How to buy Bitcoin: Money's step-by-step guide
So you're thinking about investing in Bitcoin but how do you actually do it?
- Set up a digital wallet
The first step before you buy any cryptocurrency is to set up a digital wallet. This will be a relatively secure place to store your bitcoin and also is the "address" you need to provide when you're buying and selling cryptocurrency. Although providers may be able to store your bitcoin on their exchange it is recommended that you transfer your bitcoins to your own personal wallet as that will probably be more secure.
There are a number of different types of wallets. There are software wallets that you can install and download onto your desktop or online wallets that are essentially browser based or you could get one for your mobile. Popular wallets include Bitcoin Core, Xapo and Mycelium. You can find a larger list here.
For larger amounts you may opt for a "hardware" wallet like Trezor or KeepKey where you can store your info on a USB. They are safer because even though you can transact online they are stored offline making it harder to hack.
- Choose a trading platform
You'll need to set up an account with a trading platform that will let you buy and sell bitcoin or other cryptocurrencies.
When shopping around for a trading platform make sure you compare the fees as there can be a big difference between sites. You should also take into the account the exchange rate. Some will let you trade in Aussie dollars which you might find useful if you don't want to worry about the conversion rates but buying and selling in US dollars is more common.
It's also a good idea to make sure there's plenty of volume on your chosen trading platform to minimise possible liquidity issues if you want to sell.
BTC Markets is the biggest exchange in Australia and lets you buy in Aussie dollars. Other exchanges include CoinJar, BitcoinAustralia, CoinSpot and CoinLoft. You'll probably be asked for proof of identification such as a driver's licence, passport or proof of age card.
- Fund your account
After you have set up an account with your chosen platform you and gone through the verification process you'll need to add funds to your account so that you can make a purchase. Depending on the provider you might be able to make a direct ETF transfer, pay using POli or you may be able to make a cash deposit at a bank branch.
- Make a purchase
You have your digital wallet, opened a trading account and deposited cash - now the only thing left to do is to make your purchase. At the time of writing one bitcoin would set you back $AU5474 but you don't have to buy a whole bitcoin - you can buy a fraction. The smallest amount will vary between platforms. Cointree for example says it accepts purchases of $200 or more while Bit Trade Australia has a minimum order size of $AU50. It is a good idea to start small.