The Everyday Australian's Guide to Getting Started With Crypto

Let’s face it: entering the crypto space as a newbie can feel incredibly overwhelming.

With an array of crypto-specific abbreviations and jargon being thrown left and right within the space, making the leap to call oneself a full-fledged crypto trader can feel like first setting foot inside a distant land.

But don’t be discouraged: anyone can get started buying and selling crypto, even if you feel like you’re past the ideal jump-off point for it.

Whether you’re a seasoned professional looking to expand your investment portfolio or a young adult who wants to make your first big investment decision, you’re in the right place.

This article will walk you through the basics to help you start your crypto journey on the right foot. Let’s get started!

What is Crypto All About?

You may have heard of crypto as a wealth-generating asset, but it’s much more than that. 

Cryptocurrency is a form of digital currency that operates on a peer-to-peer blockchain network. This network is decentralised in scope, meaning that no single authority can claim control over its value, which is unlike the case for fiat currency and its corresponding central bank.

Its peer-to-peer nature means that crypto transactions are validated and recorded through a distributed and transparent system. Every time a person sends or receives crypto across a blockchain, it will get recorded in the public ledger for anyone to see if they so desire.

While many people are drawn to crypto for its investment potential, it’s also part of a broader shift towards digital finance and ownership. Crypto and its blockchain technology are steadily becoming more and more prominent in everyday situations across different contexts and environments. 

For instance, blockchain technology is often used as an identifier due to its unique hash sequence. It’s also used as a smart contract, enabling two parties to safely move forward with a transaction without requiring an intermediary.

With that being said, crypto’s still primarily known for being an asset a person can invest in to boost their portfolio. You can also get invested in this asset when you acquire a top-performing cryptocurrency and buy Dogecoin with Independent Reserve or other local crypto exchange platforms within Australia.

Modern-Day Use Cases of Crypto

Crypto isn’t just something people buy and hold anymore. It’s something that everyday people can use and benefit from. Many Australians realise this and are starting to explore how crypto fits into day-to-day activities.

Here are five of these use cases in greater detail:

• Online payment: Cryptocurrency can be an alternative form of payment for transactions inside Australia and overseas. It’s ideal because it comes with lower fees than traditional banking. It’s also much quicker and involves fewer intermediaries.
• Investment diversification: Crypto can be used to generate capital alongside stocks, bonds, and other investable assets. The crypto market tends to perform independently from the stock and Forex markets, making it a good hedge to protect one’s wealth against external market factors.
• Decentralised finance: Crypto empowers traders to access alternative financing options without needing a good credit score or a bank account. There are various lending, borrowing, and interest-generating activities that crypto holders can take advantage of within the space.
• Digital ownership: Crypto holders can buy digital assets like art, music, or collectibles within the blockchain space. These asset classes, also called NFTs, have different hash sequences. Thanks to the blockchain’s unique identifiers, people can lay claim to specific digital assets and buy and sell them at will.
• Remittances: Businesses and freelancers with clients abroad can benefit greatly from accepting crypto payments as an alternative form of payment. Accepted crypto payments can easily be converted to the local fiat currency without going through multiple fiat conversion processes.
• Smart contracts and automation: Smart contracts are self-executing agreements that run automatically when conditions are met. Having such a system reduces the need for intermediaries.

As adoption continues to grow, crypto is shifting from a niche interest into a more functional part of the broader financial landscape. 

And while the space can be volatile at times, the future outlook of cryptocurrency tends to increase in value over time. This is because of the lower mining rewards contributing to a lower circulating supply of cryptocurrency as time passes—among many other reasons for crypto’s sustained demand.

How to Buy Your First Crypto

If you’re interested in investing in crypto for the first time, then you’re in for a treat. Nowadays, getting ahold of a crypto is incredibly simple. All you need is a WiFi connection, the money you plan to exchange, and the right smartphone app where you can conduct the trade.

The good news is that there’s no shortage of excellent and reliable crypto exchange platforms that support multiple payment methods for buyers looking to purchase their first crypto.

So without further ado, here’s a step-by-step guide on how you can buy your first cryptocurrency.

1. Select the right crypto exchange: As much as possible, select a user-friendly, secure, and regulated crypto exchange platform. 
2. Verify your identity in the platform: Sign up to the app or platform, fill in personal information, and upload relevant documents to prove your identity in the app. This is a part of Know Your Customer (KYC) compliance.
3. Fund your account: Link your bank account, debit card, or digital wallet to deposit fiat currency into your exchange account. In this case, Australian dollars.
4. Purchase a crypto: Search for a cryptocurrency that you’d like to buy, and buy it. In your buy order, choose a reasonable amount of that crypto (i.g. not too high) to ensure that you can stomach any mistake in your purchase that you may have overlooked.
5. Secure the asset: Once you have the crypto in the exchange platform, transfer it to a long-term holdings solution like a hot or cold wallet. This way, you’ll have complete ownership of your token.

With all that said, choosing the right crypto to purchase is always something to consider. Everyone has different financial goals and timelines, so what may work for someone may not necessarily work out for you.

In any case, it’s important to do your research and invest only what you can afford to lose. This way, you can steadily grow your crypto portfolio without being greatly impacted by volatility or mistakes in your process.

5 Risks of Crypto to Know About

As exciting as crypto can be, it’s important to understand that it comes with its fair share of risks. Crypto tends to be the most volatile asset class out there, so it’s important to be level-headed before jumping headfirst in the whole investment process.

Here’s some risks you should know about to ensure you’re aware of these shortcomings:

• Scams: There are many phishing scams in the crypto world, and they can be very convincing if you’re not aware of them. So always check the platform’s spelling, a link’s authenticity, and other suspicious sites that you may come across in.
• Price volatility: In the crypto space, it’s not uncommon for even top-performing cryptocurrencies to swing by as much as 5 to 10% on a single day. Unlike stock assets with set trading hours, these swings can occur anytime within the day, making it all the more crucial to set stop losses.
• Regulatory uncertainty: While Australia has regulated crypto and made it its own asset class, it’s possible for rules and policies to evolve and bend over time. You should be ready for any of these developments, whether they’re good or bad.
• Irreversible transactions: Once you send crypto, it can’t be reversed if you make a mistake.
• Platform and custody risks: Keeping funds on exchanges means you rely on their security and stability.

We hope that we’ve helped you understand the importance and risks of cryptocurrency. Regardless, we wish you all the best in starting your crypto investment journey!

Disclaimer:

This content was provided by the Independent Reserve project team for Quantify Crypto