Bitcoin has really taken off in Australia, with upwards of 4.3 million people investing in this cryptocurrency, according to recent research from Independent Reserve.
In fact, it has become so mainstream that it is now discussed alongside everyday technology such as smartphones, online banking, and digital payments. That said, many Aussies, especially older ones, still feel cautious about buying it for the first time. One reason for this is that they continue to hold concerns around safety, storage and scams, even though strict regulations are now in place to safeguard users.
If you have misgivings about adding Bitcoin to your investment portfolio and are looking for some clarity on how to do that securely, this guide is for you. In it, we’ll walk you through how to buy Bitcoin safely.
We’ll also outline what platforms and wallets actually do, and highlight the best steps to take to keep your Bitcoin secure from day one.
What is Bitcoin?
Before highlighting how to purchase Bitcoin safely, it is worth elucidating what it actually is.
Essentially, Bitcoin is a cryptocurrency. In other words, a form of digital money that operates without a central authority like a bank or government. It runs on a decentralised network called the blockchain, which records transactions across thousands of computers worldwide. As blockchain is a shared ledger, it makes any transactions that are processed through it transparent and difficult to alter.
Bitcoin can be sent directly between users, often at a lower fee rate than traditional payment systems. Many people use it as a payment method and/or digital asset. While its price can fluctuate, Bitcoin’s underlying technology focuses on secure, peer-to-peer transfers without relying on intermediaries.
Why Should I Invest In Bitcoin?
Bitcoin is by far and away the most popular of all cryptocurrencies, and people choose to invest in it for a number of reasons.
For one, as mentioned, it offers a way to hold a digital asset that operates independently of traditional banking systems. Additionally, due to its limited supply, some investors see Bitcoin as a long-term store of value, while others use it to diversify their investment portfolio.
Another reason Bitcoin is an attractive proposition is that it is very accessible. Australians can buy and sell it through local platforms using Australian dollars, which gives them a great opportunity to benefit from its high growth potential.
How To Buy Bitcoin in Australia
If you haven’t currently invested in cryptocurrency, you might be wondering how to buy Bitcoin. Well, the good news is that it is relatively straightforward.
Conventional wisdom suggests you should start by selecting a local or Australia-friendly platform that allows you to make purchases using Australian dollars. As these platforms operate under Australian regulations, you’ll be asked to verify your identity with photo ID before you can trade.
Once your account is set up, you can deposit funds via bank transfer or other supported payment options. When you have done this, you will be able to purchase Bitcoin at the current market price. The Bitcoin will soon appear in your account, where it can be held temporarily or transferred to a personal wallet.
This process is similar across most Bitcoin exchanges in Australia. Any differences will tend to be slight and mainly revolve around fees, app design, and security features.
How To Choose a Safe Bitcoin Platform
Should you want to buy Bitcoin, it is advisable to take the time to find a safe platform. Typically, this is one that clearly explains:
- Who operates it
- How it secures customer funds
- What protections are in place if something goes wrong
As a non-negotiable, you should look for platforms that outline how they comply with local regulations and conduct identity checks. Ideally, they should have good security features too, including two-factor authentication, login alerts and withdrawal confirmations. These components will help protect your account from unauthorised access.
It is also a good sign if a platform is transparent about its fees. Most reputable platforms will show their costs upfront rather than hiding them in the fine print.
What Are Bitcoin Wallets?
For many first-time investors, a Bitcoin wallet is a confusing concept to get their head around. Rather than being somewhere that you actually store the Bitcoin, your wallet holds the private keys that prove you own your Bitcoin on the blockchain.
It is important to keep these keys safe because anyone who has access to them can get to your funds. That is why having a “secure” wallet is vitally important.
Wallets can be “hot” or “cold”. Hot wallets are internet-connected, which means you can easily access them to make fast transactions. That said, they are vulnerable because they can, in theory, be subject to hacking.
Cold wallets, by contrast, are offline. Often it is kept in a home safe or bank safety deposit box. While they are inherently “safer” than hot wallets because they are not constantly connected to the internet, they are less convenient for frequent or immediate use.
Many traders use both a hot and a cold wallet to protect their Bitcoin. A hot wallet, which they can draw upon for immediate trading and a cold wallet that safeguards the majority of their coins.
What Are Some Common Bitcoin Scams to Avoid?
According to the Department of Financial Protection & Innovation in the USA, crypto scams have increased by 900% since the beginning of the pandemic. This has resulted in over 46,000 Americans losing upwards of $1 billion to crypto-related fraud.
To protect yourself in Australia, it is vital to recognise that Bitcoin scams often rely on urgency or promises that sound unrealistic. For instance, fake investment platforms may claim guaranteed returns or unusually low fees to lure users in. Similarly, impersonation scams are also common. They typically involve scammers posing as customer support and asking for your login details or private keys.
Another scam to be aware of is social media giveaways that request Bitcoin in exchange for more being sent back. Also, be mindful of phishing emails and messages that can closely mimic legitimate platforms and direct users to fake websites.
Remember, genuine platforms will NEVER ask you for your private keys or recovery phrases. So always stay on your guard to protect yourself.
