Cryptocurrencies are incredibly volatile. In October 2022, one Bitcoin was valued at AU$32,000. In October 2021, it was closer to AU$80,000. However, cryptocurrency is here to stay, and it’s becoming much more commonplace — many online stores now accept Bitcoin as a payment method.
So, how do you buy or invest in cryptocurrency? It seems complicated, and initially, it was a somewhat secretive world. But times have changed, and today, plenty of options are available. And the more popular the currency becomes, the easier it is to buy.
Getting started
The first step to buying or investing in cryptocurrency is to find an exchange or a broker. Many reputable options are available to you online, but before choosing one, you need to know the difference between exchanges and brokers. An exchange is a platform that essentially serves as a third party to unite buyers and sellers looking to trade currency.
These are typically more complicated to use, but the fees are lower if you learn how to navigate them. The more popular exchanges include Binance, Bybit, and Coinspot. If you choose the exchange route, make sure yours is AUSTRAC registered.
A broker will charge higher fees, but they do the work, so you don’t need to deal with the complicated the ins and outs of the process. They are the convenient option, but be sure to read the fine print because there can be restrictions on your holdings.
Once you find the platform that aligns with your needs and knowledge, you must create an account. Many platforms require identity verification. It’s a common requirement for reputable sites to adhere to regulations.
Using a reputable site will allow you to buy or sell once you verify your identity and account. It’s a process similar to what online banks require when you sign up – an ID, a selfie, an automated phone call, or a video where you repeat specific phrases.
Buying cryptocurrency
You can link your account to a debit card, bank account or credit card. If you opt for the latter, beware of card provider charges which can run exceptionally high because it is viewed as a cash advance. So, in addition to your typical interest rate, you will pay an additional amount. Your funding method and the platform you choose will determine how long it takes before you can purchase.
Once the money is deposited in your account, you can make your first purchase. There is an abundance of cryptocurrencies to choose from. For example, eToro has over 50 cryptocurrencies, including Dogecoin and Shiba Inu. The minimum deposit is $50, but the minimum order spends $10. There’s a 1% trading fee, which is relatively low, and it’s an excellent place for a beginner to start their crypto journey.
Binance is another option with low fees, and it offers a more comprehensive site for traders, with over one thousand markets. The trading commission is just 0.10%, and the minimum deposit will depend on your payment method. Due to the high cost of many cryptocurrencies, you can buy fractional shares. So, even if a single Bitcoin costs over $A30,000, you can still purchase a part of one.
Protecting your investment
If you purchase your cryptocurrency through a broker, they will generally handle the storage method. It’s unlikely they will offer you a choice. Whatever option you choose, be sure that you keep your codes safe so you can access your account and keep your crypto secure. If you purchase via an exchange, the currency is stored in a wallet linked to it.
You can transfer it to another location if you want something more secure. A hot wallet offers crypto traders a secure online storage option, whether you keep it on your phone, tablet, or laptop. The risk of the hot wallet is it opens you to theft because it’s online.
They are, however, more convenient to access for you. A cold wallet is offline. This is the most secure option and requires storing your crypto on an external drive. It’s imperative to ensure the device is in good condition and keep the code safe. If it disappears, so makes your investment.
