how to buy bitcoins

How to buy bitcoins

Rates and Fees verified correct on December 8th, 2016

You keep hearing about them, but what exactly are Bitcoins and how do you buy them? Read on for finder.com.au’s definitive guide.

Referred to as the currency of the internet, Bitcoin was established in 2009 as a peer-to-peer currency network that enables new people to transfer funds in the digital space. Bitcoin has taken the decentralised and user-centric ideas that have long-defined the internet and created a payment system void of central authorities, resulting in savings for those who use it.

Bitcoin is the world’s first start-up currency and is still in the early stages of its development. As a currency, the value of bitcoins depends on the current conditions of the Bitcoin network and therefore its value can be volatile.

Rates last updated December 8th, 2016
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How does Bitcoin work?

For users, Bitcoin works just the same as any other currency. Just like when you use your credit card or a transfer for an international transaction, when you use Bitcoin you are sending a certain currency digitally to someone else. Bitcoin gives each user a ‘digital wallet’ whereby they can store, send and receive bitcoins.

The Bitcoin network works by using a public ledger called the ‘block chain’. This ledger contains all processed transactions which is used to check a transaction’s validity, which can be done using digital signatures.

The value of Bitcoins is established much the same as any other currency, with the exact value depending on the number of people using bitcoins and the number of bitcoins in circulation. The value of bitcoins can also be affected by relatively small events, trades or business activities.

Who uses bitcoins?

Although it’s a digital currency, a wide range of businesses who exist both online and offline use and accept bitcoin. Bitcoins can be used to make payments online and in physical stores and any user can make these payments as long as they have the recipient's address. There is also no need for a merchant account to be set up in order to receive payments.

How do I buy bitcoins?

There are four ways to get bitcoins:

  1. Receive bitcoins as payment for goods and servicesAny business or individual can accept bitcoins as payment—all they need to have is a bitcoin digital wallet. The advantage for merchants is that bitcoin transactions are secure, irreversible and do not contain a customer’s personal information which protects losses caused by fraud. Using bitcoin for business is becoming popular due to lower fees and fewer admin costs, as well as being able to expand to markets where credit cards are unavailable or there are high rates of fraud.
  2. Purchase bitcoins at a bitcoin exchangeThere are several bitcoin exchanges available in countries across the world. In Australia, there are bitcoin traders that allow you to purchase the currency using over the counter transfers, cash deposits or bank transfers. These merchants charge varied percentage amounts for their services, usually between 1-2%.
  3. Exchange bitcoins with someone near youYou also have the option to buy bitcoins locally through LocalBitcoins.com. You can select your city and country and find people selling bitcoins and at what rates. There are a variety of sellers who are linked to different local banks and will sell bitcoins through transfers, cash deposits or other online payments. This site currently trades coins in 215 countries, including Australia.
  4. Earn bitcoins through competitive miningMining is the process of generating bitcoins with a computer. In essence you use your computer to help add transactions to the bitcoin public ledger. In return you’re paid transaction fees and a subsidy of new bitcoins. Anyone can process transactions using specialised hardware and software. Mining bitcoins is deliberately difficult to keep the number of coins in circulation at a steady number.

Where can I get bitcoins in Australia?

Bitcoins are readily available in Australia for those who want to purchase them. Bitcoin has various affiliate programs through which users can buy, trade, earn and spend bitcoins. Types of affiliate programs can include:

    • Forex.Users can use bitcoins to trade and make investments.
    • Bitcoin exchanges. Purchase bitcoins using different currencies, including Australian Dollars.
    • Buy bitcoin services. You can buy bitcoins from a physical location or online transaction by referring customers, deposits or betting addresses. This system is commission-based.
    • Advertising. You can pay users in bitcoins to visit sites, or you can earn bitcoins by monetising online content.
    • Gambling. You can use bitcoins to play in online gambling games, or be paid in bitcoins for your winnings.
    • Mining. As explained above, you can earn bitcoins by validating bitcoin transactions online.
    • Domain hosting. You can use bitcoins to register a domain name.

The table below outlines some sites and companies which facilitate the purchase, exchange and sale of bitcoins.

SpendBitcoins.comBitcointraderCoinJar FillerBitXjoin
Uses over the counter transfers for bitcoin purchases.Accepts cash deposits for bitcoin purchases.Charges 2% for buying and 1.1% for selling.Uses brokerage platforms to make over the counter cash deposits.
Bit Trade AustraliaBuyBitcoinAustraliaBitcoin4AustraliaBtcMarkets.net
An Australian exchange for bitcoins.An Australian exchange for bitcoins.Supplies bitcoins for cash by letting you make payments over the counter at major banks.A bitcoin exchange that operates in Australia.
Bitcoin AustraliaQuickBTCoinloftMt. Gox
Provides an exchange service to convert AUD to bitcoins.Instant Bitcoin payment using your bank account.Purchase bitcoins using Australian dollars via bank deposit.Bitcoin exchange that allows large purchases of bitcoins.
BitcoinsChile.clrBitco.inLocalBitcoins.com24change
Buy Bitcoins via Western Digital and Moneygram.A service that lets you borrow and win bitcoins.An in-person trading service that trades bitcoins for cash.An automated buy/sell bitcoin service.
TradeBitcoin.comVirwoXBitQuickJustCoin.com
In-person trading of bitcoins with people in your local area.Purchase bitcoins with PayPal and credit cards.Connects bitcoin seller and buyers directly to their own bank accounts.Bitcoin exchange based in Norway that supports euros, Litecoins and Ripple.
CoinMamaPrivatBitBitcoins For SaleXMLGold
Buy bitcoins and Litecoins with your credit card, Western Union, Moneygram and more.Exchange service that works with various payments methods for bitcoins.A service that finds, curates and sells bitcoins from eBay.An exchange service that works with bitcoins and other digital currencies.

Shirley Liu

Shirley is finder.com.au's publisher for banking and investments. She is currently studying a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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8 Responses to How to buy bitcoins

  1. Default Gravatar
    juby | July 28, 2016

    does coinbase provide service to australia

    • Staff
      Elizabeth | July 28, 2016

      Hi Juby,

      Coinbase just expanded its services to Australia yesterday. You’re able to buy bitcoins with a credit or debit card.

      Hope this helps,

      Elizabeth

    • Default Gravatar
      | July 28, 2016

      Bitcoin is legal in au? Do we need to declare it during the time of tax return.thank you

    • Staff
      Elizabeth | July 29, 2016

      Hi Juby,

      Bitcoin is legal in Australia. There are no tax implications if you’re simply paying for goods or services (for your personal consumption) in bitcoin. According to the ATO, any capital gains or loss from bitcoin will be disregarded if it is $10,000 or less. If you receive bitcoin as payment as goods for services you will need to record it in Australian dollars as part of your regular income.

      According to the ATO:

      “Transacting with bitcoins is akin to a barter arrangement, with similar tax consequences.

      The ATO’s view is that Bitcoin is neither money nor a foreign currency, and the supply of bitcoin is not a financial supply for goods and services tax (GST) purposes. Bitcoin is, however, an asset for capital gains tax (CGT) purposes.

      The records you require in relation to bitcoin transactions are:

      - the date of the transactions
      - the amount in Australian dollars (which can be taken from a reputable online exchange)
      - what the transaction was for, and
      - who the other party was (even if it’s just their Bitcoin address).”

      I hope this helps,

      Elizabeth

  2. Default Gravatar
    fred | May 2, 2016

    Hi,

    So basically it’s impossible to buy bitcoin in Australia anonymously? Because you either have to leave a trail online via BPAY or online banking(comes back to you if anyone looks), or walk in to a bank branch(under CCTV surveillance so just a matter of looking up time and date to find out who it is etc.)? Therefore defeating the entire purpose of paying for things anonymously. They really don’t like us being anonymous do they. Hence why cash is so rare these days I guess. Thanks anyway!

  3. Default Gravatar
    Brendan | April 29, 2015

    Hi if one was trying to set up a wallet and purchase bitcoins using a debit card for the past few months and found it virtually impossible to do. Is there anything you would suggest to have the ability to make this happen with a debit card that is Visa? In other words how the hek can you actually purchase these things
    /

    • Default Gravatar
      Christopher | October 30, 2015

      Hi Brendan,

      Bitcoin transactions are irreversible, Visa/Mastercard transactions are reversible. Only a few exchanges overseas accept Visa/Mastercard, because of the risk of somebody buying Bitcoins and then reversing the card transaction.

      The few exchanges that take the risk must increase their prices significantly to counter the risk, which then makes them uncompetitive. Darn.

      Most exchanges in Australia use bank deposits, except for Coinjar which uses Bpay (IMHO a very good way to do it, which is probably why it’s such a popular exchange in Australia).

      If you wanted to use your Visa card because you’re not sure if you can trust a Bitcoin exchange, then maybe you should try only sending small amounts of money to start off with. Although 1 BTC is worth $450, you can buy as little as $20 worth of Bitcoin. That’s how I started off, and if you’re unsure you can start by buying just that amount.

    • Staff
      Shirley | May 2, 2015

      Hi Brendan,

      Thanks for your question.

      To our knowledge there are no bitcoin exchanges based in Australia that accept debit cards as a form of payment for bitcoins, this method is available overseas. If you’re insistent on using your debit card, you may want to conduct some more research regarding international bitcoin exchanges.

      An option you may want to consider is using a bank transfer from your transaction account instead, this method is a lot more common for Australian bitcoin exchanges.

      I hope this helps,
      Shirley

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