How to buy Ethereum in Australia
Whether you’re wanting to buy Ethereum (ETH), Bitcoin (BTC), or even Golem (GNT) using Australian dollars (AUD), there’s no real obvious place to start as a newcomer to the world of cryptocurrency and related blockchain assets.
If you’ve come here wanting to better understand why you should, these articles should serve as a decent point of entry for further research: “A beginner’s guide to Ethereum” from Coinbase, and “Ethereum for Everyone” from Ethereum's AI.
I’ve been inundated with Aussies approaching me for advice on how to buy ETH in recent days, so I thought I’d put together this article with some concise and understandable information on the simplest ways to get going.
To quickly cover off some pricing background and growth potential, I first heard about ETH while on a plane between Melbourne and Sydney very early in 2016. I was listening to an Andreessen Horowitz podcast who discussed it, and the price was around USD $4 at that time. If we’d had Wi-Fi in the air, I’d have purchased then and there. Instead, by the time I’d made my way to meetings and my hotel, I’d forgotten. Months later, after checking my notes and buying, I gave a shoutout to my network of Facebook friends about the somewhat risky opportunity. Even at USD $11, returns for anyone who invested then have proven astonishing.
Now, with ETH riding toward AUD $250, I continue to invest new money into ETH, and many others still consider it a wise investment as well. Speculation by even traditional market investors suggests an AUD $700+ price within 12 months, while Deloitte predict at least 10% of global GDP being stored on Blockchain platforms by 2025 — which means AUD $700 may seem comparatively insignificant to future values. If that isn’t impressive enough, the Enterprise Ethereum Alliance (EEA) just added over 80 new members including Mitsubishi, Samsung, the San Francisco Stock Exchange, Toyota, and more. It’s no wonder the price is spiking.
The total market cap of cryptocurrencies is now bigger than the GDP of most countries on the planet. Albert Wenger, a venture capitalist from USV says “I’m in the camp that $80 billion [market cap] will still look like a small blip when we look back.” It took 7 years for the value of all cryptocurrency to hit $10 billion, another year to hit $20 billion, 3 more months to hit $40 billion… and 3 weeks from there to hit $80 billion.
Great, but onto the part about buying it?
I’ve got some good news and some bad news. As an Australian buying cryptocurrency using AUD, it’s not too challenging to do so. You may have to wait a few days for account verification at various exchanges, however that’s about as frustrating as the process becomes. The bad news is that you’re going to pay inflated token prices to get in.
BTCMarkets: high BTC and ETH prices. At the time of writing this, ETH is AUD $210 at Kraken (an online exchange like BTCMarkets), but $240 at BTCM itself. Of course, if your plan is to buy and hold, and ETH reaches many multiples of this in the future, these price discrepancies now are less of a concern than if you intend to day or margin trade. BTCM has a daily POLi deposit cap of AUD $2000.
CoinJar: BTC prices are even higher than BTCMarkets, but you can get more into the crypto ecosystem faster: a daily POLi deposit cap of $2500, an additional $2500 daily via BPAY, and another $1000 per day by depositing at participating newsagent and retail outlets. A caveat here is that you’ll then need to convert your BTC to ETH at an exchange or trading platform such as Kraken, Bittrex, or ShapeShit (more information on these later).
Coinbase: Like CoinJar and BTCMarkets, Coinbase prices are inflated well above trading platform exchanges. Unlike them, you can get smaller amounts of money in quicker, as Coinbase accept credit card payments. However, they only accept credit card, and you’ll pay more than 3% of your transaction value in fees as well — evalulate the token prices plus fees from all 3 places before pulling the trigger.
Once you have your BTC or ETH, I’d strongly advise moving it off-exchange and away from centralised services. This is still the land of cowboys, and dodgy stuff happens daily. In 2016, I lost 33% of my entire portfolio due to a hack of Bitfinex (an exchange I won’t recommend), while another exchange named Poloniex has gone down numerous times recently due to denial of service attacks.
For Ethereum, I will suggest storing your assets on a ‘paper wallet’ using MyEtherWallet.com. If you’re wondering how your ETH can be stored on a piece of paper, this isn’t unusual. Describing it in layman’s terms: your cryptocurrency isn’t coins stored in any one place. Your digital coins are represented as transactions on a distributed ledger; a Blockchain. There are tens of thousands of copies of the ledger, but a ‘private key’ – a very long and unique string of digits – provides access to the parts of it that are yours. So, keep that key private! It’s not an immediately intuitive concept to grasp, but I encourage you all to read further about how all of this works — it’s how our future is going to work.
As for a high level explanation of the difference between Bitcoin and Ethereum, this one isn’t truly accurate, but helps newcomers get their heads around the different digital currency capabilities:
Bitcoin = could buy a house outright.
Ethereum = could repay a mortgage over a variable time, with interest.
Thanks to its smart contracts, Ethereum is effectively becoming the “Internet of Agreements” — no fiat systems, banks, or any kind of middleman required.
Cool. What’s this Golem stuff you speak of?
Investing in Golem Project tokens is of particular interest to me, but it is certainly not financial advice. Buy GNT — let alone ETH and BTC — at your own risk. Only ever buy as much as you’re willing to lose.
Not all cryptocurrency is mere currency. Sometimes it’s equity in the blockchain-based business, sometimes it’s a profit share of the blockchain service’s fees (a kind of profit share), and in Golem’s case it’s a share in a finite number of tokens used to purchase and sell compute power in the cloud market.
“Compute power?” Imagine you could rent out your computer’s processing grunt. Not allow access to the hard drive or operating system, rather on-sell your hardware processing power to those who need it. This means your CPU (processor) and GPU (graphics card). Similarly to SETI@home and Folding@home, you’ll be lending your processing power to others. Unlike SETI, your processing power won’t be used by researchers on the hunt for extraterrestrial life, rather by developers working on artificial intelligence, deep learning, and 3D rendering projects that require more grunt than what is available to them locally.
Golem currently sits at around AUD 40c, but was 10c just weeks ago. The speculated potential here is a multi-dollar token in the near-to-mid future, as supply and demand increases for the utilisation of compute for those aforementioned (and increasingly prolific) development projects.
You can’t buy GNT at BTCMarkets, CoinJar, or Coinbase, but you can convert your already purchased ETH or BTC to GNT at ShapeShift.io, which is a great way to avoid the complexly of buy and sell orders using trading platforms.
What trading platforms would you recommend?
Once your crypto is in hand, the trading platforms I would use to day/margin trade are Bittrex (bad UX, but generally reliable) and Kraken (passable UX, but a smaller range of tokens to trade). Steer clear of Poloniex and Bitfinex.
That said, trading such volatile ‘stock’ on an ongoing basis is a risky business. I’ve been burned numerous times by delayed deposits and withdrawals (effectively frozen funds), exchanges becoming unavailable (Poloniex is regularly DDoS attacked), and even the aforementioned matter of having my money stolen in exchange-wide breaches (Bitfinex).
My advice is to buy and hold tokens that meet the following criteria:
- You fully understand their Blockchain model/tech.
- You believe in their Blockchain product, would use it yourself, or know people who would.
- They have a reputable team working on it.
- They already have good support from community and/or industry (depending on whether they’re enterprise or consumer focused).
- They’re demonstrating a commitment to good user experience (if their product is an interface).
Some of the projects that have met this criteria for me personally include Golem and Aragon, while I’m giving Stratis and Lykke some good thought right now.
To reiterate, only ever trade what you’re willing to lose.
How do I withdraw my Ethereum to an Australian bank account?
It’s simpler than you might imagine. I’d recommend sending your ETH to BTCMarkets and withdrawing to your bank account from there. Alternatively, you can consider using livingroomofsatoshi.com for smaller AUD withdrawals, and even pay BPAY bill using their service.
What tax implications are there for making profit on Ethereum and Bitcoin?
First of all, full disclosure: I’m not an accountant. What I do know: if you’re withdrawing ETH or BTC to AUD, you’re liable to pay tax on it, such as capital gains. However, at the time of writing this article, gains related tax can be avoided if you make purchases using your cryptocurrency of up to AUD $10,000, as opposed to withdrawing that $10,000 to AUD and then buying something with it. For further reading on this topic, start at this page on the Australian Tax Office website.
Is there anything else I need to know?
I think I’ve covered off much of it, but please don’t hesitate to get in touch with queries or amendments and I’ll be sure to update this article accordingly.
Good luck. While this appears to be a 21st century gold rush, proceed only with good understanding the risks, and with the best information you can find. There is speculation that this could be a bubble, and other speculation that this is just the very beginning. This is brand new ground, it’s rocky, and it’s impossible to know where prices will settle at any point in time.
My personal strategy is to hold for another 12–24 months, unless red flags are waved before then – in which case I’ll withdraw my original investment, and chance the profits.
Big crashes will happen, no doubt. I’ve already been through two of them on the way to this point. Of course, not every steep increase is followed by a crash, and not every crash is followed by a recovery. There will be much unpredictable volatility over the coming year, so be prepared for that.
I’m in the camp that thinks models based on Blockchain technology – especially consumer oriented ones that aren’t even necessarily finance related – will be long term and grand successes; that this really is the future of the internet and how we organise ourselves.
While you’re here, check out Horizon State. We’re leveraging blockchain technology to redesign the way that opinion is solicited, votes are cast, and decisions are made. Building atop of distributed ledger technology, we’ve created a digital ballot box which cannot be hacked, and is many multiples cheaper to run than traditional voting processes. Our technology underpins the world’s first public blockchain based voting system in wide use, developed for use by MiVote.org.au members.