How to Buy and Store Bitcoin (for Australians)
There are many ways to buy bitcoins in Australia, but the very first step is to acquire a Bitcoin wallet.
A Bitcoin wallet stores private keys, which are just really long numbers that no one else can possibly guess.
For a great explanation about just how long these keys are, check out these videos:
How secure is 256 bit security?
Bitcoin 101 — Quindecillions & The Amazing Math Of Bitcoin’s Private Keys
If you’re not sure why you’d want to buy bitcoins check out my other article, Why You Might Want to Hold Bitcoin.
If you have a hardware Bitcoin wallet skip ahead to the section titled ‘Sign up to a Bitcoin exchange’. Otherwise, consider investing in your security.
Many people getting into Bitcoin don’t have a hardware wallet — these are common excuses I hear and my response in-line:
- An exchange will do a better job of security
In 2018 ~ $1 billion was stolen from various exchanges.
- I’ve never been hacked so I most likely won’t get hacked in the future
I made this error in judgement, don’t make the same mistake.
- The amount of bitcoins I have is not worth stealing
The price of Bitcoin can jump substantially and has done many times in the past. You don’t want to be in a situation where you suddenly have a lot of money in an insecure wallet.
- It sounds too hard
Some people hear the word hardware and automatically shut down, but I assure you these are just USB devices with a couple of buttons. They come with easy to follow instructions and there’s also great support from the companies as well as communities of people who are happy to help you if you get stuck.
Hot vs Cold
A ‘hot wallet’ is a Bitcoin wallet that lives on a device. Common examples are your desktop computer, laptop, smartphone, Bitcoin account wallet websites or Bitcoin exchanges. These are generally connected to the Internet.
On the plus side, it is much easier to spend these coins conveniently like when you’re out in public you can just whip out your phone and send some bitcoins.
On the negative side, storing bitcoins in ‘hot wallets’ means there is a higher risk of theft by hackers. You do not want to store any amount over what you would feel comfortable carrying around in cash in a hot wallet.
A ‘cold wallet’ is a Bitcoin wallet that is generally not connected to the Internet. The best way to manage a cold wallet is to acquire a hardware wallet like a Trezor or Ledger Nano.
Hardware wallets are geared for use with a computer (Windows, Mac, Linux). If you prefer to use just a smartphone it’s possible to use a Trezor with an Android smartphone and compatible wallets (Mycelium comes to mind). Here is a better guide if this is the route you want to take.
Sign up to a Bitcoin exchange
Independent Reserve is a registered Australian company and has trading fees starting from 0.50%.
They require you to identify yourself before you can trade.
If you don’t like the idea of having an exchange and government monitoring all your bitcoin transactions you should check out my article on a Bisq — A P2P Exchange!
