How to Buy Bitcoin in Australia?
Table of contents
- Where to buy Bitcoin in Australia?
- How to buy Bitcoin in 4 steps
- What is Bitcoin?
- How did Bitcoin come about?
- How is Bitcoin created?
- A timeline of Bitcoin
- Ways to store Bitcoin
- Bitcoin (BTC) payment methods
- The different ways to buy Bitcoin
- What to consider before buying Bitcoin
- How is Bitcoin taxed?
- Frequently asked questions
Where to buy Bitcoin in Australia?
Centralized exchanges are the most recommended place for Australians to buy Bitcoin. The best platforms offer a simple and secure method for adding BTC to a crypto portfolio. Many cryptocurrency exchanges in Australia support free AUD deposits and low transaction fees, such as Swyftx. When choosing between exchanges to buy Bitcoin, it’s worth considering these costs, as well as industry reputation, customer service and the presence of a mobile application.
Because Bitcoin is such an iconic coin, there are many other locations Australians can invest in the asset too. These are typically recommended for more experienced crypto traders. P2P exchanges connect investors to directly buy (and sell) Bitcoin at an agreed-upon price.
Additionally, the influx of Bitcoin decentralised finance (DeFi) platforms has led to several DEXs offering BTC to traders. Such platforms can provide attractive transaction fees but are often a little risky and require a level of expertise that some investors may not be comfortable with.
How to buy Bitcoin in 4 steps
Step 1: Choose an exchange
The first and most important step for buying Bitcoin is choosing an exchange that suits your financial needs. It is vital for investors to identify their specific investment goals and to perform independent research on various exchanges and what they can offer. Important factors to consider include:
- Transaction fees
- Deposit/withdrawal fees
- Deposit/withdrawal methods (e.g. does the exchange accept AUD?)
- Customer support reputation
- Past hacks or compromises
- Security measures
Step 2: Create and verify an account
Once an exchange has been selected, it’s time to make an account. This process is usually quite simple. On Swyftx, new users need only navigate to the home page and select “Signup” or “Start Trading”.
Next, fill out the registration details, inputting a valid mobile number, email address, country of residence, and name. Finally, verify the phone and email information is accurate by entering a one-time code, and the account will be created.
Due to the Australian government’s Anti-Money Laundering and Know Your Customer (KYC) protocols, new accounts must verify their identity before depositing fiat currency like AUD. This process only takes a few minutes and requires users to scan government-issued identification such as a driver’s license or a passport. Taking the images on a mobile device can streamline the task.
Step 3: Deposit AUD
To buy BTC from centralized exchanges, investors must fund their accounts. This can be done with a variety of assets, however, most new Bitcoin buyers should stick to fiat currency like AUD.
Users can select “Transfer Funds” from the top right of their screen and then “Deposit”. This brings up a screen with several payment options. Swyftx supports near-instant and free AUD deposit methods, including direct deposit via PayID and Osko. Investors can even use their debit/credit cards to fund their accounts, although this can incur a transaction fee.
Select your preferred payment method and enter the amount of AUD to deposit. Finally, confirm the transaction (ensuring to double-check the details).
Step 4: Buy Bitcoin (BTC)
The final step is to use the money we just deposited to buy Bitcoin. First, ensure that the AUD transfer has been approved and the exchange account is funded. Then, navigate to the platform’s trading hub – for Swyftx, users can find a list of supported assets via the “Asset List” tab.
Find Bitcoin – it will usually be right at the top – and select “Buy”. This will bring up a new window to the right-hand side of the platform. Here, you only need to input the amount of AUD you wish to spend. Ensure all the order details are correct by clicking “Review” and confirming the transaction.
That’s it! The newly purchased Bitcoin should hit your Swyftx account within minutes.
What is Bitcoin?
Bitcoin is the cryptocurrency credited with kick-starting the crypto industry. The native token, BTC, was the first digital currency to use blockchain technology. The asset and associated blockchain form the core of the world’s earliest permissionless, peer-to-peer payment network. Bitcoin allows people from all over the globe to transfer money without the need for an intermediary – such as a bank or gateway like PayPal. Unlike these centralized authorities, Bitcoin’s decentralized blockchain technology means data and transaction management are spread across thousands of computers.
How did Bitcoin come about?
Bitcoin emerged in the late 2000s as an alternative payment system to the traditional, centralized banks that had long dominated the globe. The Global Financial Crisis (GFC) was a hallmark of this era – one of the worst economic crises since The Great Depression. Many in the public became disillusioned with traditional financial models, as they believed the financial disaster was largely due to the negligence of banking institutions.
As a response, anonymous developer Satoshi Nakamoto invented a currency free from the interference of banks and governments. The coin was developed in 2008, with the first reference to Bitcoin appearing when the domain name bitcoin.org was registered in August. The cryptocurrency’s whitepaper was released in October to explain Bitcoin’s function, larger purpose, and how it worked. The Bitcoin blockchain and token finally went live in January 2009, with Nakamoto mining the first “genesis” block.
While Bitcoin was initially intended as an alternative global payments system to banks, it has slowly transformed into a store of value akin to digital gold.
How is Bitcoin created?
Bitcoin follows a consensus mechanism known as “Proof of Work”. More commonly known as “mining”, new Bitcoins are minted when blockchain participants solve a complex mathematical equation. The first miner to solve this algorithm gets the privilege of verifying recent Bitcoin transactions and adding a new block to the chain. As a reward, the successful miner receives a pre-determined amount of Bitcoin.
Bitcoin was coded with a maximum supply of 21 million BTC. This means that once all 21 million are mined, no new coins can ever enter circulation. To prevent the supply from being maxed out within just a few years, Bitcoin’s developers added a process known as “Bitcoin halving”. These events, occurring every four years, cut miners’ block reward in half, meaning fewer and fewer BTC is minted over time.
All things being equal, the final Bitcoin will be created sometime during the year 2140.
A timeline of Bitcoin
- August 2008. Domain name bitcoin.org is registered. This is the first public use of the term “Bitcoin”
- October 2008. Bitcoin’s whitepaper, Bitcoin: A Peer-to-Peer Electronic Cash System is released by Satoshi Nakamoto
- January 3, 2009. The first-ever BTC is mined by Satoshi Nakamoto.
- January 12, 2009. The first-ever transaction on the Bitcoin network is executed, with Satoshi Nakamoto sending 10 Bitcoins to Hal Finney.
- May 22, 2010. The first real-world transaction of BTC occurs, with someone buying two large pizzas with 10,000 Bitcoins. This date is known and celebrated as “Bitcoin Pizza Day”.
- February 2011. The price of BTC hits USD $1 for the first time.
- April 2012. BTC crosses the $100 mark.
- November 28 2013. The value of BTC breaches $1,000 – though at this time, most were still investing as a hobby and there were minimal institutional or real-world transactions taking place.
- February 7 2014. Mt. Gox, Bitcoin’s largest exchange, lost hundreds of millions due to hacks and had to shutdown. This event spiralled into BTC’s first major crypto winter, with its price dropping from $1,000 to ~$200.
- August 2017. Bitcoin’s community clashes, with one faction preferring BTC to be used as a method of payment rather than a store of value. As a result, half of Bitcoin’s developers left to work on their new fork – Bitcoin Cash (BCH).
- November 29 2017. After years of slow growth, Bitcoin enjoys a massive 2017. In late November, the price of one BTC broke the $10k barrier for the first time.
- 2018-19. Bad news piled up for Bitcoin through the industry’s next bear market. Google banned crypto advertising in March 2018, while prominent exchange Bitfinex was found to have hidden a loss of $850m+.
- December 2020. Following the global shutdown due to the Covid-19 pandemic, Bitcoin went on a run, breaking the $20k barrier by the end of the year.
- February 2021. Tesla announces they are beginning to accept BTC as a payment method.
- June 2021. El Salvador becomes the first country in the world to accept BTC as legal tender.
- November 2021. Bitcoin storms past the $50k mark to reach its all-time high of USD $68,789.63.
- November 2022. After a stellar 18 months, Bitcoin falls into another bear market – this time slashing its price by more than 60% and falling to a 2-year low of $15,516.
Ways to store Bitcoin
The easiest way to store Bitcoin is on an exchange wallet. Most reputable exchanges offer a native wallet that holds crypto assets purchased on the platform. Storing BTC in these wallets typically requires no further effort beyond buying the coin.
Although exchange wallets are inherently less secure than some alternatives, they can still be a safe and convenient storage solution. For example, Swyftx’s Bitcoin wallet utilises a combination of hot and cold storage to ensure the safety of customers’ funds.
View our detailed guide on how to buy crypto in Australia.
Hardware wallets are usually touted as the safest storage solution for large crypto portfolios. Popular offerings include the Trezor T and Ledger Nano X. Hardware wallets are an excellent way to store BTC for the security-conscious, as such devices must be plugged into a computer to connect to the internet. This makes it extremely unlikely they will be hacked.
However, hardware wallets can be a bit clunky, expensive and inconvenient.
Many online wallets are available as browser extensions or desktop apps that can store Bitcoin. Such solutions present a middle-ground between exchange and hardware wallets. Online wallets are usually non-custodial, so the user is in complete control of holding their assets. However, they are constantly connected to the internet, presenting a slightly higher risk of being compromised than their hardware alternatives.
Examples of well-trusted Bitcoin online wallets include:
- Atomic Wallet
- Exodus Wallet
Bitcoin (BTC) payment methods
There are several methods that investors can use to pay for Bitcoin in Australia.
When using Australian dollars to buy BTC, bank transfers are typically preferred. This is because they are cheap (free if using Swyftx) and fast.
Most platforms support direct deposits which are usually near-instant – although the exact deposit speed depends on the bank being used. Direct deposits on Swyftx come with a minimum deposit of $30 AUD and a daily maximum of $50,000.
Investors can also use PayID to buy Bitcoin. This payment method has the same minimums and maximums as direct deposits , while also being instant and free. However, some competing platforms may charge a fee for this service.
Payment gateway POLi is another potential payment method for investors planning to buy BTC with AUD. This portal allows Swyftx users to directly access their online bank account and instantly receive money, without needing to use a separate application. The minimum POLi deposit is $30 AUD, and the daily maximum is $20,000.
Credit and debit card
Some platforms allow investors to buy Bitcoin using a credit or debit card. This method is usually a little slower and more expensive than via bank transfer, but can be convenient for some. Swyftx supports AUD deposits of up to $15,000 using a MasterCard or VISA.
Other payment methods
Given Bitcoin’s stature in the industry, there are several other ways that investors can add BTC to their crypto portfolios:
- Crypto to crypto swaps
- BPAY deposits
- Cash deposits (via Blueshyft)
- Google/Apple Pay
Unfortunately, Swyftx does not support any of these methods at this time.
The different ways to buy Bitcoin
Spot buying is usually the most cost-effective method of trading Bitcoin on a centralized exchange. It involves buying the asset from another trader selling the coin at a specific price.
Spot buying also allows investors to set up a “trigger” order that executes when BTC hits a certain price. For example, someone could set up a trade that buys 0.5 BTC when (or if) its market price dips to $25,000.
Instant buying Bitcoin is only supported by a few exchanges, but usually involves immediately settling an order at market price. In this case, investors cannot pre-determine the price they wish to buy or sell Bitcoin at, and cannot set a trigger order.
In some instances, instant buying BTC can be performed without users needing to fund their trading accounts with fiat or cryptocurrency. Instead, they can link a supported debit/credit card and buy BTC directly, much like buying something from an online store. This method of buying Bitcoin can be quite inefficient and expensive.
What to consider before buying Bitcoin
How Bitcoin is regulated in the future may go a long way to determining its future as a legitimate store of value. So far, news has been good on this front, as BTC is one of the few cryptocurrencies the Securities and Exchange Commission considers as a commodity, rather than a security. This leaves it exempt from the legal issues other prominent coins such as XRP face.
Bitcoin sits in a strange place when it comes to competitors. The blockchain’s legacy is undeniable, and many consider the coin synonymous with “cryptocurrency” as a whole. Except for perhaps Ethereum, no other projects come close to BTC in terms of market cap, stature in the industry and worldwide recognition. It’s almost incomprehensible that Bitcoin is ever usurped as the king of crypto.
However, Bitcoin’s technology and principles are relatively old and its blockchain suffers from certain issues – a big one being scalability. Sending Bitcoin can take more than 10 minutes, whereas some newer blockchains can send thousands of transactions every second. Although Bitcoin’s legend may be untouchable, its relevance as a mode of payment may lessen over time.
Bitcoin is easily the most widely-known cryptocurrency. Consequently, it has seen far more institutional, retail and consumer adoption than most of its counterparts. BTC is accepted at several stores, including Shopify, Starbucks and AT&T. Additionally, many traditional finance companies have created Bitcoin ETFs, allowing Wall Street investors to gain exposure to the crypto sector.
If crypto is to see widespread adoption in the coming decade, Bitcoin will likely be leading the charge.
How is Bitcoin taxed?
According to the Australian Taxation Office, Bitcoin is considered “property”, rather than a foreign currency. Due to this, BTC investors are potentially liable to pay Capital Gains Tax (CGT). CGT is incurred anytime a disposal event occurs. This includes (but isn’t limited to):
- Selling BTC
- Swapping BTC to another cryptocurrency
- Using BTC to buy goods or services
- Gifting BTC
If, at the time of disposal, the value of BTC is higher than when it was purchased, that investor must pay CGT. The difference between these two prices is typically taxed at that individual’s nominal tax rate, although investors holding BTC for longer than 12 months may receive a discount.
It’s worth noting that if the investor incurs a loss, this figure can be subtracted from other capital gains to reduce their tax load.
Frequently asked questions
Buying Bitcoin via a trusted centralised exchange is the easiest way for new investors to add BTC to their portfolios. More experienced traders may consider buying Bitcoin using other cryptocurrencies.
Yes, buying Bitcoin is legal in Australia. However, Bitcoin is not considered legal tender in Australia and cannot be used to pay off government debts (like taxes).
Yes, there are several platforms that support buying BTC with PayPal. eToro and P2P networks like Binance P2P are two options. International investors can buy BTC directly on the PayPal platform, however, this service is yet to reach Australian shores.
Bitcoin’s supply is capped at 21 million, meaning that its price is heavily influenced by supply and demand metrics. If there are more buyers than there are sellers on global markets, BTC’s price will rise and vice versa.
Yes, buying Bitcoin is safe, particularly when purchased via a trustworthy exchange and stored in a secure wallet. Cryptocurrencies are notorious for their volatility, but relative to the rest of the industry, BTC is actually one of the most stable assets available. That said, no investment is completely safe and investors should always practice risk mitigation.