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One of the positive aspects about cryptocurrencies is that they are accessible to anyone with an internet connection and some funds to get started. This is, of course, what crypto was designed to be: a new financial system that everyone has access to on an equal playing field.
But with this ease of access comes a variety of different ways to get started. So, what is the best way to begin trading crypto?
If you’re considering investing in cryptocurrency, this guide is here to cut through the noise and get you started on the right track.
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Assuming you already understand how cryptocurrencies work (and if you don’t, here’s a primer), you first need to choose how you would like to exchange your Australian dollars (or other fiat currency) for crypto.
The most popular choice is to use a centralised crypto exchange. These are platforms, usually in the form of a website or mobile app, where you can deposit fiat currency to buy crypto. Depending on the exchange, they may also offer trading between other cryptocurrencies and also selling back into fiat so you can cash out into your bank account.
There are also various other ways to get fiat into cryptocurrency, such as physical crypto ATMs, direct-to-wallet on-ramps and even crypto gift cards. These options typically require you to have a personal wallet set up already, which we’ll cover later in this guide.
For the sake of simplicity, let’s follow the path of getting started via a centralised exchange, as these generally offer the easiest way to trade. The first step is of course to choose which exchange looks most suitable by weighing up the features, fees and the overall feel of the platform. If you are looking for the best crypto exchange for Australians, you can find our list for 2024 here.
Typically, creating an account with a crypto exchange involves an identity check that’ll involve entering some key information about yourself, providing a government-issued ID and passing some biometric checks.
This usually means uploading a photo or short video of your face or looking into the lens of your webcam or smartphone camera while following a series of prompts. These steps are part of the know-your-customer (KYC) process which regulated exchanges must complete in order to keep you safe, as well as stay compliant.
Exchanges are obliged to follow strict KYC regulations designed to tackle money laundering and fraud. These checks are in place to weed out people using your image to open a fraudulent account. The information is also shared with the Australian Tax Office (ATO) so they can be aware of taxpayers who trade cryptocurrencies. Just like shares, gains made on crypto investments are taxable in Australia.
Once approved, you’ll need to deposit some traditional “fiat” currency, such as Australian dollars, with which to buy cryptocurrencies.
While many tokens can be bought for fractions of a cent, exchanges typically set minimum deposits‚ which means you might have to pay in, for example, $10—even if you only want to spend 20 cents on a single Dogecoin.
You’re ready to start trading after you’ve passed the identification checks and met the minimum deposit requirements.
Cryptocurrency is a borderless, secure digital payments system that allows anyone with an internet connection to transfer value directly with another person without needing a third party like a bank or payment provider. By removing the middlemen, the costs and complexities of traditional payment systems are removed from the equation.
The removal of third parties also promotes financial inclusion and freedom. People who would typically not have access to bank accounts or international payments systems can now participate in the global economy. They can store, send and receive value from anywhere in the world without relying on a financial institution that may charge high fees.
The easiest way to understand the value of a system like this is to imagine you needed to send some funds to a friend or family member in a different country. Using a traditional payment, the best-case scenario would be that the payment would take less than a day and cost 1-2% of the transaction. However, depending on what country they were located in, it could also take days, cost a fortune and potentially never arrive to them.
Crypto is designed to solve this, allowing you to send a payment almost instantly in just a couple of clicks for very little cost. With cryptocurrency, the infrastructure which makes payment possible is decentralised—no single person, group or interest controls it. It all works using blockchain technology. Blockchains are immutable digital ledgers maintained by thousands of volunteers, governed by communities of ordinary people and distributed to anyone who wants to get involved.
Volunteers offer their time and effort to run specialised computers in exchange for the chance to earn cryptocurrency, and encryption technology makes it practically impossible to cheat the system. When you carry out a transaction with cryptocurrency, volunteers around the globe make a record of it in their copy of the relevant ledger. When a certain number of transactions are recorded, a block of those transactions is added to a long chain of previous blocks representing the chronological history of transactions in that currency.
To add a block to the blockchain, you first need to validate it. To do this, you must either correctly guess a 64-character, alphanumeric string with trillions of possible combinations or stake your own cryptocurrency for the opportunity.
If you’re lucky enough to be chosen—either because your computer rig was powerful enough to make the correct guess (or the closest guess within a 10-time limit) or you staked enough of your assets to tip the odds in your favour—you’ll need a 51% majority of the volunteers to agree yours is an accurate record of the transaction. If you tried to claim there was more cryptocurrency in an account than there actually was, the majority would reject it. In order to cheat the system, you’d have to control at least 51% of the votes on the network. In either case, the cost would be prohibitive for any of the larger blockchains, like bitcoin or Ethereum.
When your block is added to the blockchain, you’re rewarded with a small amount of a given cryptocurrency. There are no cryptocurrency coins or notes, there are only records of transactions keeping track of who owns which assets.
Cryptocurrencies can be used to pay for goods and services, traded for other cryptocurrencies, or held onto for speculative purposes.
Within your chosen crypto exchange, you’ll be able to check prices for a range of tokens and see how they’ve been performing over the past hours, days, weeks, months and even years.
Exchanges will generally show you the tokens that are trending upwards and downwards in price, new tokens, popular tokens and so forth. You can use all of this information, in addition to your own research, to decide which coins to buy and sell. When you buy a cryptocurrency, somebody is selling it, you’re both just using the exchange as an intermediary. When there are more buyers than sellers, the price of a token tends to rise, and vice versa.
How and when you choose to buy depends on your approach to investing, what you hope to gain and how much you tolerate risk.
Some people are day traders, buying and selling tokens within the same day to take advantage of movements in the market.
Day trading is such a short-term strategy that it prevents investors from riding out price dips that might correct themselves over longer periods. Unfortunately, most individuals who try their hand at day trading find the crypto market is a cruel mistress and moves against them more often than not.
Swing traders, on the other hand, hold coins for longer periods of time, monitoring prices of assets over a period of weeks to determine the best assets to buy, sell and hold.
Observing price movements over longer periods can help traders to make more informed decisions, but potentially requires more discipline and the ability to not act impulsively on smaller, day-to-day changes.
Position trading takes a long-term view of crypto investing. Position traders buy coins in anticipation that they’ll make gains over the longer term and are less concerned with day-to-day, or even week-to-week, volatility.
Position trading also has the benefit of building a portfolio over time, starting with a small investment and increasing it over time. The trade off is that investors must be confident enough in their chosen investments to ride out any turmoil in the market that appears on a day-to-day basis.
Countless factors can affect a cryptocurrency’s price, but supply, demand and sentiment are useful indicators for predicting trends. When demand is met with sufficient supply or more supply than is needed, prices tend to remain flat or fall. In crypto, supply is determined by how coins are mined.
For example, earlier in 2024, the amount of Bitcoin given to miners who successfully add a block to the blockchain halved from 6.25 BTC to around 3.125 BTC.
This drastic slowdown in the rate of new Bitcoin issuance, in theory, puts upwards pressure on the value of BTC as the new supply entering the market dwindles. However, if demand were ever to drop significantly, the supply squeeze would be insignificant.
Demand is the other side of the coin. When more people are interested in buying something, the more those who can afford it are willing to pay for its relative scarcity. If, for example, a major public figure were to say they believed a coin would become very valuable, their support could pique interest and lead demand to outstrip supply, pushing prices up.
On the other hand, if a coin begins to be seen as less valuable, perhaps if there were rumours of technical issues behind the scenes, demand would fall, and sellers would need to accept lower prices in order to get rid of their coins; hence prices fall.
Such a scenario hinges on sentiment; that is to say, public perception of value can have a direct effect on value.
When Ethereum went from using a Proof of Work consensus mechanism to a Proof of Stake mechanism in 2022, it was predicted that the environmental benefits of the change would make it more sustainable, making it a safer and more valuable investment.
Similarly, crypto prices rose after the collapse of Silicon Valley Bank (SVB) in 2023. The failures of these banks was a clear case study that highlighted the value of a digital payments system that sat outside the control of any centralised institution that could, theoretically, fail at any moment. While US authorities did decide to intervene in order to protect SVB deposits, if this were to happen on a broader scale or in a country that didn’t have such a democratic government, many of the bank’s customers could have lost their deposits forever. With cryptocurrency, you can store it yourself, meaning that bank failures would never pose a risk to your investment. Monitoring the news for changes in these three factors can help to predict how prices might change, but countless external factors are also at play.
Once you’ve chosen a currency to invest in, you’ll need to navigate to the relevant page within your exchange and select buy.
First, you need to input the amount of fiat (AUD) currency you want to spend before being shown how much of the cryptocurrency you’ve chosen it’ll buy you. For example, $10 might buy you 0.00022 BTC, or 100 DOGE.
If transaction fees are included (they often are), you’ll get fractionally less of your chosen currency than you’d get with straight fiat-to-crypto conversion—this is because the exchange is taking a small cut of the money you’re paying out to the seller of the cryptocurrency.
After this, your account will be credited with your newly bought crypto for you to hold, sell or spend with merchants who accept it. This ranges from a small number of merchants to a tiny number, depending on the currency. Tesla, for example, accepts bitcoin, for example, but don’t expect to pay your local grocery store with crypto.
You can choose to sell your crypto for fiat currency or trade it for another cryptocurrency. The buying process is much the same as buying a cryptocurrency with Aussie dollars, you just pay with a cryptocurrency instead. For example, 100 DOGE might buy you 0.00022 worth of bitcoin. Again, transaction fees may apply.
All of this assumes you want to trade manually, and make your own decisions about what to buy and when to make trades. There are platforms that can automate the process, with bots that will buy and sell on your behalf when certain trading conditions are met. It’s worth mentioning that eToro has a ‘CopyPortfolios’ feature that lets you mimic successful investor trades automatically.
If your goal is to make a profit from trading cryptocurrency, you’ll need to choose an asset(s) you believe is likely to appreciate in value.
It is extremely important to note that not all cryptocurrencies are created equal, and while “blue-chip” crypto assets like bitcoin and Ethereum have performed well since their inception, it doesn’t mean that other cryptocurrencies will follow the same path.
However, cryptocurrency is infamously volatile and unpredictable, making it extremely difficult to back a winner. Bitcoin has risen in value by over 80% since the start of the year , but is still down by around 50% from its November 2021 peak.
Traders tend to follow crypto news feeds, watch out for forthcoming technological developments, pay attention to regulatory developments, study crypto exchange data and simply watch price trends over time to decide which assets to buy.
Securing your digital assets is a vital component to trading crypto. This is done with a ‘crypto wallet’, which stores ‘keys’ not physical coins. There are two keys: a private key (like a password) to unlock your wallet, and a public key (like a bank account number) to receive coins.
There are several types of wallets:
A key principle is “Not your keys, not your coins,” emphasising the need to control your keys. A non-custodial wallet (you control the keys) is safer than a custodial wallet (a provider controls your keys). Although custodial wallets may be user-friendly, they carry a risk of asset loss if the provider is compromised or goes bankrupt. You can find our list of the best crypto wallets for Australians in 2024 here.
Whatever you decide to trade in, wherever you choose to do it and whenever you buy or sell, you should be aware that crypto is extremely volatile and, for the time being, largely unregulated in Australia.
Digital asset markets remain the wild west of the investment world. Few regulatory bodies around the world can keep up with the ever-evolving world of crypto, and therefore, there remains a significant risk of losing any money you invest. It is extremely important to note that not all cryptocurrencies are created equal, and while “blue-chip” crypto assets like bitcoin and Ethereum have performed well since their inception, it doesn’t mean that any other cryptocurrencies will follow the same path.
The ease of creating a new crypto project anonymously has also made the digital asset market rife with scams, so don’t fall victim to investing any schemes or projects that sound too good to be true. More often than not, you’ll be left with nothing if you do fall into their trap—as sadly many Australians have already done.
The advantages and disadvantages of trading cryptocurrencies are almost completely subjective, and depend entirely on how you feel about crypto as a concept.
Enthusiasts often argue crypto can serve as a hedge against currency debasement, one of the main causes of inflation. Given that the debasement of fiat currencies like the AUD and USD has only accelerated since the Covid-19 pandemic, this alone could be a solid argument for investing in cryptocurrency. However, on top of this, crypto offers a payments system that’s faster and cheaper than centralised fiat currencies and free of interference from vested interests from central authorities—an important priority for some traders.
Detractors say cryptocurrencies are volatile, unpredictable and lack real-world utility. Environmentally minded critics say certain cryptocurrency systems are unsustainable because of the huge amounts of energy they use. However, some of these detractors are often myths that are outdated and have perpetuated over time.
Without regulation, some people also fear investors are exposed to rogue traders, scams, platform collapse and other risks. Some say the relative privacy of cryptocurrency, coupled with a lack of regulation, makes it a haven for fraudsters, money launderers and criminals. You can read more about the Federal Government’s plans to regulate crypto in our guide to the future of crypto in Australia.
As with anything, there are always two sides to the coin and it is up to you to make the decision as to whether trading cryptocurrency is the right step for you to reach your own financial and investment goals.
This article is not an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency or CFDs as an investment class. Cryptocurrency is unregulated in Australia and your capital is at risk. Trading in contracts for difference (CFDs) is riskier than conventional share trading, not suitable for the majority of investors, and includes the potential for partial or total loss of capital. You should always consider whether you can afford to lose your money before deciding to trade in CFDs or cryptocurrency, and seek advice from an authorised financial advisor.
There are several steps involved to get started trading cryptocurrency in Australia:
To get started trading cryptocurrency in Australia, follow these steps:
Note that profits from cryptocurrency trading may be subject to capital gains tax in Australia, so it’s essential to keep track of your trades and consult with a tax advisor.
The ease of trading cryptocurrency can vary based on several factors including your familiarity with financial markets, understanding of cryptocurrencies, the platform you choose to use, and your ability to navigate its user interface.
Trading cryptocurrencies is technically straightforward—you open an account on a cryptocurrency exchange, deposit funds, and then you can buy, sell, and trade various digital currencies. Many platforms have user-friendly interfaces that allow for easy buying and selling.
However, the actual process of making profitable trades can be complex. Cryptocurrency markets are highly volatile and unpredictable. This, combined with the complex nature of blockchain technology and the wide variety of available cryptocurrencies, means that successful trading requires a good understanding of the market, a solid strategy, and often a substantial time commitment to monitor prices and market trends.
The majority of those who get into crypto trading quickly find it is much more difficult than anticipated and eventually move towards a more strategic investment approach, which requires less commitment and can help build a longer term investment portfolio.
Yes, you can trade cryptocurrencies directly, known as ‘spot trading’. This involves buying and selling the actual cryptocurrency itself, rather than a derivative. For example, you might buy Bitcoin with AUD and later sell that Bitcoin back into AUD, or even into a different cryptocurrency.
Direct trading of cryptocurrencies is done on cryptocurrency exchanges. When you engage in a direct trade, you actually hold the cryptocurrency in your digital wallet. This differs from derivative trading, as rather than having a contract that represents the asset, you actually own the asset and can do what you like with it.
The best way to get started is to begin by conducting research to understand the fundamentals of blockchain and the reasons behind investing in crypto. Once you’re comfortable with the fundamentals, you might decide to open an account with a reputable exchange and begin by investing a small amount to begin your journey. It’s also important to research and understand the risks involved in investing in cryptocurrency. Starting small and being patient is key
While it’s possible to make $100 a day with crypto, it’s not a guaranteed outcome and requires significant knowledge, experience and risk management. To achieve consistent returns, you would need to have a solid understanding of market trends, technical analysis, and risk management strategies in order to have a replicable strategy. Keep in mind that trading and investing in cryptocurrency can be highly volatile, and losses can occur quickly.
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Staff writer Mark Hooson has been a journalist within the personal finance, consumer affairs and fraud sectors for more than 10 years. He is also Forbes Advisor UK’s resident tech expert. Mark says he thrives on making ‘complicated and dry topics easier to digest’.
Patrick McGimpsey is passionate about crypto and its impact on the financial world. He has over seven years' experience in the crypto space and has previously shared his knowledge with the anti money laundering and fraud prevention departments of leading Australian financial institutions.
