Buying Bitcoin in Australia: A Beginners Guide
In terms of market capitalisation, Bitcoin (BTC) is the largest cryptocurrency in the world. Created in 2009, Bitcoin’s value has dramatically increased and is now a trillion dollar market. Alongside it popularity, the trading of Bitcoin has grown multi-fold and it can now be bought and sold with almost every crypto exchange in the world.
Bitcoin is available for purchase by the everyday Australian as well as seasoned traders. All top Australian-based crypto exchanges provide this service. So how does one buy Bitcoin in Australia? This step-by-step guide outlines the process that a beginner can undertake to start their Bitcoin investment journey. To aid with the explanatory process, we have used Swyftx as the cryptocurrency exchange. Based on our research, Swyftx is the best overall crypto exchange in Australia to buy, trade and sell Bitcoin.
This guide provides a step-by-step process on how to buy Bitcoin with an Australian exchange. If you are looking for guided information on other popular topics such as the best crypto exchanges in Australia or how to buy other digital assets, you can find the links below.
Best Crypto Exchanges In Australia
How To Buy Cryptocurrency In Australia
How To Buy Ethereum in Australia
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How To Buy Bitcoin In Australia
An overview of the five steps to buy Bitcoin in Australia is as follows:
- Open an account with Swyftx
- Verify your identity and activate 2 Factor Authentication (2FA)
- Deposit Australian Dollar (AUD) funds into your account
- Enter in the amount of Bitcoin to buy
- Review the transaction details and confirm
Guide to Buying Bitcoin in Australia
Step 1 - Opening An Account With A Crypto Exchange
Using our link to collect $10 BTC, go to the Swyftx website and click on the “Sign Up” button. This will redirect you to the registration page where an email address, password and phone number will be required to be provided.
Once the details are entered, accept the terms and conditions and click on “Create Account”.
Step 2 - Verify Your Identity
Using the new login details, login into the Swyftx account to commence the ID verification process. Since Swyftx is an Australian-based crypto exchange, it is legally required under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to obtain customer details and verify identities. This process must be completed before any AUD can be deposited into the account wallet.
The following will be required to complete ID verification:
- Email – login into the nominated email account and click on the email verification email sent by Swyftx.
- Phone number – Swyftx will send a SMS message to the nominated phone number.
- Identity – Swyftx will require copies of one Australia government issued document such as a passport or drivers licence.
The ID verification process with Swyftx takes less than 5 minutes to complete.
After the ID verification process is complete, we strongly recommend setting up 2 Factor Authentication (2FA). 2FA provides a basic level of security for the account where two methods of verification are needed to verify the account and also when funds are withdrawn. The 2FA set up page can be found under the “About” tab on the user account dashboard.
We suggest downloading Google Authenticator on a mobile device. The process will involve the use of the authenticator to scan a QR code or alternatively input a provided code to enable authentication of the device.
Tip: If the six digit code provided by Google Authenticator does not work, then go into the settings and sync the time correction for codes. This should rectify the issue.
Step 3 - Deposit AUD Into Your Account
Before Bitcoin can be purchased, Australian Dollars will need to be deposited into the account wallet. When it comes to depositing funds, it is wise to be mindful of the fees and the time taken to complete transfer of funds. Most Australian exchanges will offer several ways to deposit AUD, with the most common being direct bank transfer, POLi, and PayID. Swyftx is one of the few exchanges which offer deposits via credit card. Most of these methods will instantly deposit AUD into the account with the exception of bank transfers (unless via OSKO which is instant) and deposits made from credit cards. Swyftx do not charge any fees to deposit (or withdraw) funds into the wallet.
Note, that Swyftx will send an automated email notifying of the successful deposit of AUD funds into the wallet.
Step 4 - Enter In the Purchase
The buy window can be found under “Trade”. Next, click on “Buy” to view the screen below. The page will present the following:
- Amount of AUD in the wallet and available to spend.
- The current market price of Bitcoin.
- Several order types (market, limit, stop and recurring)
The default order type is “Market” which allows beginner investors to easily and quickly purchase Bitcoin in a single transaction. The other order types are for intermediate to advanced investors and a discussion of each type is detailed in our Swyftx review. Customers will have the option of either entering in the amount of Bitcoin they want to purchase, or the amount of AUD they want to spend to buy Bitcoin.
Step 5 - Review & Confirm The Purchase
After an amount of AUD is entered in, the amount of Bitcoin that will be purchased will be presented and will be inclusive of the trading fee (0.6%). Click on “Instant Buy” to review the transaction details and “Confirm Buy” to complete the purchase. Note, that once the purchase is confirmed, it cannot be reversed and AUD funds recovered.
Buying Bitcoin in Australia: Things You Should Know
What Is Bitcoin?
Bitcoin (BTC) is a digital currency that can be bought, traded or sold on a decentralised system. Since it operates over a decentralised ledger called the Blockchain, it is free of any regulatory governance or oversight from financial institutions or govnernments. Instead, it relies on peer-to-peer software and cryptography.
Since it’s public launch in 2009, the value of a single Bitcoin was $150. Since then, its value has risen dramatically and one Bitcoin in 2021 is worth around AUD$72,000. The number of Bitcoins that can be mined is capped at 21 million, and many expect its price to continue to rise due to the finite supply and blockchain technology becomes more mainstream.
How The Bitcoin Blockchain Works
The public ledger on which Bitcoin works records all transactions with copies held on computer servers around the world. Each computer server is known as a node. When Bitcoin is b9ought, traded, or sold, the details of the transaction are made known to every node. Therefore, this means that every transaction is transparent to everyone. Transactions are collected by miners who const1ruct a digital block, with each block added to the blockchain.
The Origins of Bitcoin
Bitcoin was created by a person, or persons, known as Satoshi Nakamoto. In August 2008, Nakamoto authored a whitepaper titled Bitcoin: A Peer-to-Peer Electronic Cash System. In January 2009, the software open-source code was implemented and Bitcoin was released. The Bitcoin network was created when Nakamoto mined the first block of the blockchain, known as the “genesis block”.
Why Was Bitcoin Created?
Bitcoin was created as a digital alternative to traditional fiat currencies such as the United States Dollar (USD) and Australian Dollar (AUD). The intention was for it to be traded over the internet as a payment system that would be free of the control of financial institutions and governments.
Is Bitcoin Safe?
The cryptography that underpins the Bitcoin blockchain is based on the Secure Hash Algorithm (SHA-256) algorithm designed by the United States National Security Agency (NSA). In theory, a hacker would need to control at least 51% of the entire BTC network in order to create the consensus that they owned the associated Bitcoin. Transfers of the ‘owned’ Bitcoin could then be made to several wallets. Given the growing vastness of the network, a breach is highly impractical and unlikely.
There have been several high-profile cases of security breaches and losses or theft of staggering amounts of Bitcoin and other digital assets. The most infamous case is the Mt Gox case where approximately $350 million worth of Bitcoin was lost. Cases such as this have revolved around the theft or loss of digital assets held in storage by cryptocurrency exchanges and not the blockchain itself.
What Is Bitcoin Mining?
Bitcoin mining it eh process where new Bitcoin is created on the blockchain network. Transactions involving the purchase, trading or selling of Bitcoin are eventually collected by miners and placed into new blocks. This is achieved by completing a cryptographic calculation The first miner to solve the calculation on t4he next block broadcasts it to the network, and if correct is added to the blockchain. The miner is then rewarded with a small amount of BTC.
Is Buying Bitcoin Legal in Australia?
The purchasing, trading, and selling of BTC and other digital assets is legal in Australia and is recognised as property by the Australian Tax Office (ATO). Since 2017, laws and regulations have been progressively introduced to control the crypto market. The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 mandates that all Australian-based crypto exchanges are registered with AUSTRAC and adhere to specific security requirements.
What Is The Best Platform to Buy Bitcoin In Australia?
In our opinion, the best cryptocurrency to buy Bitcoin is Swyftx. The Australian-based exchange is one of a few exchanges which utilise multiple order books to provide higher liquidity on trading pairs. The higher trading volume and market depth allow Swyftx to offer lower spreads. The platform is feature-rich and carefully designed with beginner and experienced investors in mind. A close second is Digital Surge.
What Is The Smallest Amount Of Bitcoin That Can Be Bought?
Investors residing in Australia are able to buy fractional amounts of Bitcoin. The minimum amount of Bitcoin that can be bought is governed by the cryptocurrency exchange and usually start upwards of AUD$2. The smallest unit of Bitcoin, the Satoshi, is a hundred millionth of one Bitcoin. The trading fee would exceed the purchase price and therefore making it impractical. Minimum Bitcoin purchase amounts are in place to account for mining and transaction fees.
What Is Bitcoin Dominance?
According to Forbes, Bitcoin is the dominant cryptocurrency amongst approximately 5,000 other coins and digital assets. Bitcoin dominance is the measure of the percentage of Bitcoin within the total cryptocurrency market cap. If there is an increase in Bitcoin dominance, alternate cryptocurrencies lose value against BTC and vice versa. At the time of writing, the total cryptocurrency market cap is estimated to be $1.94 Trillion. BTC has a market of approximately $875 Billion, therefore BTC dominance is around 45%.
How Do I Choose A Crypto Exchange?
With so many Australian-based crypto exchanges available, beginners may find it difficult to know which exchange is best for them. Before you start buying Bitcoin, here are a few important considerations to take on board to assist with comparing exchanges.
- Interface Usability – Beginners should ideally be seeking out a User Interface (UI) which is simplistic, intuitive to use and therefore making the trading experience easier and more enjoyable. Features that beginners should be on the look out for include instant deposits and withdrawals, instant buying and selling.
- Deposit Method – The method of depositing AUD funds into the account wallet will vary from exchange to exchange. The most common ways include direct bank transfer, BPay, POLi and credit / debit cards. The fees incurred and speed of the transaction should also be considered.
- Fees – Australians should be aware of the various fees that may be incurred when trading Bitcoin on a cryptocurrency exchange. Fees may include deposit fees (most exchanges charge zero deposit or withdrawal fees), withdrawal fees and trading fees (between assets, e.g. Bitcoin to Ethereum). Although not considered a fee, spreads will apply to each transaction. The spread is the difference between the buy and sell price for a quoted cryptocurrency.
- Supported Crypto – Almost all exchanges will provide Bitcoin as a purchasable and tradeable asset. However, if there is a possibility of diversifying into other cryptocurrencies then the number and type of supported cryptocurrencies and trading pairs (e.g. BTC-ETH) should be assessed.
- Liquidity & Volume – The larger and more established digital currency exchanges will tend to have access to greater liquidity compared to smaller cryptocurrency exchanges. Liquidity refers to how easily one asset is converted into a fiat currency or another asset. The higher the liquidity of an exchange, the easier and faster it will be to complete fiat-to-crypto and crypto-to-crypto transactions.
- Security Measures – Before you choose a crypto exchange, ensure that they are registered with AUSTRAC. Industry standard security measures for Australian crypto exchanges typically include multi-location and offline cold wallet storage of funds, a combination of hot and cold fund storage, multi-signature verification withdrawal process, and 2FA. Other features may include user private key control, ID verification, notification on account activity (i.e. email and / or SMS), proof of reserve, email encryption and 24/7 security protocol monitoring and penetration testing by third-parties.
- Quality of Customer Support – Most exchanges provide a ‘knowledge’ or ‘education’ section of their website, however some exchanges do this better than others. Beginners should explore the customer support features of the exchange. Support tools to assist with immediate troubleshooting advice or assistance may come in the form of a ticket system or live chat bot.
What Is A Cryptocurrency Exchange?
A cryptocurrency exchange is an online platform where cryptocurrencies and digital assets can be bought and sold in exchange for tokens at market prices. There are three types of crypto exchanges:
- Fiat-to-crypto exchanges where involve the local currency (e.g. AUD, USD) is traded for crypto (e.g. BTC).
- Crypto-to-crypto exchanges where digital assets and coins can be traded for other assets, otherwise known as trading pairs (e.g. BTC-ETH).
- A combination of the above.
Types of Crypto Exchanges
There are three types of cryptocurrency exchange:
- Decentralised Exchanges (DEX) – A crypto exchange that is not governed by a central authority and transactions are made from peer-to-peer. Blockchain technology is the vector for the trading of assets between customers.
- Centralised Exchanges (CEX) – A cryptocurrency exchange that is governed and regulated by a central authority.
How To Spend Bitcoin In Australia
The number of ways Bitcoin can be used or spent in Australia is increasing. Traders and investors can use Bitcoin to purchase goods and services using the following methods (but not limited to):
- Direct transferring of crypto from a wallet to the recipients address.
- Using a cryptocurrency debit card to send Bitcoin to a merchant. The process is akin to using a standard debit card where held assets can be accessed or loaded onto the card. Some exchanges offer this services, whilst others do not.
- Pay Australian bills directly using the Bitcoin BPAY biller code. Cointree and Digital Surge offer this service.
- Use stored Bitcoin to withdraw AUD from a Bitcoin ATM.
- Use Bitcoin to purchase goods from merchants such as Mooning Market. Moon Market works similar to Amazon and eBay.
Storing Bitcoin in Australia
Deciding on how to store Bitcoin in Australia comes down to two options. Firstly, Bitcoin can be kept in the exchanges storage system, which can be cold-storage (wallet), or a combination of hot and cold-storage. Secondly, cold-storage wallets may be used by individuals to hold Bitcoin offline and usually in a physical state.
- Hot storage refers to a wallet that is connected to the internet and can be accessed at any time. Examples include online cloud wallets, mobile wallets, software wallets and exchanges. Hot wallets are great for keeping an amount of BTC available for frequent buying, trading and selling.
- Cold-storage refers to a physical means of keeping crypto in a storage device and are only accessible by the wallet owner. Examples include hardware wallets such as CoolWallet Pro and the Ledger Nano X. Cold-wallets are not connected to the internet.
Since hot-wallets (e.g. exchanges) are connected to the internet, BTC may be susceptible to loss, damage or theft, albeit the risks are low. With this in mind, investors and traders should be seeking a reputable and trustworthy exchange that has a stellar security record. The best way to mitigate against this potential risk is to store Bitcoin in a cold-storage wallet.
The key function of a cold wallet is to provide an extra security mechanism between the internet-connected device (e.g. computer) and the asset. All wallets will have a private key that legitimises access to the stored asset. Most wallets usually come equipped with a variety of recovery options in case the wallet is lost or damaged.
Frequently Asked Questions
Is It Legal To Buy Bitcoin In Australia?
The purchasing, trading and selling of Bitcoin and other digital assets is legal in Australia and is recognised as property by the Australian Tax Office (ATO). Since 2017, laws and regulations have been progressively introduced to control the crypto market. The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 mandates that all Australian-based crypto exchanges are registered with AUSTRAC and adhere to specific security requirements.
Is Bitcoin Taxed In Australia?
If capital or financial gains are met with the buying, trading, or selling of Bitcoin, then it will be subject to Capital Gains Tax (CGT) under the Australian Tax Office (ATO) regulations. This typically applies to individual investors. On the other hand, traders who earn Bitcoin as payment resulting from commercial business will likely incur Income Tax.
For more information, read our guide on Bitcoin tax in Australia and consult a financial advisor.
Can I Use Bitcoin To Pay For Australian Bills?
Can I Buy Bitcoin Using A Credit Card?
Bitcoin can be purchased using a credit card however it depends on what exchange you are using as not all with provide this service. An exchange that accepts credit card as a method to make AUD deposits will be essential. The fees are typically higher however the method provides a level of convenience. Reputable and trustworthy exchanges should be used to buy Bitcoin with a credit card such as Binance or Coinbase.
Can I Buy Bitcoin At An ATM?
A Bitcoin ATM is an internet-based connection kiosk where consumers can deposit cash in exchange for BTC or vice versa. They are usually associated with a particular cryptocurrency exchange where Bitcoin is sent to the customer’s wallet using a QR code. Bitcoin ATMs typically charge high fees, where the service fee is around 7-20% of the transaction amount.