Investing in Cryptocurrency
Everyone around you is investing in or talking about cryptocurrency. Mates are busy discussing the best crypto wallets and how they will spend their extra dollars. Whether it is through genuine interest, curiosity or just a basic fear of missing out, you want to become involved. This is all well and good, but to the untrained eye, there can seemingly be many high obstacles blocking the path to crypto-investment. Like with everything in life, it can be difficult to understand what you don’t really know.
It is in-fact, very easy to start investing in cryptocurrency. All that you require is a logical, step-by-step approach, a willingness to absorb some new information and above all, patience. Armed with these tools, let us guide you on your first journey into Australian cryptocurrency.
Before you jump straight in, it is worth taking some time to familiarize yourself with exactly what the purpose of cryptocurrencies is (or at least the ones you are considering to purchase) and also, a little about how the blockchain (the underlying system) works. This kind of due diligence will reap dividends in the future and stop you from making some really novice errors in trading.
From here, you can head straight for a cryptocurrency exchange. This is the place where you can buy and sell cryptocurrency. There are many of these exchanges available to Australian customers. As with any type of service, some are fantastic and others not so much. Every exchange has its pros and cons. For the purposes of this guide and keeping things simple, we will focus our attention on two exchanges.
Coinbase is one of the world’s largest cryptocurrency exchanges and also one of the easiest to navigate when starting out. The selection of cyptos available on Coinbase is limited to a few major players, these are Bitcoin, Ethereum, Litecoin and Bitcoin Cash. The influence of Coinbase on the industry is actually so large, that rumors they may add more coins to their exchange can often trigger strong price movements.
The advantages of starting with Coinbase are several. It gives you a safe and secure medium of purchase which is easy to understand, you can purchase any of the major currencies which form a great foundation for your portfolio and which you can also use to trade on other crypto-only exchanges such as Binance.
The biggest advantage is that this is one of the few sites where you can purchase cryptocurrency with your Australian credit or debit card. With a 3.99% fee, your crypto purchase is delivered immediately to your exchange wallet, and so, the journey begins.
Binance is one of the world’s fastest growing non-fiat exchanges. Here you can only trade cryptocurrency for other cryptocurrencies. It is a fantastic place to come, with an easy registration process and low fees (Variable depending on currency) where you can trade your major cryptos for a wide array of Alt-Coins.
There will be a registration and ID verification process for both sites which can vary in completion time depending on how busy their systems are, but with both of these accounts set-up, you can now trade basically any cryptocurrency on the market in seconds.
With the exchanges figured out and your first purchases acquired, it is pretty safe to keep them automatically stored on your exchange wallet for a while, but eventually you will be wanting an independent wallet of your own.
Best Cryptocurrency Wallets
Many choose to keep their cryptocurrency stored on the exchanges where they were purchased. This is fine if you intend to regularly trade them in and out of market positions or if you have only purchased a relatively small amount. However, they are statistically the least secure, with hackings of even the most trusted exchanges costing millions.
There are a number of crypto wallet choices available to Australian users. Two of the best for the entry level user which we will cover are Jaxx and MyEtherWallet.
Jaxx is a relatively new but strong competitor among the Australian cryptocurrency wallets. It offers one of the best-developed user interfaces in the market. This makes it really simple to use. It is compatible with desktop on mac and windows and you can easily download the great android of IPhone application.
In addition to being easy to use, it is also highly secure. When you set-up your wallet, be sure to take a safe note of your private key and back-up phrase in case you lose your phone or forget your password. This step is vital for all of your wallets. Without these things, you could lose your coins.
With Jaxx you can store most of the major cryptocurrencies available in Australia, plus a host more (55 at time of writing).
Sending cryptocurrency to and from your wallet couldn’t be simpler. Enter your Jazz wallet address into the receiver section when sending from your Coinbase or Binance and the transaction will be completed quickly. Alternatively you can just scan your Jaxx QR code to perform the same task. The time it takes to show up in your wallet will depend on the currency (Some is slower than others), the amount and the network traffic.
The fees will vary but stand at approximately .000441ETH. Bitcoin may be a bit more costly. These fees do not go to Jaxx, which is free to download and use, but to the network users who validate and mine your transactions.
A final reason why Jaxx is one of the best cryptocurrency wallets for Australian users is its implementation of Shapeshift. This allows you to change any currency you are holding in your wallet to another compatible Jaxx currency. All while staying in your wallet, bypassing the need for an exchange. This feature can be extremely helpful for increasing security and reducing your transaction fees.
Whilst Jaxx is a software wallet, MyEtherWallet is an online wallet. Although this makes it technically a little more vulnerable to attack, it is one of the most highly regarded and secure online cryptocurrency wallets available to Australian users.
With MyEtherWallet you can create multiple wallets and store practically any available currency. MEW also provides the ability to store a vast amount of tokens from ICO offerings. This is especially useful as you get more involved in the cryptocurrency world and start investing in lesser known coins and tokens.
The fees and sending process are much the same as with Jaxx and other wallet types, with your fee going to the network and not the company itself.
A cryptocurrency which has rocketed in popularity both in Australia and globally is Ripple (XRP). A small aside for owners of Ripple who require a safe place to store your currency. Because Ripple is not based on the same platform (ERC-20) as many of the other coins, it cannot be stored on the wallets mentioned above. It should instead be stored independently in a Ripple specific wallet.
Toast Wallet offers a fantastically secure option with a great downloadable mobile app to safely track your holdings. Again, fees are minimal and sending and receiving works exactly with other wallets, except faster! The only caveat with Ripple is that you should maintain a holding balance of 20XRP in your wallet at all times.
First and foremost, the most crucial piece of advice to follow with investing in cryptocurrency or any other type of investment is, do not risk more than you can afford to lose. Of course, that is much easier said than done, but the key is not to get carried away with potential gains and also not to be too disheartened with short-term losses.
- Set your goals for a particular cryptocurrency before investing and try to stick to them. These could be both short and long term goals depending on the currency.
- Try to avoid constantly checking the prices of your coins. This has the potential to drive you up the walls and lead to some poor trading decisions.
- Do extensive research into the cryptocurrency you are considering to purchase before you actually do so. Making an informed decision often means you can be more at peace even if it losses and at the very least you will be able to discuss your reasoning knowledgably with other investors.
- Do not be afraid to get out of your position. Of course there are many times when a long-term hold is advocated, however each situation is subjective and you should also not be afraid to walk away from a wrong decision.
- Carefully consider the utility of the coins you are purchasing. What is their intended purpose and does a gap exist in the market for this particular purpose. In many cases, the greater the utility function of the coin, the higher value it can reach.
- The supply of coins is also vital. The use case of a particular coin could be really great, but if the market is flooded then demand will be easily met and price should remain relatively low.
Following these few key tenants should help to steer you in the right fundamental direction. The remainder will be up to you.
Monitoring Your Cryptos
Once you have made your purchases and stored them safely in a wallet, you will invariably want some convenient way to watch how they perform. Sure, you can check them on the exchanges all the time. This is a quite cumbersome method though and sometimes it can be difficult for you to get an overview.
Luckily, there are a couple of great apps available to Australian cryptocurrency investors which have been used and tested by millions of crypto investors globally. The top two in this area are, Blockfolio and Delta.
Both of these applications provide similar functions and with a similarly easy to user interface. They both allow you to input your cryptocurrency purchases and build an easy portfolio which you can view and manage in the application at all times and which is updated in real-time.
You can enter your purchase amount and exact price as well as monitoring the prices of cryptocurrency on Australian crypto exchanges and pretty much any exchanges around the world. The wealth of information you are provided with, including price charts, make both of these apps a one stop location for easy monitoring of your holdings. Both applications are completely free and available to download in both the App Store and Google Play Store for android users.
Cryptocurrency can represent a daunting prospect when you first look at the markets from the outside. Not only that, but among the many cryptocurrency advocates in Australia and globally, there will always be a large amount of naysayers. These people will try to instill fear in the market and feeling of new or potential investors. Often concerns about security and future value will be cited.
Hopefully through reading this guide, we have brought to light the ease with which cryptocurrency investment can happen. It need not be a path fraught with danger, but instead an opportunity to gain knowledge and learn as you invest in a whole new future economy.
Crypto investing in Australia, as with any part of the world, is no walk in the park and for many people, they may simply not be suited to such a venture. For those who are eager to invest and learn however, by following the above steps, you will at least make your initial steps a little more trouble free and provide yourself with the best possible foundation to start a successful cryptocurrency investment empire, one coin at a time.
- The views expressed in this piece are merely opinions of the author and are not in any way intended as financial advice. Every investment decision you make is at your own risk. Do not invest more than you can afford to lose.