To buy cryptocurrency, you must first choose a broker or a reliable crypto exchange. Although both paths allow you to buy crypto, there are important differences between them to keep in mind.
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What is a Cryptocurrency Exchange?
A cryptocurrency exchange is a platform where buyers and sellers meet to trade cryptocurrencies. Exchanges often have relatively low fees, but they tend to have more complex interfaces with multiple trade types and advanced performance charts, all of which can make it intimidating for new crypto investors.
Some of the most famous cryptocurrency exchanges are Coinbase, Kraken and Binance. While these companies’ standard trading interfaces can overwhelm beginners, especially those without a background in stock trading, they also offer user-friendly easy purchase options.
A host of Australian exchanges, such as CoinSpot, Independent Reserve and Swyftx, allow users to buy a range of cryptocurrencies with AUD, including through bank transfers or via BPAY in some cases. Be sure to research which exchange is best for you before signing up, especially regarding trading and transaction fees. Some other questions worth asking are:
What security best practices does the exchange use? Are cryptocurrencies held on the platform in a secure cold wallet? Does the platform have a helpful and easy to contact support team? Does it offer a wide variety of coins for trading? What are the terms and conditions?
As the failure of FTX highlighted, you should not assume that all exchanges use security best practices, so it is critical to verify for yourself.
Australian crypto exchanges must be registered with AUSTRAC, and comply with anti-money laundering and counter-terrorism financing (AML/CTF) legislation. However, this requirement has more to do with preventing criminal syndicates from laundering money; it does not imply your coins will be protected. Cryptocurrency is not regulated by the financial watchdog, ASIC, although this may change in the near future according to plans by the Australian government.
The convenience of exchanges also comes at a price, as the beginner-friendly options charge significantly more than buying the same crypto via each platform’s standard trading interface. To save on costs, you can try to learn enough to use the standard trading platforms before you make your first crypto purchase – or not long after.
What is a Cryptocurrency Broker?
Cryptocurrency brokers take the complexity out of buying crypto, offering easy-to-use interfaces that interact with exchanges on your behalf in exchange for a fee. Caleb & Brown is an example of a famous crypto broker in Australia.
Others claim to be “free” while making money by selling information about what you and other traders buy and sell to large brokers or funds or not executing your trade at the best possible market price.
While this is undeniably convenient, you need to be careful with brokers as you may be restricted from moving your cryptocurrencies off the platform. For example, with some you cannot transfer your crypto holdings out of your account.
This may not seem like a big deal, but experienced crypto investors prefer to keep their coins in crypto wallets for added security. Most choose hardware crypto wallets that are not connected to the internet for the ultimate peace of mind and highest level of security.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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