How Australians can enter the Bitcoin and cyptocurrency market

One of the biggest reasons for Bitcoin’s slower-than-market acceptance in Australia are the high barriers to entry which are faced in Australia.

Converting $AUD or fiat money into cyrptocurrency is an arduous task for Australians who only have limited number of options of which, they are either complicated or expensive.

Those who have managed to enter the crypto market have done so at the expense of paying high entry costs but most have been offset by the strong bull run the crypto market made throughout December 2017.

For Australians to better understand ways they an enter the crypto space and acquire cryptocurrencies like Bitcoin, Ethereum, Ripple, NEO etc, this blog post looks at the most accessible and cheapest entry points for Australians to enter the market.

With Bitcoin being the main currency in the crypto space, it is the most common entry crypto for Australians.

Once you own Bitcoin, it is much easier to convert those BTC/fractions of BTC into the hundreds of other cyrptocurrencies and altcoins.

When looking at prices for Bitcoin, be sure to know that $BTC is divisible up to eight decimal points so even though the price may be $10,000 for 1 BTC, $100 can still purchase 0.01BTC which still has plenty of value in the marketplace.

Googling ‘where to buy bitcoin in Australia’, common search results will lead you to sites like coinspot.com.au, bitcoin.com.au and cointree.com.au.

Retail trading sites

These sites are retail Bitcoin trading sites which enable individuals to purchase BTC with $AUD but individuals will do so at a premium price.

Due to the volatility of the Bitcoin market, these retail sites will require you to deposit cash directly into their nominated bank account if you want the price they quote you. And if you don’t do so within a short period, they will cancel your order and ask you to submit a new one at a different price which could be lower or higher.

The buy price of these retail sites will also be significantly higher than the global valuation due to their level of convenience.

For example, at 10.20am (AEDT) on January 17, the global average price of BTC was $10,913.70 USD which converts to roughly $13,578.11 AUD.

At the exact same time, the following buy prices were offered by the following retail sites:
Cointree.com.au - $16,405.76 (+20.83% premium)
Coinspot.com.au - $16,404.96 (+20.82% premium)
Bitcoin.com.au - $16,486.54 (+21.42% premium)

Whilst it is understandable that these sites need to charge a premium on the global average in order for them to maintain their sites and any staff they have managing their businesses, 20% premiums have to be considered excessive but for some people, the premium is worth the convenience.

Buying Bitcoin from retail sites

In order to buy from these retail traders, you must have a Bitcoin wallet for them to deposit your bitcoin into. Online Bitcoin wallets are free to create with one of the most common ones being Blockchain.com. They also have an app which you can use on a smartphone to send and receive your BTC.

When you place your order, the retail site will ask for your wallet address to send your Bitcoins to and send you an invoice with details of how to pay. The most immediate way to get your Bitcoins will be to deposit cash ($AUD) into the nominated bank account on the invoice. Once you do so and send them back a receipt of your cash deposit, they will commence transferring your purchased BTC into your nominated wallet.

Cryptocurrency Exchange Sites

The alternative to retail sites for buying Bitcoins is to use an Exchange site. Cyrptocurrency exchanges are available all over the world and this is where he bulk of volume gets traded.

A lot of the global exchanges, however, require you to deposit a cryptocurrency into your account with them rather than fiat money which means you cannot trade into altcoins without first buying Bitcoin.

Exchanges work like a sharemarket where you will buy your preferred crypto directly from another person. For this reason, the price of a coin on an exchange is significantly less than the retail prices.

For example, at the time those price were taken earlier from the retail sites, the price on Bitfinex.com was $10,918 USD which converts to roughly $13,708. 47 USD and a premium of just 0.09% - significantly less than the 20% premiums offered by Australian retail sites.

Whilst Bitfinex is one of the largest global cryptocurrency exchanges, it is extremely difficult for Australians to commence trading on there with new accounts required to deposit a minimum of $10,000 USD or equivalent cryptocurrency. Wire transfers also take 7-10 business days to clear, in which time a lot can happen in the markets.

BTC Markets – An Australian Exchange

At present, the most user-friendly exchange in Australia is the Melbourne-based BTC Markets.

Unlike the global exchange, BTC Markets still has a premium markup on their trading prices but this is due to a lack of volume in the Australian market for trading compared to the global market.

At 10.20am (AEDT) on January 17, when the global average price of BTC was $13,578.11 AUD, BTC was being traded on BTC Markets for $15,250 AUD – a premium of 12.31% which is still significantly less than the retail sites.

Something to keep in mind, though, is that although you are paying a premium on an exchange when you buy a cryptocurrency, you will also benefit from the premium when you sell it because there is only one trade price on an exchange.

For retail traders, the sell price is significantly less than the buy price they offer so they charge high premiums when you buy from them and high premiums when you sell to them.

As an exchange, BTC Markets also offers four other common cryptocurrencies: Ethereum, Ripple, Bitcoin Cash and Litecoin.
Other Australian exchanges are acx.io and Independent Reserve.

How to trade on BTC Markets

Because you are buying crypto directly from another person on the BTC Markets exchange, you must have either cryptocurrency or $AUD in your account before you can place a buy order.

BTC Markets offer $AUD deposits via bPay with no deposit fees attached.

The general turnaround time is 24 hours so the money should be credited to your BTC Markets account reasonably quickly if you follow their bPay instructions correctly.

Buying Altcoins

Once you have Bitcoin in a storage wallet or on an exchange, you can withdraw the BTC into other exchange sites where there are hundreds of altcoins to be traded.

Common ones used are:
Binance.com (a good all-round exchange with volume and altcoins)
Bittrex.com (lot of altcoins tradable for BTC with reasonable volume)
Bitfinex.com (high volume, all cryptos are tradable against $USD, best technical analysis capabilities but requires a minimum $10,000 USD deposit)
Cryptopia.nz (lots of altcoins but some with very little volume)