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If you’re new to the world of crypto, figuring out how to buy Bitcoin, Dogecoin, Ethereum and other cryptocurrencies can be confusing at first. Thankfully, it’s pretty simple to learn the ropes, even if you’re a beginner.
It’s important to keep in mind that this highly volatile asset class is prone to fluctuations and not for the faint-hearted. As an example, Bitcoin, traded close to $US70,000 in late 2021 and yet by June of 2022 was trading below $US18,000 before recovering to hover around the $US20,000 mark the following month. All up, Bitcoin has fallen 70% in value since November.
Nevertheless, if you’re aware of the risks, but still keen to invest in cryptocurrency follow these five steps:
To buy cryptocurrency, first you need to pick a broker or a reputable crypto exchange. While both avenues allow you to buy crypto, there are key differences between them to keep in mind.
Naga
Maker fee: 0,40% Taker fee: 0,40% ; Cryptocurrencies Available for Trade: 30+
*Crypto assets are unregulated & highly speculative. No consumer protection. Capital at risk.
A cryptocurrency exchange is a platform where buyers and sellers meet to trade cryptocurrencies. Exchanges often have relatively low fees, but they tend to have more complex interfaces with multiple trade types and advanced performance charts, all of which can make them intimidating for new crypto investors.
Some of the most well-known cryptocurrency exchanges are Coinbase, Gemini, Binance and eToro. While these companies’ standard trading interfaces may overwhelm beginners, particularly those without a background trading stocks, they also offer user-friendly easy purchase options.
A host of Australian-based exchanges, such as CoinSpot, Swyftx and BTC Markets, allow users to purchase a range of cryptocurrencies with AUD, including through bank transfers, in some instances, or via BPAY. Make sure you investigate trading and transaction fees, and research the Australian-based exchange. Is it secure and does it include support? Does it offer a wide variety of coins for trading? What are the terms and conditions?
Australian crypto exchanges must be registered with AUSTRAC, and comply with Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) legislation.
The convenience of exchanges does come at a cost, however, as the beginner-friendly options charge substantially more than it would cost to buy the same crypto via each platform’s standard trading interface. To save on costs, you might aim to learn enough to use the standard trading platforms before you make your first crypto purchase – or not long after.
Cryptocurrency brokers take the complexity out of purchasing crypto, offering easy-to-use interfaces that interact with exchanges on your behalf. Some charge higher fees than exchanges. Others claim to be “free” while making money by selling information about what you and other traders are buying and selling to large brokerages or funds or not executing your trade at the best possible market price.
While they’re undeniably convenient, you have to be careful with brokers because you may face restrictions on moving your cryptocurrency holdings off the platform. With some, for example, you cannot transfer your crypto holdings out of your account.
This may not seem like a huge deal, but seasoned crypto investors prefer to hold their coins in crypto wallets for extra security. Some even choose hardware crypto wallets that are not connected to the internet for even more security.
Once you decide on a cryptocurrency broker or exchange, you can sign up to open an account. Depending on the platform and the amount you plan to buy, you may have to verify your identity. This is an essential step to prevent fraud and meet regulatory requirements.
You may not be able to buy or sell cryptocurrency until you complete the verification process. The platform may ask you to submit a copy of your driver’s licence or passport, and you may even be asked to upload a selfie to prove your appearance matches the documents you submit.
To buy crypto, you’ll need to make sure you have funds in your account. You might deposit money into your crypto account by linking your bank account or making a payment with a debit or credit card (watch out for high charges from your card provider with the credit card option – see below).
Depending on the exchange or broker and your funding method, you may have to wait a few days before you can use the money you deposit to buy cryptocurrency.
Here’s one big buyer beware: while some exchanges or brokers allow you to deposit money from a credit card, doing so is extremely risky – and expensive. Credit card companies process cryptocurrency purchases with credit cards as cash advances. This means they’re subject to higher interest rates than regular purchases, and you’ll also have to pay additional cash advance fees.
For example, you may have to pay 5% of the transaction amount when you make a cash advance. This is on top of any fees that your crypto exchange or brokerage may charge, and these can run up to 5% themselves, meaning you might lose 10% of your crypto purchase to fees.
Once there is money in your account, you’re ready to place your first cryptocurrency order. There are hundreds of cryptocurrencies to choose from, ranging from well-known names like Bitcoin and Ethereum to more obscure cryptos like Theta Fuel or Holo.
When you decide on which cryptocurrency to purchase, you can enter its ticker symbol – Bitcoin, for instance is BTC – and how many coins you’d like to purchase. With most exchanges and brokers, you can purchase fractional shares of cryptocurrency, allowing you to buy a sliver of high-priced tokens like Bitcoin or Ethereum that otherwise cost thousands of Australian dollars to own.
Cryptocurrency exchanges are not regulated in Australia, and some would-be investors have even fallen victim to theft or hacking. You could even lose your investment if you forget or lose the codes to access your account. That’s why it’s so important to have a secure storage place for your cryptocurrencies.
As noted above, if you’re buying cryptocurrency via a broker, you may have little to no choice in how your cryptocurrency is stored. If you purchase cryptocurrency through an exchange, you have more options that may or may not suit you:
While buying cryptocurrency is a major trend right now, it’s a volatile and risky investment choice. If investing in crypto on an exchange or via a broker doesn’t feel like the right choice for you, here are a few options to indirectly invest in Bitcoin and other cryptocurrencies:
eToro
Get millions of investment ideas on eToro with the power of social investing ; Share in the knowledge of 25M users and invest in 0% commission stocks
*Crypto assets are unregulated & highly speculative. No consumer protection. Capital at risk.
Exchange traded funds are popular investments that let you buy exposure to hundreds of individual holdings in one fell swoop. This means they provide immediate diversification and may be less risky than selecting individual investments.
There has long been an appetite for cryptocurrency ETFs, which allow you to invest in many cryptocurrencies at once. The first cryptocurrency ETFs for private investors are rolling out in the Asia Pacific: recently Sydney-based ETF Securities and Switzerland’s 21Shares joined forces to trade Bitcoin on the Cboe Australia exchange. Cosmos Asset Management’s bitcoin feeder ETF has also launched in Sydney.
If you’d rather invest in companies with tangible products or services and that are subject to regulatory oversight—but still want exposure to the cryptocurrency market—you can buy shares in companies that use or own cryptocurrencies and the blockchain that powers them. You’ll need an online brokerage account to buy shares in publicly-listed companies such as:
As with any investment, make sure you consider your investment goals and current financial situation before investing in cryptocurrency or individual companies that have a heavy stake in it. Cryptocurrency can be extremely volatile – a single tweet can make its price plummet – and it’s still a very speculative investment. This means you should invest with caution.
Be aware, too, of bad actors infiltrating the crypto space. As the Australian Government’s Australian Competition and Consumer Commission (ACCC) points out, Australians lost over $205 million to scams between 1 January and 1 May of 2022, with $113 million of those losses related to crypto.
This article is not an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency as an investment class.
Related: How to Buy Cryptocurrency in 5 Minutes
Kat Tretina is a freelance writer based in Orlando, FL. She specializes in helping people finance their education and manage debt.
Johanna Leggatt is the Lead Editor for Forbes Advisor, Australia. She has more than 20 years' experience as a print and digital journalist, including with Australian Associated Press (AAP) and The Sun-Herald in Sydney. She is a former digital sub-editor on The Guardian and The Telegraph in the UK, and lives in Melbourne.
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