When it comes to investing, few things have grabbed the interest of inexperienced public traders and market veterans alike more than cryptocurrencies. And one crypto stands out above them all — Bitcoin (BTC). Whether you have always wanted to buy Bitcoin in Australia and think now is the right time or you are still learning about cryptocurrency and want to make your first trade, this guide can help you better understand Bitcoin and learn how to add it to your portfolio.
Read on to learn more about the most popular cryptocurrency in the world, cryptocurrency exchanges, how to trade Bitcoin in Australia, some things to consider when making your investment and ways to monitor it.
Table of Contents
What is bitcoin?
What is a cryptocurrency exchange?
What should you look for in a cryptocurrency exchange?
How do you make a deposit and purchase bitcoin?
How to manage your risk when buying bitcoin
How to monitor your bitcoin investment
What is Bitcoin?
Bitcoin was the first type of cryptocurrency in the world and has grown to become the largest. Cryptocurrency is a decentralised digital transaction tool, which means it is not controlled by any single bank, government institution or other organisation. Bitcoin and other cryptocurrencies use blockchain technology, which records and stores transaction records. Cryptocurrencies are sent and received via digital cryptocurrency wallets and cryptocurrency exchanges, which act as marketplaces for trading crypto (more on these in a moment).
Bitcoin was invented by Satoshi Nakamoto in 2009. Nobody knows exactly who Nakamoto is — the creator could be one person or a group of people. Throughout its history, Bitcoin has built a reputation for being volatile. In July 2010, it made its first big jump from $.0008 in value to $.08 and has seen plenty of movement since. After a series of ups and downs, Bitcoin started to really rise in value (with accompanying dips, as well) in 2017. There was a lot of momentum behind Bitcoin in 2020 and into 2021. In April 2021, it hit an all-time high of $64,603.24. Since then, there have been peaks and troughs in this cryptocurrency.
What Is a Cryptocurrency Exchange?
Traditionally, a cryptocurrency exchange is where people “meet” digitally to exchange Bitcoin and other types of crypto. As mentioned above, exchanges are platforms that can be considered a type of marketplace. They are important pleces when it comes to figuring out where to purchase Bitcoin in Australia.
Exchanges allow you to buy or sell Bitcoin and other cryptocurrency as well as exchange one type of coin for another through the use of what is called trading pairs. This is similar to how forex trading works — two types of currency are paired up to form an exchange rate. Some Bitcoin exchanges also allow you to use traditional currency — known as fiat money — to buy Bitcoin in Australia.
Different types of cryptocurrency exchanges
There are several different styles and methods of accessing cryptocurrency exchanges on which you can buy Bitcoin in Australia. Here are a few options.
Cryptocurrency trading platforms are good options for traders of varying investing experience. Most platforms have easy-to-use apps that let you monitor prices and trade with just a few taps. Many of these have some degree of centralisation, which means that there is an aspect of regulation or governance by the owner of the platform. That can potentially lead to more security when trading. In general, you will make your chosen amount of crypto or fiat money available in your account to make exchanges. There are also decentralised exchanges and platforms that simply facilitate trading from one wallet to another. They never actually handle your crypto.
A Bitcoin broker, also known as a Bitcoin retailer, is an individual or business that trades Bitcoin directly to investors. This can be a great option for those in the earlier stages of learning how to invest in Bitcoin in Australia. Brokers act as a middle man between the crypto market and investors. Depending on which broker or retailer you use, you can perform crypto-to-crypto trades as well as purchasing crypto using fiat money.
Peer-to-peer exchanges give traders the chance to interact directly with other people. Sometimes there will be a third party involved to help ensure that the transaction goes smoothly and to help prevent fraud or scamming.
A derivatives platform is another option for those who are more experienced and already know how to invest in Bitcoin. This generally involves agreeing with another party to buy or sell based on a future price point.
One of the most popular aspects of Bitcoin and other cryptocurrency is the aforementioned lack of regulation or centralisation. But that can also come with some risk, as there can be less oversight and governance. That means it is important to research a cryptocurrency exchange before you use it.
What Should You Look For in a Cryptocurrency Exchange?
With so many options out there, it is important to do some research when deciding where to buy Bitcoin in Australia. Here are some things to consider when determining which type of crypto exchange and which specific outlet works best for you.
- Your experience. As mentioned earlier, there are some platforms that can feel more welcoming than others, which can make them better suited for crypto beginners. Brokers can make things easier, as can a range of apps that can suit traders new and old, active and passive. You might want to avoid derivatives platforms until you have more investing experience.
- Trading fees. As with any type of investing, any fees associated with trading or profit taking should be considered when looking at different Bitcoin exchanges. These fees can add up, especially if you are a more active trader, and impact your margins.
- Exchange options. If you want to buy Bitcoin in Australia with fiat money or by exchanging other types of crypto, make sure you find an outlet that supports the currencies and cryptos you want to invest with and in. Most will feature Bitcoin trading capability.
- Security. Has the exchange ever been hacked or experienced other types of security issues? Does it have two-factor authentication for logging in or market-leading security certification? If it does, it should be pretty easy to find out.
- Word of mouth. The Bitcoin community is quite active digitally, with many spending time discussing the world of crypto on message boards and social media. While it is never smart to believe everything you read on the Internet, you can use these discussions and opinions to get a better idea of which exchange might suit you best. The trading community has the power to be a great, inclusive place for those learning.
Not to toot our own horn, but TBanque’s trading platform offers opportunities for new traders and veterans alike, with tools such as copy trading available to enable users to take a less ‘hands on’ approach to trading and gain from other investors. With low commission fees, secure trading and an active investor community, you can enjoy all of the benefits of the world’s leading social trading platform.
How Do You Make a Deposit and Purchase Bitcoin?
Once you have chosen an exchange and figured out a cryptocurrency investing strategy, it is time to make a deposit (or otherwise access your funds or other cryptocurrency) so you can actually buy Bitcoin.
First you need to set up an account. Often, this is similar to what you have done when you have set up an account on other online platforms and eCommerce sites. However, some crypto exchanges let you remain more anonymous, requiring little more than an email address and verification that you own that address. Others require more information upon sign-up.
As with purchasing other goods online, you will want to decide how you will fund your Bitcoin trading. Most outlets accept major credit and debit cards and bank transfers like those facilitated by services such as Osko and POLi. Some also accept BPay.
It might surprise you to learn that you can sometimes buy Bitcoin in Australia with cash as well. There are even things called Bitcoin ATMs into which you can deposit cash to buy Bitcoin that is sent straight to your digital wallet. While potentially dangerous, conducting a peer-to-peer trade in person is another way you can potentially buy Bitcoin with cash. Some platforms even have agreements with newsagents that let you complete transactions with over-the-counter cash payments.
Whichever payment or exchange method you choose, remember one of the tips from above — check any associated transaction fees either from the exchange or your financial institution. These can add up quickly, especially if you are an active trader.
How to trade Bitcoin on TBanque
Trading cryptocurrencies can be a very straightforward process. If you want to start investing Bitcoin on TBanque, there are five steps you can follow.
Step 1: Create an TBanque account
Step 2: Search for Bitcoin
Step 3: Click on “Trade”
Step 4: Insert your desired investment amount
Step 5: Click on “Open Trade”
Voila! It is as easy as that to use the TBanque platform to trade cryptocurrencies and a range of other markets. When you sign up to TBanque, you also gain access to a $100,000 demo account where you can test different strategies and see how your investments perform, before using real money.
How To Manage Your Risk When Buying Bitcoin
As with any type of trading, it is important to know how to manage your risk the best way possible when buying Bitcoin. Here are a few things to keep in mind.
What are some risks when buying Bitcoin?
One of the biggest risks when it comes to Bitcoin is its volatility. Since 2017, when the crypto really started to take off, it has continued to break through new price point barriers. But a lot of those highs also came with lows afterwards. This volatility leads to the same risk that all investments come with — the potential to lose all of the money you have put in.
New regulations imposed by governing bodies on businesses or Bitcoin itself can have a huge impact on the price of Bitcoin.
As Bitcoin and other cryptocurrencies have become more successful, there could be a higher level of liquidity risk. This means that you might not be able to withdraw your Bitcoin in the fiat money you desire any time you want.
Finally, a Bitcoin risk that has less to do with its value and more to do with your personal situation is security, both in regards to your own crypto wallet and also bitcoin exchanges.
How to combat Bitcoin risk in your investment
Many of the same concepts that go into managing any sort of investment risk, such as currency trading strategies, can apply to Bitcoin. These can be especially helpful when dealing with such a volatile asset.
Perhaps the most important of these is having an exit strategy. This can be established in a variety of ways, one of which is having the discipline to set a number at which you will stop trading. Another is to set up a stop-loss point. This is an automated tool that will stop you from trading, or lower your trading volume, when an asset drops to a certain value. It is important that your exit strategy takes the liquidity risk mentioned above into account.
Another good investment strategy across all markets is to diversify when possible. This can mean a few different things when buying Bitcoin. You might want to spread your investment across different coins, so if something happens to one of them, not all of your investment is compromised. It can be dangerous to get caught up in the wave of public support for Bitcoin and dedicate too much of your capital to it. Diversification in the broader sense is also important, and building a portfolio of different asset classes such as stocks, ETFs, commodities and so on, will help reduce your risk if one area of your investment is impacted.
For security purposes, practising healthy, smart digital safety habits can go a long way towards keeping your crypto safe. This includes proper password storage and creation and using two-factor authentication. Another option is to treat your digital wallet like your real wallet. Would you have all of your money as cash sitting in your physical wallet? Of course not. So consider not keeping all of your crypto in your digital wallet either.
How To Monitor Your Bitcoin Investment
Once you have made your Bitcoin investment, it is a good idea to know how to monitor it. Some more active traders like to know every rise and fall of each of their investments. Others choose a “set-and-forget” style of passive investing in which they check in periodically. Here are a few tips and tricks that can suit a range of investing interest and activity levels.
- Set up alerts. This is a great option if you use an online platform to trade Bitcoin in Australia. An example of this is setting price alerts on TBanque, which lets you enable notifications for real-time changes in value to assets like Bitcoin whether you have them in your portfolio or not.
- Do not get emotional. Investing based on fear, pride, sadness or any other emotion can be dangerous. Avoid investing based on emotion by setting target prices for entering and exiting the bitcoin market. One example of this is the stop-loss point referenced earlier.
- Keep your eye on the big picture. While some investors like to pay attention to every single dip and rise in the market, that might not be the best way to monitor your Bitcoin investment. Your investment in Bitcoin will depend on whether you view the coin as a long-term or short-term strategy. While both have their merits, it is your decision as to which method is best for the coin. Accordingly, when to enter or exit a position is completely up to you, but investors who can get caught up in the emotion might find long-term investments are a better strategy to utilise.
- Read the news. Some successful traders will often know less about the day-to-day happenings of their portfolio’s value and more about the moves and news associated with the companies and organisations tied to their investments. The same can be true for your bitcoin position. Stay updated on news and analysis about regulations and big investments, which can potentially help you learn more about the direction of Bitcoin than daily dips and rises.
By knowing how to buy Bitcoin in Australia and having a clearer picture of what to consider when doing so, you can potentially make a more informed decision about getting involved in the cryptocurrency market. Ready to get started? Check out all the great features of the TBanque Trading Platform, which can help you make your first Bitcoin investment today.
Join TBanque today and discover how Bitcoin is performing.
This information is for educational purposes only and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to, buy or sell any financial instruments. This material has been prepared without regard to any particular investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as a reliable indicator of future results. TBanque makes no representation and assumes no liability as to the accuracy or completeness of the content of this guide. Make sure you understand the risks involved in trading before committing any capital. Never risk more than you are prepared to lose.