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How to buy cryptocurrency in Australia

TABLE OF CONTENTS

How to buy cryptocurrency in Australia

How to buy cryptocurrency in Australia

Vantage Updated Updated Fri, February 2 04:29

People are continually looking at buying crypto in Australia. There are a number of reasons for this including technological and economic factors.

One of the most talked about reasons is that Australia is considered a tech-savvy population and it boasts a high internet penetration rate. This sets an ideal environment and ecosystem for online trading in Australia.

Investing itself has seen a steady growth with the ASX noting that 23% of Australia’s nine million equity investors began their investing journey as of 2018[1]. There was a similar increase in Australian online trading showing that a 2022 cryptocurrency user survey of more than 3,700 Australian adults showed ‘almost two million Australians have been exposed to cryptocurrency, with 1.56 million continuing to hold the digital asset.[2]

When it comes to buying cryptocurrency there are a number of different factors that need to be taken into account. If you are new to the crypto market, then it is important that you understand how this type of investment works and the risks involved.

In its very basic form, investing in cryptocurrencies can range from buying cryptocurrency directly to investing in crypto businesses and funds. It is possible to buy cryptocurrency by using a crypto exchange or through specialised broker-dealers.

Is cryptocurrency investing different from other investments?

It doesn’t matter what type of investment you are undertaking. The crucial factor is that you understand what you are investing in. 

With cryptocurrency, you need to know the different aspects of the investment process and exactly what makes a particular cryptocurrency valuable. If you don’t understand all these points, then it is well worth building your knowledge base with educational guides and information such as Investing in Cryptocurrency and What Types of Cryptocurrencies are there

Another point to consider is that not all cryptocurrencies are created equal, and it is vital that you have a plan and you can manage your risk appropriately. Depending on your investment goals, your personal circumstances and your financial needs, this might mean either increasing or scaling back your crypto exposure.

Only when you have researched all you want to know about a particular crypto or combination of cryptocurrencies and how the trading process works should you consider buying crypto in Australia.

Cryptocurrency investing in Australia

Cryptocurrency can be bought or sold on a trading platform using money, or you can buy or sell it directly.

Crypto is kept in a unique digital or software wallet (hot) or hardware (cold) wallet. Each wallet has private keys (unique codes) allowing you to authorise transactions on the blockchain network.

  • A hardware wallet is protected from hackers because it stores these private keys on a secure device not connected to the internet. 
  • A software wallet is held by an individual or by a crypto trading platform on your behalf. While this can simplify buying, selling and storing crypto, it is not a regulated service, which means that if the trading platform fails, you may not be able to recover your cryptocurrency.

One such case was the fall of one of the five biggest crypto trading platforms by trading volume in November 2022. FTX declared insolvency and failed to fulfill withdrawal demands and the company was forced to file for bankruptcy in the US as a result.

Remember that, unlike a national currency as a legal tender, such as the Australian dollar, cryptocurrencies have no such legal value. The value of a crypto asset depends on what people are willing to pay for it on the market. 

The advantages and risks of cryptocurrency investment

As with any investment, you need to do your due diligence and make sure you are aware of both the advantages and the risks involved in your investment.

The price of a cryptocurrency is highly volatile, which can be a double-edged sword. 

Its value is often based solely on market speculation and the price can fluctuate to extreme levels over a short space of time. It can be affected by anything from investor sentiment to media hype. That volatility means that while it has the ability to create profits, it is also highly risky. 

One advantage is that cryptocurrency transfers between two parties can be faster than standard money transfers.

The price of unbacked crypto may depend on:

  • its popularity at any given time  (influenced by factors like the number of people using it)
  • how easy it is to trade or use
  • the perceived value of the currency
  • its underlying blockchain technology[3]

While the interest in cryptocurrencies continues to grow in Australia, even financial institutions like the Commonwealth Bank are ‘seeing a growing number of customers losing funds to cryptocurrency scams.’ The ACCC Targeting Scams report (PDF) revealed over $220 million was lost to scammers through cryptocurrency in 2022’.[4]

Being aware of the risks is essential to any investment.

Trading in cryptocurrency today

Understanding what you are investing in is also an important aspect of any investment process. It is worth investigating what makes a particular cryptocurrency valuable. Remember that an advantage of cryptocurrency is that it has the potential to offer protection against inflation. The majority of cryptocurrencies have a hard cap on the total number of coins that will ever be minted as a safeguard against inflation. This is just one factor in how value can be added. There are other factors such as your financial position and how much time you can allocate to your investment which will determine if you are ready to invest.

Not all cryptocurrencies are created equal, and it is important to have a plan and manage your risk appropriately. It is possible to invest in crypto without actually owning the actual coin.

Of the many various methods to trade cryptocurrency, one of the most popular is  trading a crypto Contract for Difference or CFD. 

CFD trading allows traders  to speculate on the price movements of underlying assets – such as shares, indices, commodities, forex and cryptocurrencies without actually owning them. CFD traders are then able to capitalise on the rise or fall in future market movements. 

Trading crypto CFDs with Vantage

You can buy and sell cryptocurrency CFDs by speculating and capitalising on their potential price movements, without actually owning the coin. 

Vantage gives you the ability to access more than 40 crypto coins, such as Solana, Dogecoin, Cardano, XRP and other Altcoin, besides Bitcoin and Ethereum.

The process involved in crypto cfd trading includes: Register, Fund and Trade.

  1. Choose an account type and submit your application.
  2. Fund your account using a wide range of funding methods.
  3. Access 1,000+ CFD instruments across all asset types on MT4 / MT5.

You can trade crypto in Australia while having the ability to protect your digital currency trading with our range of risk management tools, including price alerts and stop losses to limit unfavourable price movements.

Once you know how to trade cryptocurrency in Australia, it takes just 5 minutes to open a Live Account with Vantage. 

Reference

  1. Australia’s trading transformation – report’ https://www.ausiex.com.au/media/178119/ausiex-australias-trading-transformation.pdf. Accessed July 2023.
  2. 2022 Australian cryptocurrency user report’ – https://investmenttrends.com/. Accessed July 2023.
  3. ‘MoneySmart – ‘Cryptocurrencies: The risks of investing in crypto’ https://moneysmart.gov.au/investment-warnings/cryptocurrencies Accessed July 2023.
  4. ‘Commonwealth Bank – Cryptocurrency payments’ https://www.commbank.com.au/support/security/cryptocurrency-payments.html Accessed July 2023.

Disclaimer: The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our client. No representation or warranty is given as to the accuracy or completeness of this information and therefore it shouldn’t be relied upon as such. Any research provided does not have regard to specific financial situations, needs or investment objectives. Vantage accepts no responsibility for any use that may be made of these comments and for any consequences that result. Consequently, any person acting on it does so entirely at their own risk. We advise any readers of this material to seek professional advice where necessary. Without the approval of Vantage, reproduction or redistribution of this information isn’t permitted.

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