Disclaimer: This article is not financial advice. Last updated August 2021.
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The best place to earn interest on Bitcoin is Blockfi. They are not a bank so do your own research. I only keep a small amount of Bitcoin with them. There are no fees. Sign up here and get $10 of free BTC with your first deposit.
This is a question I've been getting asked a lot recently. Whenever I mention Bitcoin to people 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 buy Bitcoin with your credit card (which I have done, and it works great).
However, 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.
Contents of this guide:
- What is Bitcoin?
- How does Bitcoin affect you and I?
- What's the best place to buy Bitcoin in NZ?
- How to store Bitcoin safely
- How to earn interest on your Bitcoin
- More Bitcoin tips
What is Bitcoin, exactly?
Before you buy Bitcoin, you should know what it is. I will try to spend the next five minutes explaining this as simply as possible (of course, feel free to skip this part if you're well versed already).
Bitcoin is a currency. Think of it as the currency of the internet. It is something you can 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 concepts:
Bitcoin is 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 a digital currency. This means it does not exist in physical form. It exists only digitally. This is advantageous as digital things move much faster than physical things.
Bitcoin is a decentralised currency, as it exists only on a technology known as the blockchain. Here's the easiest way for me to explain a blockchain:
Think about your bank account at ASB. Your information is stored on the ASB servers. The only party that can alter that database is ASB.
This is great, but also flawed. Flaws in this type of system were apparent in Cyprus not too long ago, where the country was about to go bankrupt and the government simply ordered banks to give them 20% of all citizens' savings. If you had $1,000 in the bank, it got chopped to $800, to keep the government from going broke. The reason the banks could do this was because they have complete control over the citizens' money. If you're a student of history, you'll know Cyprus was not the first. This has already happened many times before.
Blockchain solves this problem by replacing centralised databases with decentralised ones. Rather than the ASB database only being held on ASB's servers, the ASB database would be held on the computer of every single ASB customer instead (like your phone, or laptop). In order for ASB to take any of your money like they did in Cyprus, every customer would need to agree, or they would need to hack every customer's laptop and change the database on each one (basically impossible).
In this system, it is the holders of the currency with the power, rather than the bank.
By being decentralised in this manner, it also means that the network can operate "peer to peer". This means that when you pay someone, instead of you giving your money to ASB, and then ASB giving your money to Fred (and taking a fee), you can just send your money directly to Fred.
This is Bitcoin: The global, decentralised, digital, peer to peer currency.
So how does this affect you and I?
Bitcoin's purpose is to be an upgrade from the 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 a fee to change it to a foreign currency, then pay the bank a fee 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 Bitcoin, this same process can be done in under an hour for less than a ten cents in fees. Remember - peer to peer. Just like 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 is now working its way into the mainstream.
Many shops worldwide now accept Bitcoin as payment for general goods and services, and it has been made an official currency of the country El Salvador (and more will surely follow!)
Recently Argentina and Paraguay settled an international trade using Bitcoin, so it is being used in international finance by governments too.
JP Morgan's CEO said in 2017 that Bitcoin was a scam and any of the bank's traders would be fired if they were caught trading Bitcoin. By 2018, JP Morgan had put together a team of Bitcoin analysts who concluded Bitcoin did in fact have an intrinsic value of $5,000 per coin. By 2020, JP Morgan had since become the bank for several top Bitcoin exchanges. Today, JPMorgan offers Bitcoin trading to every single one of its clients. See the pattern?
Now even some of the world's most prominent billionaires, including Jack Dorsey, Paul Tudor Jones and Stan Druckenmiller and Elon Musk have said they've added Bitcoin to their portfolios, and some of the biggest companies in the world such as Square and Tesla now hold and accept Bitcoin.
All are positive trends for Bitcoin, and I encourage you to do your own research and make your own estimations of where it will go in the future.
If you're interested, you can read more of my thoughts about Bitcoin here.
What's the best place to buy Bitcoin in NZ?
When I first wrote this guide in 2017, there was one clear leader for buying Bitcoin in New Zealand and that was Independent Reserve.
The reason for this was they had the lowest rates and the lowest fees of any Bitcoin exchange available to Kiwis. My recommendation is always based on price and value - whichever service offers the best value for money always gets my vote and that is what I will recommend to you.
In 2021, Independent Reserve is still a great option and I still use them, but they are no longer my top recommendation for first time investors.
They have been toppled by a full service NZ owned and operated Bitcoin broker called EasyCrypto.
Best option for buying Bitcoin for Kiwis: EasyCrypto
EasyCrypto is a full service cryptocurrency broker and is almost like a New Zealand version of Coinbase.
The reason they are now my recommended service are because their prices have improved and they're now basically the same as Independent Reserve's.
(maybe half a percent off, depending on the market, but as you'll see below you save much more money than that in the end).
Here are more reasons why it gets the top spot from me:
- Orders are filled quickly at market prices.
- Very low fees.
- Excellent customer service.
- It has a big (maybe the biggest?) selection of coins.
- They don't store coins but instead help you set up your own wallets, which is much safer for you.
- NZ owned and operated and abides by all NZ laws.
- They are a registered NZ Financial Services Provider and FDRS member.
- You can pay easily with bank deposit or Poli.
How to buy Bitcoin on EasyCrypto?
One reason I like EasyCrypto is because the process is so easy. It's literally four steps and the same as buying a pair of shoes online, and you can have your Bitcoin in literally fifteen minutes or less.
Get started: Open an EasyCrypto account:
On their homepage, you'll see an option to open an account:
Once you click that you can sign up with your socials or an email address:
That's it! You're in.
Verifying your account:
Because EasyCrypto is registered as a Financial Services Provider in NZ, they need to verify your identity.
Remember, this is a good thing! Do not buy Bitcoin (or any financial service) from anyone in NZ who isn't registered. There's a good chance your money will disappear and you won't get it back.
Verifying your identity should only take a few minutes and requires a driver's license or passport:
You can also verify manually which is what I did, by sending them a photo of yourself holding your driver's license.
Once you've done that, you're ready to buy!
Step 1: Choose your coins and quantity
For this example, I'm going to walk you through buying $200 of Bitcoin.
Head to the homepage after you've signed up and you should see a page with all the coins you can buy:
Click "Buy", then click "Bitcoin" and then click "$200" as I've shown in the screenshot above.
Of course you can choose to buy more or less, or a different coin, but we'll stick with Bitcoin for now.
Step 2: Choose your Bitcoin address
On the next page, you'll get asked to enter your Bitcoin address. This is where your Bitcoin will be sent to.
A Bitcoin address is like an email address - it's unique to you and only you have access to it.
If you don't have one, just click the "I don't have a Bitcoin address" button and EasyCrypto will help you set one up.
Don't worry, it's very easy (just like setting up an email account).
You also have the option of just setting up a wallet yourself. It's very easy and all it requires is downloading an app. The wallet I recommend is Exodus.
If you need help setting up your wallet, I've made a quick step-by step guide for you. Just click the blue box below.
Open it up and you should come to this screen:
Tap the Get Started button and swipe through the introductory messages and you'll get taken to your portfolio.
You'll see the first line in your portfolio is Bitcoin:
Tap the Bitcoin logo and you'll get taken to your Bitcoin holdings:
Obviously, it will show as zero right now (but we're going to change that!)
On the left hand side you'll see an upward arrow, which is for sending Bitcoin, and on the right hand side you'll see a downward arrow, which is for receiving.
Tap the downward arrow:
This will then show you everything you need to receive Bitcoin.
You'll see your Bitcoin address at the bottom!
It should look like a string of letters and numbers starting with bc1qvuq......
Simply copy this string of characters and paste it into EasyCrypto when they ask for your address. Also, before you place your order, double and triple check that the address is correct!
Otherwise someone else might be getting a nice surprise when your Bitcoin gets sent to them instead 😉
Also, don't forget to backup your wallet. This is hugely important. Exodus has a simple guide to backing up your wallet here. It will only take 5 minutes. Don't forget!
This is actually one of the main reasons I recommend EasyCrypto.
They do not keep your coins in storage on their own site/servers. They actually help you set up a private wallet and help you keep your own Bitcoin.
This is the safest option and if you follow the Bitcoinsphere, you may remember Cryptopia, another NZ Bitcoin exchange got hacked in 2019 and lost around $20 million in user funds.
If people had been storing their coins in their own wallets, this wouldn't have happened.
Step 3: Choose a payment option
The next screen will give you your payment options.
You can use Account2Account or standard bank deposit which are both free, or you can use POLI which is $3 or 1%, whichever is lower.
Step 4: Make payment and wait for your Bitcoin to arrive
EasyCrypto will then give you payment instructions:
Once you have paid, your Bitcoin should arrive in a few hours or whenever your bank deposit clears.
That's it! You're now invested in Bitcoin.
Who should use EasyCrypto to buy Bitcoin?
In my opinion EasyCrypto is going to be the best option for 95% of first time buyers, and for people who are new to Bitcoin.
When it comes to Bitcoin, most people are interested in buying $200 or $500 or maybe a few thousand dollars as an investment. EasyCrypto is absolutely perfect for this and you won't find a service better suited for it.
As you get more involved and educated about Bitcoin, you may also become interested in purchasing other cryptocurrencies such as Ethereum or Ripple XRP or Litecoin, and many others. EasyCrypto allows you to buy all of these as well, and has more than seventy of the most established cryptocurrencies which you can buy directly with NZD.
They're also one of the safest options and operate everything legally and above board as a registered provider, so you know you're protected by NZ law, which is not the case when dealing with overseas brokers and exchanges.
If you want to get started with EasyCrypto, you can open a new account by clicking here.
Option 2: Buying Bitcoin with Independent Reserve
Independent Reserve is an Australian based exchange which allows trading in AUD, NZD and USD.
The reason I was using Independent Reserve in the past is because their fees were lower and prices were much better.
However, now as the market matures, that has changed.
Here is what buying $200 NZD worth of Bitcoin will cost you today on EasyCrypto (May 2020):
And here is what the same amount will cost you on Independent Reserve:
As you can see, Independent Reserve will be cheaper by $1.44, or just over half a percent. A few years ago it was closer to 3-4%.
Of course half a percent is still a good saving, but there are other charges involved in using Independent Reserve:
- You need to send a SWIFT payment to an Australian bank account to add funds to your account. This usually costs around $15-$30 from an NZ bank.
- Independent Reserve charges a processing fee of $15 for any deposits below $5,000 NZD.
- Independent Reserve charges a withdrawal fee of $20 for all NZD withdrawals.
Finally, due to some legal barriers it cannot process payments from ANZ, Kiwibank and Westpac.
So who should use Independent Reserve?
There are two scenarios where Independent Reserve is a good option.
One, you are purchasing large amounts of Bitcoin or other currencies.
As we saw above, Independent Reserve's prices are better by half a percent, and that's negligible for most of us. Any savings will be cancelled out by the extra fees we need to pay.
However, if you were buying $100,000 of Bitcoin, half a percent would equal $500. Obviously it is worth paying a couple of $15 fees to save $500.
The second scenario it might be better to use Independent Reserve is if you're a trader. On EasyCrypto, it generally takes around an hour or a maybe a day (depending on how you pay) for you to buy/sell your Bitcoin.
However, on Independent Reserve, once you've deposited the money in your account, trades are instant. Waiting an hour for our Bitcoin to arrive isn't a problem for most of us, but if you're a day trader and doing 5-10 orders per day, EasyCrypto won't suit you and I'd recommend using Independent Reserve instead.
Also note: Independent Reserve doesn't have a lot of coins available to buy and sell - it has Bitcoin, Ethereum, Litecoin, Ripple XRP, EOS, OmiseGo, ZeroX, Stellar, and Bitcoin Cash. If you're interesting in a larger variety of currencies, stick with EasyCrypto.
How to buy and sell Bitcoin on Independent Reserve
The thing I like about Independent Reserve is the user experience is excellent. It is super easy to use.
You can deposit NZD straight into Independent Reserve from your online banking, and it usually shows within 48 hours.
The liquidity is also good and prices generally reflect the USD markets pretty closely.
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:
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 straightforward:
Then you'll need to add an email address and confirm. 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. Just take a photo of your latest bank statement and send that in (or you can download a PDF from your internet banking).
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!
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 with all the details.
You will need to go back to your internet banking and send the money via SWIFT transfer. This will incur a fee, it's usually around $15. 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!
Once you've sent your transfer, Independent Reserve will usually credit it within 24-48 hours.
As a side note, all deposits from Australian banks are free, so if you have an Australian bank account definitely use that instead. If you need to move money between your Aussie and NZ bank accounts, I recommend Transferwise. The fee is around $5 and you get a much better exchange rate. I use it all the time to send money overseas and it's awesome. You can get your first transfer free using this link.
Update 2020: Independent Reserve can no longer accept NZD deposits from ANZ, Kiwibank and Westpac.
How to start buying Bitcoin on Independent Reserve
Once your deposit clears, it's time to start investing.
I'm not going to do a really long screenshot tutorial as if you're using Independent Reserve, I'm guessing you're already pretty trading/Bitcoin savvy. I will quickly give you a little look inside the platform though.
The trading section looks like this:
I'll enter 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.
Of course you can also do Limit Buys and Sells, and stop orders in the advanced tab:
Other than that, it's all pretty straightforward and no different to any other trading platform. Arbitrage was possible a few years ago, but now it's mostly in line with the USD equivalent markets.
Overall great platform and probably the best option out there for trading crypto directly with NZD and AUD.
If you're ready to get started, you can register for a free Independent Reserve account here.
In summary: If you're new to Bitcoin, buying in NZD, and not buying and selling every day, use EasyCrypto. If you're trading extremely large amounts and day trading (multiple transactions per day), try Independent Reserve.
What's the best way to store Bitcoin in New Zealand?
Buying Bitcoin in NZ is the first hump, but what about storage?
It is very common to leave your Bitcoin on an exchange, and to be honest that is usually okay. Even I leave some coins in exchanges and it's not a big deal.
However, there are risks to this. Exchanges get hacked all the time and due to the "crypto" nature of the industry, your coins are almost never recovered.
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.
Again, this is why EasyCrypto is a great brokerage to use, because not only do they encourage you to keep your coins in your own wallet, which is the safest option, they force you to do it.
Most exchanges and services want to hold your coins for you, so they can keep them in private accounts in case they go under, or lend them out to traders and institutions and earn interest on them. EasyCrypto doesn't even give you this option and in doing so doesn't expose you to any of that risk.
So, what is a Bitcoin wallet, you ask?
A wallet is a storage system for your Bitcoin. It's a bit like an online bank account.
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 for keeping a little Bitcoin that's easy for you to access each day.
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 use 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, inside the device itself, 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 30 other major cryptocurrencies, along with your Bitcoin. You can grab one here. They ship their Bitcoin wallets worldwide, including to New Zealand.
As I said I don't use a software wallet, but if you are interested in one, I would recommend the wallet provided by Exodus.
In summary: If you have only have a few hundred dollars in Bitcoin, use a software wallet - I recommend Exodus. If you have thousands of dollars or more in Bitcoin, invest in a hardware wallet. I recommend the Ledger Nano S.
Can you earn interest on Bitcoin?
Yes, you can!
This is a much sought after service and some big players have brought it to market.
I've been trying to find a reliable service for this for years. Here are two that I trust enough to use:
The first is Blockfi.
Blockfi is backed by some pretty big names and investors, the one that tipped me over the edge was Peter Thiel, who is an investor I've followed for many years.
The rates change every month but usually it sits around 4% per annum.
I'm not comfortable putting in all my holdings, but I have been depositing a little month by month and as the industry matures I'll hopefully be able to earn interest on everything I own.
If you're interested in keeping some of your Bitcoin in Blockfi, you can use this link to get $10 of free Bitcoin on your first deposit.
Remember, Blockfi is not subject to banking laws, and they do not have a fiduciary duty towards you. Blockfi have claimed that in the event of bankruptcy, depositors will be paid first but that is not a guarantee that your funds are safe. Do your own research and make an educated decision on whether depositing with them fits your risk profile.
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 intention 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 not to rush. If you have, say, $1,000 to invest, don't throw it all in at once. Dip your toes in and get a feel for how the market behaves.
Even if you're used to trading in commodities and financial markets, the cryptocurrency market is quite different. It is open globally, 24 hours a day, 365 days per year, and the market is still very young. There is no other market like it. 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!
Questions? Leave em below. I'll answer them the best I can! A full directory of places to buy Bitcoin in NZ can be found here.