This is a question I’ve been getting asked a lot recently. Whenever I mention to people I’ve been dabbling in Bitcoin and that it’s my highest returning investment (hands down!) they always want to know how to get started themselves.
For most people I just point them to a major exchange like Coinbase, which is super established and easy. You can even buy bitcoin with your credit card (which I have done, and it works great).
However, as usual, things are a little more complicated for us Kiwis. Big exchanges like Coinbase do not operate in New Zealand, and most exchanges that do operate in New Zealand are small and less established.
The good news is, there are options for us to buy Bitcoin in NZ, and I have used several. In this guide I’m going to break down the best options for Kiwis to buy Bitcoin in NZ safely and fairly, so you can start adding some Bitcoin to your investment portfolio.
Note: If you’re trying to buy Bitcoin in Australia, this guide will apply to you as well. In fact, the main platform(s) recommended below is Aussie based, they just cater to NZers too. Keep reading!
What is Bitcoin, exactly?
Before you buy Bitcoin, you should know what it is.
Bitcoin is a currency. It is something you can use to spend, like when you buy something, or save, like when you put money in the bank. But the intended purpose of Bitcoin goes a bit wider than that.
Here are a few of its concepts:
Bitcoin is intended as a global currency. It is not restricted by class, citizenship or geography. It can be sent to and received by any person, anywhere in the world. It is not controlled by any bank, government, company or person. This means, like the internet, it cannot be shut down at any central point.
When people say Bitcoin is decentralised and autonomous, this is what they mean.
Bitcoin is also a digital currency. This means it does not exist in physical form. It exists only digitally, on a technology known as the blockchain. Blockchain technology is a dense subject (I won’t go into it here), but the premise is that the blockchain, and anything stored within it, is public, transparent, and unalterable. The entire history of Bitcoin can be seen on the blockchain by anyone with an internet connection, such as you and I. Think about the potential changes that has for banking and money as we know it.
So how does this affect you and I?
Bitcoin’s purpose is to be an upgrade from our current idea of money. Imagine you need to send $10,000 to your parents overseas. Usually, you would need to go to the bank, deposit the money, pay the bank to change it to a foreign currency, pay the bank to send it. Then three days later it would arrive at your parents’ bank and they would pay a bunch of fees to withdraw it before they finally can use the money. With a digital currency like Bitcoin, it can all be done in under an hour for less than a dollar in fees. Just link the internet changed the way we send mail, messages, and information, Bitcoin wants to change the way we send money.
Since it’s beginnings in 2009 Bitcoin has made tremendous strides. Along with increasing exponentially in value, it is now working its way into the mainstream. Various shops in the USA now accept Bitcoin as payment for general goods and services, and it has been officially recognised as a currency in Japan. It seems highly likely that it will eventually become an every day means of exchange, like the dollar and pound.
The problem with NZ bitcoin exchanges
There are a few NZ Bitcoin exchanges floating around that allow you to buy Bitcoin in NZ. Some notable names are Cryptopia, Kiwi Coin and NZBCX. There is nothing wrong with these exchanges per se, and you can use them if you wish. However, I generally recommend New Zealanders use a larger, more established exchange to invest in Bitcoin. Here’s why:
The first reason is liquidity. We’re a tiny country after all, even our sharemarket has poor liquidity at times. Imagine how few people in our country are buying and selling Bitcoin? What that means is, if you decide one day you want to buy two Bitcoin at the current price, there might not even be two Bitcoin for sale in New Zealand at that price! Meaning you’ll need to settle for buying less than you want, or you’ll need to pay a premium (or both). The same goes for selling – if you wake up one day and want to sell all your Bitcoin at the market price, there may not be any buyers. If you’ve done any share investing in your time, you’ll know how crucial liquidity is to your investment.
The second reason is security. If even the biggest exchanges in the world are vulnerable to hacks (and there have been hacks in the past), you can bet the smaller ones are vulnerable too. Of course every exchange has preventive measures in place, but I just prefer to invest with someone with slightly more resources to put towards the security of your coins.
Lastly, Kiwi exchanges are just a little backward in general. The verification process on Kiwi-coin is the most ridiculous I have seen on the 20+ exchanges I’ve looked into. As I touched on earlier, with cryptocurrency you don’t want to mess around – use the best.
What’s the best exchange to buy Bitcoin in NZ?
There isn’t really any best exchange; some are cheaper, some more expensive, some easier to use and others more difficult and so on. But there are ones I believe are better than others. Below I’m going to give you two options I think are good choices for Kiwis to buy Bitcoin in NZ, and I’ve used both.
This is the platform I use most often, and am currently using for all my bitcoin purchases today.
Independent Reserve is an Australian based exchange which allows trading in AUD, NZD and USD.
The thing I like about Independent Reserve is the user experience is great. It is super easy to buy and sell your Bitcoin, and if you wish to transfer your Bitcoin out to a private wallet that is pretty seamless too (we’ll get into wallets later).
They do have fees for pretty much everything (which is normal), but it’s not expensive at all – the brokerage on each transaction is only half a percent. Besides, the fairer prices for Bitcoin you will get on this exchange will more than make up for any fees in the long run.
As for liquidity, it’s not as deep as US and international exchanges, but much better than the NZ exchanges. Buying on a NZ exchange will cost you at least 5-10% more because there are so few sellers.
You can deposit NZD straight into Independent Reserve from your online banking, and it usually shows within a day. If you want to buy Bitcoin in NZ, this is the first exchange I recommend.
As a side note, this is also a great exchange for New Zealanders to buy Ethereum, which is another popular digital currency that I’ve invested in.
Obviously being an Aussie company, this is a great platform to buy Bitcoin and Ethereum if you’re based in Australia too.
How to get set up on Independent Reserve
Simply head to the Independent Reserve homepage and click the “Create Account” button in the top right hand corner. You’ll get shown a standard signup box like this:
Simply fill out that form and you’re in! You’ve got an account.
The first thing Independent Reserve will do is take you to your account details. By law Independent Reserve needs to collect some personal info from you, such as your name, address, DOB etc. It’s all pretty straightforward:
Then you’ll need to add an email address and confirm it. Again all very straightforward.
The last thing you need to do is verify your identity. You should see a big blue box at the top of the page:
Click the blue button and you’ll get taken to a verification page. This is the most arduous part of setting up your account but in reality should only take you five minutes. You’ll need to upload a picture of you with your ID, and some personal details like your full name and address.
Get your passport or drivers license and snap a picture of yourself holding it up under your face. I just used the webcam on my laptop and it worked fine. You’ll also need a copy of a bank statement showing your address. I just went and downloaded a PDF bank statement from my internet banking and uploaded that. Once you’ve uploaded those two documents you can send them through. Independent Reserve should verify you within a few hours.
Once you’ve been verified, you can start investing!
Now – I should say something here. I know this whole set up process can be dragging and a lot of people just turn off here and forget about the idea of investing altogether. Don’t do this. That’s what I did when I first thought about investing a few years back when Bitcoin was only a few hundred dollars. Obviously I kick myself all the time for doing that. I’d be putting a down payment on a new house today if I’d invested back then (groan).
If you’re interested in getting some skin into Bitcoin, take care of this now. It will literally take you about twenty minutes to set your account up. Then you’re in.
Deposit money into your Independent Reserve Account
First, you’ll need to deposit some cash (obviously). You can do this in the accounts section. Simply click the “Accounts” button at the top of the page and you’ll get taken to a screen like this:
Go to NZD and click “deposit”. There you will get given a screen where you can set up a deposit. You will need to go back to your internet banking and send the money via SWIFT transfer. This may incur a fee, it’s usually around $15-$20. Note that Independent Reserve will also charge you a $15 fee for any deposits under $5,000. Unfortunately this is just the way it is for us Kiwis, our options are limited. If we want nice things we have to pay for them! However, like I said earlier, the better price you’re going to get on your Bitcoin will more than pay for these small fees in the long run.
As a side note, all deposits from Australian banks are free, so if by any chance you have an Australian bank account you should definitely use that instead!
If you need to move money between your Australian and New Zealand bank accounts, I’d recommend using Transferwise. They do it for super cheap and will give you the true exchange rate. I use it all the time to send money overseas and it’s seamless. Awesome service. You can also get your first transfer free using this link.
Update 2018: Independent Reserve can no longer accept NZD deposits from ANZ, Kiwibank and Westpac. This is unfortunate, but has become increasingly common. A lot of banks (worldwide, not just NZ) have been stonewalling people from exchanging national currencies into cryptocurrency. They haven’t really given a reason for this, but it’s not hard to guess why. My advice is simple: Change banks. If a bank can’t offer you a simple, legal, bank transfer then they don’t deserve your business. In five years I have no doubt buying Ethereum will be as easy as clicking one or two buttons but for now, early adopters will just need to jump through the hoops.
How to buy your first Bitcoin on Independent Reserve
Once your deposit clears, it’s time to start investing. Head to the trading section by clicking “Trade” at the top of the page. You’ll get taken to a page like this:
Let me explain this screen to you a little bit.
You can see two buy options. There is Buy (Market), and there is Buy (Limit). The same options are there for selling, but let’s not worry about the sell options for now.
Let’s talk about Market Buys first. When you choose to do a Market Buy, that means you’re taking the current market price. For example, if the current market price is $1,000 per Bitcoin, you’re going to pay $1,000.
In the example below, we can see the lowest price a seller is offering for Bitcoin is $10,400 per coin. That means that’s considered the market price on Independent Reserve.
You’ll see I’ve entered an order to buy 0.01 Bitcoin at market price, which will be about $104.
Independent Reserve will also charge half a percent as brokerage, which will be 52 cents. That brings the total cost to $104.52. Pretty simple right?
Now let’s see what a Limit Buy looks like.
When we do a Limit Buy, we are saying that the market price is too expensive right now, but if the market price reaches $X (i.e. our limit price), we would like to buy. So let’s say we don’t want to buy Bitcoin at $10,400, but we wouldn’t mind buying it at $10,100. Here’s what we do.
Click on Buy (Limit). Enter your limit price as $10,100. Enter how much Bitcoin you would like. In this example we’ll stick with 0.01 Bitcoins. Your order should look like this:
If the market hits that price, your order will execute. Once that happens, you’ll get an email from Independent Reserve saying your trade was successful.
Congratulations! You’re currently the proud owner of Bitcoin.
Ready to start buying Bitcoin in NZ? You can register for an Independent Reserve account here.
Option 2: Localbitcoins.com
Another way to buy Bitcoin in NZ is through the site localbitcoins.com.
Localbitcoins is more like a P2P Bitcoin exchange that matches you with a buyer or seller in your location. The Bitcoin is deposited in Escrow while the trade takes place, and once the seller confirms your deposit was received the Bitcoin is released into your localbitcoins account. There are various sellers based in New Zealand, and you can make your purchase with a simple internet banking transfer.
Now, there are pros and cons to this.
- It’s a fast, no-fuss way to make your first Bitcoin purchase.
- No ID verification or lengthy account set up needed (although some sellers will request this).
- Pay easily with internet banking.
- The price is always inflated. For example, as I type this right now, the market price on Independent Reserve is $10,400 NZD. The cheapest price offered on localbitcoins $11,154 NZD, so about a $750 premium.
- Most sellers have a minimum purchase, usually around $500. On exchanges like Independent Reserve, you can buy as little as $10 if you want to.
Who should use localbitcoins?
Localbitcoins is a good option if you’re not planning on buying Bitcoin regularly or not planning on putting in too much money. If you’re the kind of person who’s thinking “I’ll just put in 200 bucks and see what happens to it in ten years” then localbitcoins is probably a good choice. You can buy Bitcoin quickly and safely with a simple bank deposit.
If you plan on regularly buying and selling Bitcoin, I’d highly recommend using an exchange such as Independent Reserve. You’ll have much more freedom and you’ll get much better prices too.
How to buy Bitcoin using localbitcoins.com
First you need to set up an account. This is much easier than the process Independent Reserve has.
Simply go to localbitcoins.com and click the big green “Sign Up Free” button on the homepage:
You’ll get taken to a Register screen where you can enter you details. It’s no different to signing up for a Facebook account:
Once you’ve confirmed your email address, you’re ready to buy!
To get started, hit the “Buy Bitcoins” button at the top of the page. You’ll get shown some options on where you want to buy. We want to buy Bitcoin in NZ, obviously, so select NZD, New Zealand, and “All Online Options”, like this:
You’ll get shown all the active sellers in New Zealand. In this particular case, it’s showing me 16 sellers currently offering to sell Bitcoin in NZ:
A few things to take note of here. One is the price. Like I said earlier, if you’re buying Bitcoin in NZ the price is going to be inflated. That’s just the way it is. In this example, you can see the best price offered is $11,154.94, whereas the price on Independent Reserve was $10,400. Pretty big difference.
The second thing to note here is the minimum. You’ll see that the seller offering the cheapest price has a minimum buy of $2,000. So if you’re just looking to chuck in $50 or $100, you’re out of luck here. You’ll need to choose a slightly more expensive seller. You’ll see there’s a seller down the list with a $50 minimum, but his price is $12,119, about $1,000 more than the cheapest guy. So that’s the price you’re going to pay for convenience.
Let’s go ahead and choose that first guy. Just click the “Buy” button and you’ll get taken to his offer. It looks like this:
We can see he has 100% positive feedback with 3,000 trades (think of it like a Trademe for Bitcoin), so that’s good. We can be reasonably sure he’s legit. He also has the instructions for buying. This guy’s requirements are rather straightforward – no ID check or SMS confirmation, just deposit into the bank account and he’ll release the coins to you. Some sellers will insist on a driver’s license or passport for their own records – it’s up to you if you want to entertain those sellers or find someone else.
Also note the 270 minute time limit. That means once you’ve placed the order, you’ll have 270 minutes (or around four and a half hours) to make payment. If you don’t make payment within that window, the trade will be cancelled.
Once your payment is received, the seller will notify localbitcoins.com and you’ll get your Bitcoin released to you. Despite the price premium, it’s a nice and easy way to get your first Bitcoins.
Ready to get started? You can register for a free localbitcoins account here.
Of course there are other options to buy Bitcoin in NZ. Like I said, these are the two that I like the most. They’re both reliable, safe, and work with NZD. Therefore these are the two methods I currently recommend.
How do you keep your bitcoin safe?
You need to remember that Bitcoin isn’t like other currency. It’s not protected by government backing or anything like that. If someone steals your Bitcoin, there is no 0800 BITCOIN number you can call to get it back. Once it’s gone, it’s gone.
That means you are responsible for keeping your Bitcoin secure. Luckily, that is not difficult and can be done with a few easy measures.
The first thing you should do is set up 2 Factor Authentication (2FA) on whichever exchange you’re using. Both Independent Reserve and Localbitcoins have 2FA.
What this means is, whenever you log into your accounts you will need to enter two passwords. One will be the password you’ve set on your account, and the other will be a random code from an app on your phone. This means even if someone is able to find out your password, they’ll still need to physically have access to your cellphone to get in.
To activate 2FA, you will need to download the Google Authenticator app on your phone. This app generates a new 6 digit code every 30 seconds that you’ll need to enter when you login. It’s perfect for Bitcoin accounts.
To set up 2FA on Independent Reserve, simply click “Settings” at the top of the screen. Then scroll all the way down to the bottom of the page. You’ll find the 2FA settings here:
Click on the “change” option for Google Authenticator, and you’ll get shown a scan code. Obviously I can’t show you my details for security purposes, but it’s very easy to do. Just open the Google Authenticator app on your phone, scan the code and follow the instructions.
You should also set up the Primary and Secondary telephone numbers. The Primary number can just be your personal cellphone. The Secondary can be the number of a parent or friend or anyone else you trust.
That means even if your cellphone gets stolen, you’ll still have a way to get into your account and recover your Bitcoin.
You can set up 2FA in localbitcoins in exactly the same way by going to your settings and choosing “Account Security”:
Some of you might be thinking, is it really necessary to do this?
The answer is yes. Bitcoin gets stolen all the time from careless people, and if you jump on Google you will hear endless stories of people who lost their Bitcoin because they didn’t have 2FA turned on and had a crappy password. Also, remember that some people have literally hundreds of thousands, if not millions of dollars in Bitcoin stored in various wallet and exchanges. But even if you’ve only put in a few hundreds bucks, that’s still worth taking a few extra steps to protect.
Keep in mind that Bitcoin is a very new technology, similar to the internet in 1990, or banking in 1960. There was a time when you needed to go into the bank branch and meet with your account manager with two forms of ID to withdraw $10. That’s kind of the stage we’re at now with cryptocurrency. Of course it’s 2018, so technology in this area is going to move very quickly and better solutions aren’t far away, but for now, do the extra leg work to keep your Bitcoin safe.
What’s the best way to store Bitcoin in New Zealand?
Buying Bitcoin in NZ is the first hump, but what about storage?
99% of the time, leaving your Bitcoin on an exchange will be okay. Even I leave some coins in exchanges and it’s not a big deal.
However, there are risks to this. What happens if your exchange suddenly disappears the next day? While unlikely, it can and does happen. Bitcoin enthusiasts will often talk of the notorious Mt Gox hack, where the biggest exchange in the world was hacked and millions of Bitcoins were lost.
Therefore, if you’re serious about your Bitcoin investment and you plan on holding it for the long term, I would suggest using a Bitcoin wallet.
A wallet is basically a storage system for your Bitcoin. It contains two keys: one public and one private.
The public key is what you give to someone so they can send you Bitcoin. If you sold a donkey for Bitcoin, you would give the buyer your public key, and he would pay you by sending Bitcoin to that address. Think of it like your Bitcoin bank account number.
The private key is something you keep secret. Think of it like your Bitcoin internet banking password. The private key is what allows you to send Bitcoin from your wallet to somebody else. Never share your private key with anyone, ever.
Now, as for the wallets themselves. There are two main types of wallet. There are hardware wallets and software wallets.
Software wallets are free and are generated on your computer or mobile phone. Think of a software wallet like the wallet you carry around in your pocket each day. It’s good for storing a little bit of cash, but not for thousands and thousands of dollars. It’s the same for Bitcoin. If you plan on buying and selling Bitcoin regularly or actually using it to pay for things, a software wallet can be a good choice.
A hardware wallet is more like a safe in your basement. It’s a physical device (looks like a USB drive) that you can keep in your house and is used to store large amounts of digital currency. Some people even lock their hardware wallets in an actual safe or a bank safety deposit box.
What’s the difference?
The usual concern with a software wallet is the private key is generated on a computer or phone and therefore can never really be considered 1,000% safe. Obviously it depends on how clean your computer is, and if you generated it offline etc etc. Remember, if someone has your private key, they have full access to your Bitcoin.
A hardware wallet is considered much safer because the private key is generated completely offline and never even touches the internet. That’s why it’s always recommended to store large amounts of Bitcoin on a hardware wallet.
In reality, if you only have a few hundred dollars in Bitcoin, a software wallet will probably be fine. If you have thousands and thousands of dollars in Bitcoin, you probably want to invest in a hardware wallet.
What do I use?
I do not currently use a software wallet. I store some of my coins on a hardware wallet, and have a small amount of coins stored on Independent Reserve in case I want to sell some.
The hardware wallet I use is the Ledger Nano S.
It’s one of the most highly recommended in the community and is super easy to use. It also allows you to store Ethereum, Litecoin and about 10 other major cryptocurrencies, along with your Bitcoin. You can grab one here. They ship their Bitcoin wallets worldwide, including to New Zealand.
Other tips for buying in Bitcoin in NZ
I’m reluctant to give you any actual “tips” for investing in Bitcoin, because that’s not really my place here. How you invest needs to be an investment decision based on your own risk profile and comfort level.
If you want to buy some Bitcoin and try and sell it in a few days for a quick profit, that’s great, and if you want to hold it until retirement that’s great too.
What I will say is to move slowly. If you have, say, $1,000 to invest, don’t throw it all in at once. On an exchange like Independent Reserve, the fees are all percentage based so it makes no difference if you buy $1,000 at once or $10 every day. The fees will be the same.
That gives you a good opportunity to dip your toes in and get a feel for the market. Even if you’re used to trading in commodities and financial markets, the cryptocurrency market is quite different. Wild swings happen often, and the market is still very young. Big changes are always just around the corner.
I’d also encourage you to read about what Bitcoin really is and the technology behind it. One book I highly recommend is The Internet Of Money by Andreas A. Information is the key to investing and the more your learn and understand, the better decisions you can make. Other than that, where you go with your Bitcoin journey is up to you.
Have fun and good luck!
For advanced investors: If you’re interested in investing in other altcoins, such as Dash, Ripple, Monero, Litecoin, NEO and so on, you will need to use a larger, international exchange. I am currently using Binance and recommend them. They are lightning quick and super liquid – one of the biggest exchanges out there, plus the verification requirements are minimal. You can sign up for an account here.
Your first step will be to buy some Ether on Independent Reserve (you can also do it with Bitcoin, but I prefer Ether as it’s faster and has lower fees). Then you’ll need to send your Ether to Binance using the ETH wallet address they give you. Once you receive it in Binance, you’ll be able to start trading.
As far as I know of today, this is the best option for us; there are no reputable international exchanges that allow fiat deposits of NZD. If you need a full guide to getting started on Binance, I have one available here.
Questions? Leave em below. I’ll answer them the best I can!