It’s easier than ever to buy cryptocurrencies like bitcoin. Before you do, here are some things to note:
- Appreciate the importance of DYOR (Do Your Own Research). It’s an acronym you’ll see used a lot in the crypto space—and for good reason! If you solely rely on the advice of others to inform your investment decisions, then you may as well throw your money away.
- Plan how you’ll be interacting with the crypto markets. Will it be as an investor or trader? The answer will significantly affect your strategies and tax responsibilities.
- Strongly consider seeking professional advice before buying cryptocurrencies. From country to country, the regulatory status of crypto varies tremendously. This is especially true when it comes to tax, which affects traders and investors differently.
Choosing An On-Ramp Into Crypto
An on-ramp is a solution that allows investors and traders to convert fiat currencies to cryptocurrencies. On-ramps are offered by most leading crypto exchange operators and brokers.
The most popular fiat on-ramps are exchanges. These are online platforms that allow buyers and sellers to trade a range of cryptocurrencies using fiat currency or other cryptocurrencies.
There are two main types of exchanges: centralised exchanges and non-custodial exchanges.
Operated by for-profit companies, centralised exchanges are sites that facilitate the buying and selling of cryptocurrencies. These crypto exchanges typically make profits by charging users a transaction fee whenever they execute a buy or sell order.
Non-custodial exchanges are places to buy and sell cryptocurrencies in a peer-to-peer manner. Here, market prices are set by the sellers, rather than the exchange operator. Despite often being operated by a central entity, it’s common to hear non-custodial exchanges referred to as decentralised exchanges (DEXes).
Another popular way you can buy cryptocurrency with fiat is through a broker. A broker is an individual or firm (i.e., a brokerage firm) that typically charges a fee or commission for executing buy and sell orders placed by crypto investors and traders.
Because they can generally tap into deeper sources of liquidity than exchanges, brokers represent an excellent way for people looking to buy and sell cryptocurrency in large amounts. For orders worth more than A$2,500, Nugget’s News happily suggests using Caleb & Brown. And for $50,000-plus orders, HiveEx is a common recommendation.