin or BTC market, and then place your order. These exchanges often provide a larger range of currencies and charge lower fees, but also assume that you have some basic knowledge of trading concepts
Examples: Binance and Independent Reserve
Peer-to-peer exchanges work like noticeboards where users post notices that they are buying and/or selling, and at what prices. Buyers and sellers contact each other directly and transact accordingly. When you want to buy, you review the various sale offers and decide based on your parameters, such as price and accepted methods of payment. You should consider whether they have a good reputation on the platform, but even then, be careful of scams.
Examples: Binance P2P and Paxful
Best Australian Crypto Exchanges
Choosing a cryptocurrency exchange to purchase Bitcoin with your hard earned cash can be quite stressful, as there are numerous options out there; all with different payment options and fees - not to mention, not all exchanges accept the trusty Australian Dollar.
So we've done the hard work for you, and compared the top exchanges to buy bitcoins and other crypto in Australia.
| Binance | BTC Markets | Coinjar | Coinspot | Independent Reserve | Swyftx | |
|---|---|---|---|---|---|---|
| Bpay |  |
$0 | $0 | 0.90% | |
|
| Direct Debit | |
|
$0 | $0 | $0 | $0 |
| PayID/Osko | $0 | $0 | |
$0 | $0 | $0 |
| POLi | |
|
|
$0 | |
$0 |
| Trade Fees | 0.10% | 0.83% | 0.20% | 1.00% | 0.50% | 0.60% |
| Average Spread (BTC) | 0.02% | 1.90% | 1% | 3.30% | 4.30% | 1.70% |
| Choose Binance | Choose BTC Markets | Choose Coinjar | Choose Coinspot | Choose Independent Reserve | Choose Swyftx |
Binance
| Bpay | |
| Direct Debit | |
| PayID/Osko | $0 |
| POLi | |
| Trade Fees | 0.10% |
| Average Spread (BTC) | 0.02% |
| Choose Binance | |
BTC Markets
| Bpay | $0 |
| Direct Debit | |
| PayID/Osko | $0 |
| POLi | |
| Trade Fees | 0.83% |
| Average Spread (BTC) | 1.90% |
| Choose BTC Markets | |
Coinjar
| Bpay | $0 |
| Direct Debit | $0 |
| PayID/Osko | |
| POLi | |
| Trade Fees | 0.20% |
| Average Spread (BTC) | 1% |
| Choose Coinjar | |
Coinspot
| Bpay | 0.90% |
| Direct Debit | $0 |
| PayID/Osko | $0 |
| POLi | $0 |
| Trade Fees | 1.00% |
| Average Spread (BTC) | 3.30% |
| Choose Coinspot | |
Independent Reserve
| Bpay | |
| Direct Debit | $0 |
| PayID/Osko | $0 |
| POLi | |
| Trade Fees | 0.50% |
| Average Spread (BTC) | 4.30% |
| Choose Independent Reserve | |
Swyftx
| Bpay | |
| Direct Debit | $0 |
| PayID/Osko | $0 |
| POLi | $0 |
| Trade Fees | $0.60% |
| Average Spread (BTC) | 1.70% |
| Choose Swyftx | |
Best Exchange to Buy Bitcoin in Australia
Many exchanges require your email address, but depending on the platform, you may be asked for information like your full name, contact information -- even proof of identity. Once your account is verified, take whatever tutorials are available and off you go.
To pick an Australian crypto exchange that best suits you, here are our top picks:
If you want more ways to deposit your AUD, then pick Coinspot
If you want less trading fees, then pick Binance