You keep hearing about it, but what exactly is bitcoin and how do you buy it? Read on for finder.com.au’s definitive guide.
There are two main ways to buy bitcoin in Australia.
- Use a bitcoin broker. This is probably the easiest way to buy bitcoin. If you just want to get it done quickly and easily, and have no plans to become a cryptocurrency trader, then this might be the way to go. The downside is that convenience comes at a cost, and you pay a bit more for the brokerage services.
- Buy from an exchange. Cryptocurrencies like bitcoin are traded on exchanges. If you want to buy bitcoin as cost-effectively as possible, or plan on doing more trading in future, then choosing a reliable exchange might be what you want to do.
How to begin and what to do first
Before getting started, you need a place to put your bitcoin. That means either getting a wallet or looking for a broker/exchange that offers you a wallet as part of its service.
Cryptocurrency wallets in Australia: How to choose
If you’re a cryptocurrency beginner, there are probably three basic types of wallets you might consider.
- Desktop - Simple, secure, easy to use and popular, this wallet is in the form of a program you download to your computer. It’s quick and easy, but you want to be sure that your computer is free of viruses or malware.
- Smartphone - The same as above, but it’s an app for your phone instead.
- Hardware - An option for holding your currency securely offline in a more physical form. These wallets are like USBs or hard drives that hold your cryptocurrency.
You can compare hardware wallets here. They can be a good combination of security and familiarity for anyone who’s not entirely confident with new technology, and they can also be a good physical backup to have on hand.
How to buy bitcoin in Australia
You can get bitcoin in three simple steps.
Step 1 - Create a wallet
You can download and create a wallet online. The wallet is where you hold your bitcoin, and there are plenty of options, such as Blockchain.info. This wallet is widely used, backed by millions in venture capital and is designed to be simple and reliable. To set it up securely, just follow the prompts in the security centre. It's much like downloading and installing any other software.
Step 2 - Find a bitcoin service and make your payment
Choose a service you like and make your money transfer. The quickest and simplest way is to find a broker to buy bitcoin on your behalf, but you might also create an account on an exchange if you're looking for better value for money and want to get more deeply involved in cryptocurrency.
You will probably need to verify your identity with the service, depending on how much bitcoin you want to buy. This is done by providing proof of identity. Bitcoin is infinitely divisible, so you can buy just a tiny fraction of a coin if you want.
To buy from a broker, you send them money and they send you bitcoin. To buy from an exchange, you send money to your account and then use it to buy bitcoin on the open market.
Step 3 - Receive your bitcoin
Provide your wallet address to receive your bitcoin. The address will look like a long string of numbers and letters, about 15 digits long. It's easy to find with most wallets. On Bitcoin.info, you can find your wallet address in the Request tab.
Brokers and exchanges will request the address. Remember that you won't be able to receive bitcoin if you haven't provided it.
Once the transfer has been initiated, it will usually show up in your wallet in under an hour. Brokers will usually give a set timeframe in which you can expect to receive your bitcoin, while exchanges will often show their transfer times in "confirmations." Depending on how busy the network is, each bitcoin confirmation is roughly ten minutes. So if an exchange says your coin is sent in four confirmations, you can broadly expect it to take about 40 minutes before it's visible in your wallet.
How to choose a broker or exchange
Decide whether you’re happy to pay premium prices for a reliable bitcoin seller, or if you’re happy to go on the exchanges and hunt for a bargain instead.
To pick one, you should look at the following:
- Whether they are exchanges or buying/selling services. At an exchange, you’ll be trading with other users while a buying/selling service, or broker, can simply sell you bitcoin.
- Accepted payment methods. POLi lets you make quick and free bank transfers and is one of the most widely accepted payment methods when buying bitcoin in Australia. If that suits you, then most providers can offer it. If you’re looking for alternatives such as paying with cash, BPAY, credit card or PayPal, you might have to search more widely.
- Whether you need your own wallet. If you have your own wallet, then you don’t need to worry about it. If you don’t, then you might want to start with a provider that offers its own in-built wallet.
- Whether they require verification. Most reputable services will require you to verify your identity, but some will still let you conduct smaller transfers without verifying your identity. Verification can take a day or two, so if you’re in a hurry or want to transact anonymously, you might want to look for the no-verification providers. Otherwise, simply be ready to provide some identification after signup.
We’ve assembled here a list of some legitimate services for your consideration. All you have to do is pick one that suits your needs, follow the steps provided and transfer some Australian dollars, other supported fiat currency or cryptocurrency for bitcoin.
Compare bitcoin brokers and exchanges
How to get bitcoin without buying it
There are other ways to get bitcoin as well.
The following are the main ones:
- Charge bitcoin for goods and services. You can request payment in bitcoin instead of AUD.
- Mine bitcoin. It’s now extremely hard for any individual to make money from mining bitcoin. However, if you’re still interested, learn more about bitcoin mining here.
- Earn free bitcoin. Although time-consuming, there are a handful of legitimate ways to earn small amounts of free bitcoin through online games and bitcoin faucets.
How to invest in bitcoin and cryptocurrencies
If you’re interested in playing the market and getting more involved in cryptocurrencies, then the exchanges, rather than the brokers, might be where you want to be.
You’ll find brokers willing to buy bitcoin from you, but typically you’ll probably be able to find better prices by selling to other users on an exchange instead.
A full-feature exchange that lets you set limit orders and do more all round than simply trade at current market value can be exceptionally useful with an asset as volatile as bitcoin.
What’s the cheapest way to buy bitcoin?
The cheapest way is probably to charge bitcoin for goods or services, or receive bitcoin donations. But the most cost-effective way to buy bitcoin might be to purchase them from an exchange during a slump in the market.
What’s the quickest way to buy bitcoin?
The fastest way is probably to use a service like buyabitcoin.com.au that doesn’t require verification.
On platforms like this, people can buy the equivalent of up to AUD$9,000 in bitcoin as easily as entering their email address, their wallet info and transferring funds.
And getting a wallet can be as quick as going online and downloading one.
What’s the easiest way to buy bitcoin?
The easiest way to buy bitcoin in Australia is probably to use a reliable and simple bitcoin broker service. Some will even let you pay cash over the counter in a bank, or at a Smart ATM.
How does bitcoin work?
For users, bitcoin works the same as any other currency. Just like using your credit card or making a transfer for an international transaction, using a bitcoin exchange allows you to send a certain currency digitally to someone else. Bitcoin.com gives each user a digital wallet to store, send and receive bitcoin.
The bitcoin network works by using a public ledger called the blockchain. This ledger contains all processed transactions and is used to check a transaction’s validity by using digital signatures.
The value of bitcoin is established much the same as any other currency, with the exact value depending on the number of people using bitcoin and the number of bitcoin in circulation. The value of bitcoin can also be affected by relatively small events, trades or business activities.
Historical rate chart of BTC and AUD
How to sell bitcoin in Australia
The counterpart of buying bitcoin is selling it. Unless you're using it to pay for things directly, or trading it for other cryptocurrencies, selling bitcoin is how to actually get your money's worth from it.
Read the full guide to your bitcoin selling options, and how to get the best bang for your bit.
Who uses bitcoin?
Although it’s a digital currency, a wide range of businesses who exist both online and offline use and accept bitcoin. Bitcoin 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.
Popular Australian-based bitcoin exchanges
The table below outlines some other global platforms which facilitate the purchase, exchange and sale of bitcoin.
|Buy bitcoin and other high market cap altcoins with PayPal, credit card and more.||Buy bitcoin and Litecoin with your credit card, Western Union, Moneygram and more.||An in-person trading service that trades bitcoin for cash.||An exchange servicing parts of Asia and Europe (formerly BitX).|
|Buy and sell bitcoin at competitive rates using credit card and more.||An automated buy/sell bitcoin service||An exchange service that works with bitcoin and other digital currencies.||Purchase bitcoin with PayPal and credit cards.|
|Uses over the counter transfers for bitcoin purchases.||Bitcoin exchange based in Hong Kong which supports all major global currencies, even offering its own Bitcoin Debit Card.||Connect with bitcoin buyers and sellers through this peer-to-peer network.||Use a credit/debit card to buy bitcoin and other cryptocurrencies without having to verify your identity.|