Over the past decade, Bitcoin has seen a meteoric rise in interest as both a digital asset and an investment opportunity. Australia is no exception, with several exchanges such as Cointree, Independent Reserve, and Swyftx operating here.
Unfortunately, investing in Bitcoin can be complicated and risky – especially for beginners. To help ease your journey into investing with Bitcoin through Australian exchanges, we’ll provide some tips for beginners on doing so safely.
Cryptocurrency and how it works?
Before anything else, it’s essential to comprehend cryptocurrency and how it functions. Cryptocurrency is a digital or virtual currency that utilizes cryptography for security. It operates independently from a central bank and allows individuals to transfer funds directly between themselves through a decentralized system. All transactions are recorded on a public ledger known as the blockchain, providing transparency and assurance.
1. Do your research
Before investing in Bitcoin, you must do your due diligence and thoroughly research the asset. Learn about Bitcoin’s operation, history, and factors affecting its price. Additionally, research different Bitcoin exchanges like Cointree, Australia-wide to compare fees and services before selecting a reliable one.
2. With a Small Investment
Bitcoin is an extremely volatile asset, and its price can change rapidly. Therefore, it is best to start with minimal investment and only invest what you can afford to lose. Doing this helps manage the risks associated with investing in Bitcoin.
3. Create a Diversified Portfolio
When investing in Bitcoin, having a diversified investment portfolio is essential. Spread your investments across different asset classes and sectors to reduce risks and build an evenhanded portfolio. Only put some of your eggs in one basket when investing in bitcoin!
4. Select a Reputable Exchange
When investing in Bitcoin, choose an established exchange registered with the Australian Securities and Investments Commission (ASIC) and adhere to anti-money laundering and counter-terrorism financing (AML/CTF) regulations. Ensure the exchange has adequate security measures, customer support services, and fees before choosing.
5. Secure Your Bitcoin Holdings
Bitcoin is a digital asset that hackers can steal. Thus, it’s essential to take measures to protect your holdings. Use strong passwords and two-factor authentication, and store your cryptocurrency in an encrypted wallet for maximum protection.
6. Monitor Your Investment
Bitcoin is a highly volatile asset, and its price can shift abruptly. Therefore, it is essential to monitor your investments regularly and be ready to adjust your strategy if needed. Avoid basing choices on emotions based on quick price changes.
7. Be Prepared for Taxes
Investing in Bitcoin in Australia is subject to taxes. You must report any gains or losses from your Bitcoin investment on your tax return. The Australian Taxation Office (ATO) has guided how to report such gains and losses for taxation purposes.
Finally, investing in Bitcoin through Australian exchanges can be a lucrative investment option, but it also carries risks. To minimize exposure to these dangers, beginners should research the asset thoroughly, start with a small investment, create a diversified portfolio, select an established exchange, secure their holdings of Bitcoin, monitor their investment activities, and be ready for taxes. With the correct approach to investing, Bitcoin could become an important component of an Australian investor’s diversified portfolio.