Bitcoin 101

Yes! Bitcoin is completely legal in Australia. The Australian Taxation Office (ATO) treats cryptocurrency as property for tax purposes. You can legally buy, sell, hold, and use Bitcoin in Australia. However, cryptocurrency exchanges must be registered with AUSTRAC (Australian Transaction Reports and Analysis Centre) and comply with anti-money laundering regulations.

The Bitcoin network itself has never been hacked in its 16+ years of operation. However, security depends on how you manage your Bitcoin:

• Safe: Using reputable exchanges, hardware wallets, strong passwords, 2FA, and keeping seed phrases secure
• Risky: Storing Bitcoin on unregulated exchanges, sharing private keys, falling for phishing scams, or keeping large amounts on hot wallets

Follow best practices and Bitcoin is one of the most secure ways to store wealth.

You can start with as little as $10-$50 on most exchanges. Bitcoin is divisible to 8 decimal places, so you can buy tiny fractions. There's no minimum requirement - invest only what you can afford to lose.

Many beginners start with $100-$500 to learn the process without significant risk. You can always buy more later as you become more comfortable.

Yes, Bitcoin is volatile and risky like any investment. The price can go down as well as up, and you could lose your entire investment. This is why financial advisors recommend:

• • Only investing money you can afford to lose
• • Not investing your emergency fund or money needed for essential expenses
• • Diversifying your investments (don't put all your money in Bitcoin)
• • Taking a long-term perspective (5-10+ years)
• • Doing thorough research before investing

While Bitcoin has historically trended upward over the long term, past performance doesn't guarantee future results.

Bitcoin was the first cryptocurrency and remains unique:

• Bitcoin: Focused purely on being digital money, most decentralised, most secure, largest network effect, 21M fixed supply
• Other cryptos: May offer different features (smart contracts, faster transactions, different consensus mechanisms), but often with trade-offs in security, decentralisation, or proven track record

Bitcoin is often called "digital gold" while other cryptocurrencies serve various purposes. Always research thoroughly before investing in any cryptocurrency.

Yes, the ATO requires you to report cryptocurrency transactions. Key tax implications:

• • Capital gains tax applies when you sell, trade, or spend Bitcoin at a profit
• • If you hold for 12+ months, you may get a 50% CGT discount
• • Buying and holding isn't taxed - only when you dispose of it
• • You must keep records of all transactions
• • Personal use exemption applies for purchases under $10,000

Consult our Australian Tax Guide or speak with a crypto-savvy accountant for specific advice.

Bitcoin is pseudonymous, not anonymous. This means:

• • Transactions are public and visible on the blockchain
• • Addresses aren't directly tied to your identity, but can be traced
• • When you use an exchange, your identity is linked to your transactions (KYC requirements)
• • Blockchain analysis can often link addresses to real-world identities

For most legitimate users, this level of privacy is adequate. Bitcoin provides more privacy than credit cards but less than cash.

If you lose your private keys or seed phrase, your Bitcoin is permanently inaccessible. There is no "forgot password" option with Bitcoin - it's truly decentralised, meaning no company can reset your access.

This is why it's critical to:

• • Securely backup your seed phrase (12-24 words)
• • Store backups in multiple secure locations
• • Never store seed phrases digitally or in the cloud
• • Consider metal backup solutions for long-term storage
• • For large amounts, use a hardware wallet with proper backups

Keeping Bitcoin on a reputable exchange (with 2FA enabled) is safer for beginners until you understand self-custody.

Bitcoin mining does use significant energy, but the narrative is more nuanced than often portrayed:

• • Over 50% of Bitcoin mining now uses renewable energy (hydro, solar, wind, geothermal)
• • Bitcoin mining utilizes "stranded" energy that would otherwise be wasted
• • The energy secures the most robust monetary network in the world
• • Traditional banking systems also consume enormous energy (buildings, ATMs, data centers)
• • Bitcoin incentivises development of renewable energy infrastructure

The environmental impact is a legitimate consideration, but Bitcoin's energy use is increasingly sustainable and serves a valuable purpose: securing a global, permissionless monetary network.

Yes! Bitcoin's acceptance is growing globally:

• • Major companies like Microsoft, AT&T, and Overstock accept Bitcoin
• • In Australia, various retailers and online stores accept cryptocurrency
• • Gift card services let you use Bitcoin at major retailers
• • Countries like El Salvador use Bitcoin as legal tender
• • The Lightning Network enables instant, low-cost Bitcoin payments

However, most people currently view Bitcoin primarily as a store of value (like digital gold) rather than for everyday purchases. As the infrastructure improves, spending Bitcoin will become more practical.