cryptocurrency

Cryptocurrency

Cryptocurrency — a beginner-friendly guide for the crypto-unfamiliar​

Learn how to buy Bitcoin, Ethereum and other cryptos

Research and compare different coins and where to buy them from our curated list of the best crypto exchanges and wallets(to securely store them).

Compare crypto exchanges in Australia

Compare dozens of major Australian and global exchanges on features, fees, selection of cryptos and more in our comprehensive platform reviews. 

Buy and Sell Cryptocurrency from these Exchanges

Cryptocurrencies are digital assets that have a value, just like a $10 note is a physical token with 10 dollars of value assigned to it.

The difference is that digital currencies are electronic – they only exist on the internet.

While some cryptocurrencies are intended to be spent like regular currencies, other may be considered a store of value investment, used to power transactions on a crypto network or even simply to assign governance over a project.

Others, known as memecoins, are simply designed as a novelty and aren’t intended to have any intrinsic value.

In order for a cryptocurrency to have value, its coin needs to be unique, verifiable and unreplicable.

The Bitcoin blockchain was the innovation that made this possible and was first laid out in the original Bitcoin whitepaper in 2008.

Where can you buy and sell crypto in Australia?

The easiest place to buy and sell crypto is via a dedicated crypto exchange. Australians can now choose from dozens of established and feature-rich crypto exchanges.

If you’re just starting out, you might want to go with an AUSTRAC-registered exchange that lets you buy and sell crypto with Australian dollars, either via bank transfer or card.

If you’re a more experienced investors or trader, you may want to consider the number of coins an exchange offers, how low its trading fees are and other features like staking, advanced order types and good liquidity.

You can click the Go to Site button when you’re ready to create an account with any of the providers.

How does cryptocurrency work?

Crucial to crypto is the principle of decentralization. There is no single authority or business (such as a bank or government) that controls cryptocurrencies.

This idea of sovereignty over your assets and removing reliance on any sort of intermediary is something you’ll hear about a lot.

Decentralisation also makes crypto a powerful medium of exchange because it can help minimise the costs and processing times of transactions.

Thanks to these innovations, companies like Visa, PayPal and the big four Australian banks have also begun adopting cryptocurrency and blockchain technologies.

Cryptocurrency uses cryptographic technology to secure individual assets on a database called a “blockchain”. A blockchain records transactions on a network in a way that cannot be altered.

You can think of a blockchain as hundreds of connected computers sharing information with one another. This builds a ledger of data that can be used to validate that each crypto transaction is legitimate and secure.

Some blockchains use a variation of proof-of-work or proof-of-stake consensus algorithms to execute transactions. Proof of work is where the term “Bitcoin miners” comes from.

Miners operate powerful computers that solve complex mathematical problems, which helps secure the blockchain by confirming transactions. For keeping the network secure and accurate, miners are rewarded with certain amounts of the cryptocurrency each time they confirm a “block” of transactions.

Proof of stake is a bit different. This algorithm uses staking – the process of locking up cryptocurrency on a specified blockchain wallet in exchange for a reward. Staking protocols use “nodes” – small copies of the blockchain being run on thousands of different computers.

Understanding how a crypto’s algorithm works in detail isn’t essential – or easy – but it can help explain movements in price.

You might be surprised to learn that Bitcoin (BTC) is not the most traded cryptocurrency, although it usually sits in the top 3.

Instead, it’s the dominant crypto by market capitalisation – a metric that shows the circulating supply of a coin, multiplied by its value.

Is cryptocurrency safe?

There are a number of risks associated with buying, storing and using digital currencies. Before jumping in, do plenty of research and make sure you understand how to keep your crypto safe. Some key risks to be aware of include:

  • Poor regulation. Cryptocurrency is still a largely unregulated market, which means you may not be protected if your funds are lost or stolen. Look for platforms that are registered with AUSTRAC and provide an insurance fund.
  • Volatile prices. Crypto is much more unpredictable than traditional markets and massive price fluctuations within a short window are not uncommon. Because of this, your investment can quickly lose its value.
  • Vulnerable to hacking. Several million dollars have been lost to successful hacks of crypto exchanges, wallets and blockchains. It’s important to understand that without appropriate security measures like using a hardware wallet, securing your private key and enabling 2-factor authentication, your funds could be stolen.
  • Steep technical learning curve. Grasping the complex technical foundations of potential crypto investments can quickly become confusing. You’ll also need to fully understand concepts like gas fees and wallet addresses before interacting with a blockchain, or else risk total loss of funds.
  • Scams. As crypto has become popular, so too have crypto scams. Be extremely wary of deals that seem too good to be true, thoroughly research all platforms or projects before putting your money in, and never disclose your private key.

Read the Australian government’s crypto investment warning for more guidance on keeping your money safe.

Frequently asked questions


What is a simple explanation of cryptocurrency?


Cryptocurrency is a type of digital asset secured by a database known as the blockchain. Blockchains are designed to ensure privacy and security using complex cryptographic algorithms.

Cryptocurrencies have a huge number of potential uses. They can be spent like money, ensure contract transparency, manage supply chains and much more.


Cryptocurrency prices rise and fall like any other speculative investment, and can be heavily influenced by public announcements and media sentiment. Some coins, like Bitcoin, have a small supply and high demand, which can also affect its value.

You might be able to make money with crypto by buying from an exchange and holding it, trading it or earning it, but each method has unique risks attached.


The Australian Tax Office treats cryptocurrency as an asset. In this sense, it’s viewed more like a stock than a currency.

This means profits made from buying, selling or trading crypto can be subject to capital gains tax (CGT). This includes selling one crypto for another.


There are quite a few types of cryptocurrencies, including digital currencies, stablecoins, memecoins, store of value coins, governance tokens, staking tokens and payment tokens.

Many cryptos may even fall into multiple categories at once. For example, Ethereum (ETH) is the governance token of the Ethereum network and is used to process transactions on the Ethereum network. It may also be considered a store of value coin because of its strong price performance and large market capitalisation.


Buying, selling and holding cryptocurrencies may trigger a taxable event. Consult a financial adviser, refer to the latest guidance from the ATO and read our guide to crypto tax in Australia to find out more.


Yes, cryptocurrency can be sold via exchanges and brokers for a local currency like Australian dollars. In some places, you can even use a crypto ATM to convert digital assets directly into cash, though this does attract high fees.


Unfortunately for investors, there’s no such thing. The best cryptocurrency will be whichever you believe has real utility and that suits your personal investment goals.

Bitcoin and Ethereum are widely considered to be the “blue chips” of crypto because of their high market cap and proven use-cases. Check out our guide to which cryptos to buy now for a look at what’s trending today.


Cryptocurrency can be a good investment if you’ve conducted extensive research and understand fundamental trading strategies. Investing in a highly volatile asset comes with the potential to magnify your losses as well as your profits, so only invest what you can afford to lose.


Money spent on cryptocurrency goes to whoever sold the digital asset, similar to any other exchange of value. This is usually an exchange or broker service, but it can also be a stranger if you’ve used a decentralised finance or P2P platform.


It depends on the cryptocurrency you buy. For instance, $100 would get you 0.00058 of Bitcoin or 0.016 of Ether at the time of writing. Or you could buy 283 Dogecoins.


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