Cryptocurrency has been on a wild ride in the past week and the massive price drops could offer would-be investors an opportunity to buy.
Some investors are hanging onto their coins and remaining upbeat that a recovery is on the horizon, while analysts say last week’s crash could be just a little taste of what’s to come, labelling the crypto market a “bubble” that could pop at any time.
Keeping in mind that regulators have warned anyone investing in crypto should be prepared to lose all their money, there are ways Aussies can take a gamble on the digital coins through a number of platforms.
Here’s how to buy crypto in Australia.
Choose a trading platform
Do your research and choose an online exchange or trading platform. Most will allow you to create an account and transfer in Australian dollars to buy and sell.
Some of the popular platforms include Swyftx, Binance, CoinSpot, Digital Surge and CoinJar, but there are plenty more out there with more than 20 available platforms.
Finder believes that CoinSpot is the most beginner friendly, Digital Surge is best for Aussie transactions and lets you pay bills using BPay and Bitcoin, Binance has the lowest fees, Swyftx is best for altcoins (any coin other than bitcoin) and eToro is best for traders.
According to Similarweb, the most-visited cryptocurrency exchange website in the world between November 2019 and January 2020 was Coinbase, with more than 57 million website visits worldwide.
The second most-visited cryptocurrency exchange was Binance, with 53 million visits.
When choosing a platform, it’s best to research authenticity and security, ease of use, fees and hidden charges, trading features, number of coins offered, methods of payment and the ability to buy coins with the Aussie dollar so you’re not paying conversion fees.
You could test out the quality of a platform via their live customer service chat too.
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Create an account and a digital wallet
Personal details including ID will usually be required if buying cryptocurrency with Aussie money as the platforms are subject to anti-money laundering and counter-terrorism financing regulations.
Make sure you set up a two factor authentication to give your account an added layer of security.
You will need to create a wallet on one of these platforms to hold your currency.
But be wary because a computer hacker can steal the contents of your digital wallet, warns the government’s Moneysmart.
“Your digital wallet has a public key and a private key, like a password or a pin,” it said. “However, digital currency systems allow users to remain relatively anonymous and there is no central data bank.”
If hackers steal your digital currency, you have little hope of getting it back. You also have no protection against unauthorised or incorrect debits from your digital wallet either.
If you have time, you might decide to look at the difference between a ‘hot’ wallet – one that is online — and a cold wallet. It boils down to whether you want the online one that comes with your account, or one that’s offline and less at risk from security issues.
Go to the buy section of the platform
Add your bank account details and deposit Aussie dollars into your account, which should generally be free.
Crypto exchanges typically don’t let you trade in very small amounts of money though. Generally a minimum of $25 per investment is needed, according to RateCity, so if you’ve decided on $100 to test the waters, consider splitting it up between several investments.
Be aware that not all cryptocurrencies are offered on every platform, but once your account is set up and has some funds you can purchase from the buy/trade crypto section.
Make sure to research what crypto you want to buy as there are more than 9000 forms out there.
Enter how much you want to invest or how much of the coin you want to buy, check the details are correct and then confirm your purchase.
The platforms where you buy and sell cryptocurrencies are not regulated. You’re not protected if the platform fails or is hacked, warns Moneysmart.
Cryptocurrency failures in the past have lost investors significant amounts of real money, it added.
In most countries cryptocurrencies are not recognised as legal tender and you’re only protected to the extent that they fit within existing laws, such as tax laws.
Investing in cryptocurrency is also highly speculative.
Scammers can use social media and messaging apps to push up the price. They sell the tokens to other buyers at falsely inflated prices and this is known as a ‘pump and dump’ scheme, Moneysmart said.
Scammers can trick people into investing in fake opportunities to buy cryptocurrency in a number of ways.
This includes false promises of very high returns, fake support from celebrities or government agencies when people contact you through social media, using dating apps to establish a romantic connection, as well as multiple or constantly changing bank accounts used for transfers.