As interest in blockchain grows so does the desire to trade cryptocurrencies. Daily average trade volumes for cryptocurrencies are now almost on par with the New York Stock Exchange, highlighting just how in-demand crypto trading has become.
The recent attention placed onto crypto has seen many ask - what’s the big deal and how do I get started?
Being new to crypto trading is much like entering the stock market for the first time. The lingo can be daunting, there are a number of different approaches, and everyone has stories of how it's gone amazingly right or horribly wrong. In this post we're going to simplify all the fluff and give you the information needed to buy cryptocurrencies in Australia.
The crypto world is rife with specific terminology. To avoid staring at your screen like a kid glued to early-morning cartoons, here are some of the terms you need to be aware of.
Wallets are how cryptocurrencies are stored. There are cold and hot wallets. Simply put, a hot wallet is connected to the internet, whilst a cold wallet is not. As such, a hot wallet can be used to trade cryptocurrencies whilst a cold wallet is more akin to a savings account. Cold wallets are used for security and storage. They are typically hardware, and as they are not connected to the internet are much more secure against hackers.
A cryptocurrency exchange is a digital marketplace for buying and selling cryptocurrencies using either fiat currencies or other cryptocurrencies. There are many different exchanges available. When selecting an exchange we recommend you consider the following:
- Platform security
- User Reviews
- Ability to purchase coins via PayPal, credit card, bank transfer, etc (there have been cases of banks blocking direct payments to coin exchanges)
- Ability to use different currencies to purchase coins
- Transaction fees
- What coins other than bitcoin (known as Altcoins) are available for purchase
Arguably the largest exchange is Coinbase. Founded and based in San Francisco, Coinbase has spent a lot of time on the user experience of their offering with useful charts and graphs, and also provide a large library of new-investor-friendly articles. Coinbase has a flat fee on transactions of under $200USD, and a variable percentage fee for all other trades. Australians are limited to $250AUD weekly deposits into the platform, which increase over time and as more verification is provided. Additionally, Coinbase are backed by a number of prominent investors, including banks, which has brought on animosity towards them from the more anarchic cryptocurrency believers.
Coinspot is one of the larger exchanges in Australia, and one of the most frequently recommended options for new Australian investors, due to their friendly user interface and massive list of Altcoins available to trade. Additionally, funds can be transferred directly from your bank to the exchange using POLiPay. However, their transaction fees are higher than alternatives. Transaction fees for Coinspot are 1% for crypto to crypto trades and 2-3% for AUD trades. Coinspot is typically recommended to investors who prefer the clean user interface or who plan to hold their coins rather than trading frequently.
Another popular Australian exchange for frequent traders is BTC Markets due to their low trading fee of between 0.1-0.85% per trade. Additionally, the transaction fee is reduced based on your 30 day trading volume. Their layout is not as user friendly as some other exchanges; however, experienced share traders should be used to such layouts. BTC Markets is generally recommended to investors who plan to trade frequently.
Be aware - each exchange requires a different level of verification to open your account, this can take a number of weeks. Many now require a form of identification (Passport or Driver's License) with some also requiring a selfie with you holding up a sign declaring your interest in trading cryptocurrencies. We strongly recommend you do your own research before deciding which exchange to use.
The Crypto Risks
Trading cryptocurrencies in Australia is still fraught with risk. There have been muddled reports of the big 4 banks freezing accounts associated with cryptocurrencies, and the relationships between banks and exchanges is still unclear.
Exchanges are also vulnerable to targeted attacks, and don't offer any insurance for loss of coins or server downtimes. Deciding to trade cryptocurrencies is choosing to be an explorer into a new world of investing. To maximise your security we recommend you create a difficult password, use two-factor identification, look into using a cold wallet for storing your coins away from potential security exploits, and like all investing, don't invest more than you can afford to lose. Cryptocurrency trading is extremely high risk, be sure to perform your own due diligence before entering the market.
Note: this article is intended as a general discussion and should not be considered as advice. Raisebook has not received any payment from any parties mentioned in this article.
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