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 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. I will try to spend the next five minutes explaining this as simply as possible.
Bitcoin is a currency. 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 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.
Bitcoin is also 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. It’s stored in the ASB database, which is housed in the ASB server rooms. The only party that can alter that database is ASB themselves. The flaw in this type of system was 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 whether you agreed to it or not, to keep the government from going broke. The reason the banks could do this was because they were the only ones with access to the ledger. If you’re a student of history, you’ll know Cyprus was not the first. This has already happened many times before.
Blockchain aims to solve this problem but 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. In order for ASB to take any of your money unfairly, they would need access the computer of every ASB customer’s laptop (basically impossible).
In this system, it is the holders of the currency with the power, rather than the bank.
By being dencentralised 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, you can just send your money directly to Fred.
Thus you have 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 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. Remember – peer to peer. 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. Malta, Korea, China and Russia have all come out as very Bitcoin friendly and are integrating it into their economy. It seems highly likely that it will eventually become an every day means of exchange, like the dollar and pound.
If you’re interested, you can read more of my thoughts about Bitcoin here.
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 and Kiwi Coin (you can find a full directory of NZ Bitcoin exchanges here).
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. I’ve used and highly recommend both.
Option 1: Independent Reserve
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 excellent. It is super easy to use.
However the main reason I use them is because of their prices. As a highly liquid exchange, they have the best prices in New Zealand, hands down. When you purchase Bitcoin on Independent Reserve, you usually get it around 3-5% cheaper than any other exchange in New Zealand.
You can deposit NZD straight into Independent Reserve from your online banking, and it usually shows within 48 hours. 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, and they also now allow trading in Litecoin, Ripple XRP, Omisego, ZRX, EOS, Bitcoin Cash and Stellar.
Obviously being an Aussie company, this is a great platform to buy your cryptocurrency 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:
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!
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!
If you’re interested in getting some skin into Bitcoin, take care of this now. It will literally take you about fifteen 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 with all the details. 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. 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.
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 2018: Independent Reserve can no longer accept NZD deposits from ANZ, Kiwibank and Westpac. Not a surprise – a lot of banks (worldwide, not just NZ) have been stonewalling people from purchasing cryptocurrency. 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.
Start 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.
You can see two buy options: There is Buy (Market), and there is Buy (Limit).
Let’s talk about Market Buys first. When you choose to do a Market Buy, that means you’re taking the current market price.
In the example below, we can see the lowest price a seller is offering for Bitcoin is $10,400 per coin (on the top right corner). That’s the best price available, so it’s considered the market price.
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 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 Bitcoin. 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. $101.50 will be deducted from your balance, and 0.01 Bitcoin will be deposited into your account.
Congratulations! That’s all there is to it. You’re now the proud owner of Bitcoin.
If you’re ready to get started, you can register for a free Independent Reserve account here.
Option 2: EasyCrypto
EasyCrypto is a small New Zealand company that helps Kiwis buy Bitcoin.
I recently tested it to purchase a small amount of Bitcoin and was impressed by how easy it was. While the prices are slightly higher than on Independent Reserve, the process is much easier for New Zealanders.
If you’re not looking to trade regularly or invest thousands and thousands of dollars, EasyCrypto is a great option. It’s perfect for someone who is looking to start with just buying a few hundred dollars of Bitcoin and seeing how it goes.
They also offer many other cryptocurrencies (over 50), which saves you having to sign up on various international exchanges and so on when you want to branch out into other coins. For someone just getting started out in cryptocurrency and Bitcoin, EasyCrypto would be my recommendation.
I won’t go over the whole buying process here because they detail it quite well on their website, but it’s a four step process:
- Sign up for a free account on their website.
- Verify your ID.
- Place a Bitcoin order. You can choose to receive it into your own wallet if you have one, or they can set one up for you. Very handy for beginners!
- Pay for your Bitcoin. You can do this through bank transfer, everything will be done in 24 hours.
Some things to consider with using EasyCrypto:
- The fees with EasyCrypto will be slightly higher, meaning you’ll pay a few percentage points more than on Independent Reserve.
- Because it is not an exchange, selling your Bitcoin is a slower process. It might take more than a day for you to sell your Bitcoin and receive your funds, whereas on an exchange like Independent Reserve you can buy and sell instantly.
- It’s a much faster and easier process than using Independent Reserve. You won’t need to deal with SWIFT payments or anything like that.
- It’s ideal for buying small amounts of Bitcoin (say, less than $1,000).
- You won’t need to set up your own wallet (although you should try to do that eventually).
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. If you’d like a full up-to-date directory of places to Bitcoin in NZ, check out this site here.
How do you keep your bitcoin safe?
Remember 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.
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.
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.
As I said I don’t use a software wallet, but if you are interested in one, I would recommend the wallet provided by Blockchain.com.
For those of you using EasyCrypto’s wallet service, that should be fine for small amounts, but if your investment ever grows to something significant definitely consider investing in a hardware wallet.
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 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. Two other good books I’ve read are Digital Gold and The Bitcoin Standard. 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 crypto broker with a larger coin selection. 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 Bitcoin on Independent Reserve. Then you’ll need to send your Bitcoin to Binance using the BTC 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!