Estimated reading: 6 mins

Buying Crypto in NZ and Staying Safe

You want to buy an item, or you want to invest, and you have heard that cryptocurrency is an excellent way of doing this. However, you haven’t used cryptocurrency before and would like to know how you can do this safely using the New Zealand dollar.

Buying crypto in NZ isn't hard at all. Cryptocurrencies, such as the very popular Bitcoin, work in a very similar way to internet bank transfers or to using your credit card online.

Cryptocurrencies promise to make it easier to transfer funds directly between two parties without needing a bank, credit card company, or other third party.

There are many crypto assets to choose from too. As well as the well-known Bitcoin, there are Ethereum, Tether, Binance Coin, XRP, Bitcoin Cash, Cardano, Solano, Polygon, Polkadot and Avalanche - to name just a selection.

When you buy cryptocurrency, you need to have a digital “wallet”, because that is where you store your crypto assets. A crypto wallet can be online, on your computer or an external USB or hard drive.

Therefore, you will need to set up a wallet, where you can store your Bitcoin and other cryptocurrencies and then buy some. The best way to buy or sell crypto in NZ is through a cryptocurrency retailer.

New Zealand’s highly recommended cryptocurrency retailer is BitPrime whose trading platform is designed to make buying, selling and swapping digital assets as straightforward as possible. No foreign exchange. No watching complicated order books. Just an easy exchange of fiat currency (e.g. NZD) for cryptocurrency assets, or vice versa.

Other options include P2P or through an international crypto exchange - both of which are more advanced methods.

 

What wallet options are there to store the coin/token?

Set Up your Wallet

The best wallet for you will depend on three things:

  1. the currencies you want to use;
  2. the device you wish to use; and
  3. if you're going to pay for a wallet or use a free one.

You then install the wallet on your computer or mobile device.

The most secure option is a hardware wallet, a USB that stores your private keys and authorises transactions. Although it works the same as a software wallet, a hardware wallet has an extra security layer in that you’re only connected to the internet when you plug the device in.

Yes, you do need to pay, but you’re getting that extra level of safety for your money.

There are many wallet providers you can choose from, and it is well worth checking out the top 10 Bitcoin wallet options here.

 

Buying Cryptocurrency

Having set up your wallet, you are ready to buy cryptocurrency. You just log in to your cryptocurrency dealer (such as BitPrime), go to the appropriate page, and enter the amount you want to buy.

For example, suppose you are buying Bitcoin. In that case, you will need to provide your Bitcoin address in the order screen, which is usually labelled with “current address” or “receiving address” inside your wallet. This address is 33 or 34 characters long and begins with a 1 or a 3.

It is crucial for your security that you always copy and paste the address to get it right and avoid losing your digital assets.

You’ll have three payment choices with BitPrime: buying crypto with a credit card (or debit card), a bank transfer or paying via POLi.

POLi is the fastest payment option. It lets you pay directly and securely using your online banking via your POLi account.

 

Making Purchases with Crypto

Buying items using Bitcoin or other cryptocurrencies is becoming more and more popular.

Indeed many New Zealand businesses now accept cryptocurrencies as payment, and that number is increasing all the time. When it comes to buying online, there are even more.

 

Image of NZD currency as BitPrime's fees are charged in New Zealand Dollars

Selling Crypto For Fiat Currency

As well as using cryptocurrency to buy items or as an investment, you can also sell it for New Zealand dollars.

With BitPrime, for example, all you need to do is navigate to the “Sell Crypto” menu.

You enter the amount of coin you wish to sell, and BitPrime emails you a quote with instructions. Once you have followed them, BitPrime sends the NZD amount quoted to your chosen bank account within 24 business hours.

 

Increasing Your Safety

If you are buying cryptocurrency as an investment, you can do this safely - as many have already.

There are some things you can do to ensure your safety.

It is essential to be aware that cryptocurrencies are higher risk, speculative products, New Zealand’s Financial Markets Authority (FMA) advises people. The FMA has a handy resource for cryptocurrency investment. It is well worth a read if you are considering this investment.

Cryptocurrency value can go up or down rapidly, meaning higher returns but potentially higher losses, so you need to make sure you minimise this loss.

The first thing you need to do is make sure you only invest using a New Zealand-based platform on the Financial Services Providers Register.

BitPrime is both registered and New Zealand owned and based.

 

Top Tips

Minimising Loss

Secondly, you should only invest what you can afford to lose.

One of the most important risk management strategies is to ensure that your investments are spread around.

One rule that most successful investors use is the “two per cent rule”. This rule says that you should never put more than 2% of your trading capital into a single trade. Some subject authorities even recommend investing no more than 1% of your total deposit in any one investment.

It is also important to make stop-loss and take-profit orders, especially when you are new to cryptocurrency trading.

A stop-loss order is when you tell your cryptocurrency exchange to close your trade if a certain loss level is reached. If you bought some cryptocurrency for $1,000, for example, you could decide that it must be sold if the value drops to $800.

A take-profit order is where you sell when it reaches a specific price.

That way, if the upward price trend reverses, you will have made money without the risk of losing it all again.

If you find you are losing money, take a break. This is important because most people begin to behave irrationally if they continue trading. They usually find themselves losing even more. Avoid these rash decisions by giving yourself a chance to recover psychologically.

A good rule of thumb is to stop trading if you lose more than 6% of the capital you have invested and take a break of two weeks.

It is important to track the performances of your diverse selection of investments. Have a look at Trading View for technical analysis to help track your investing. Write down the profit or loss for each of your investments daily.

Another vital part of safe trading using cryptocurrencies is being aware that a cryptocurrency transaction is irreversible in most cases. Usually, you can only get your money back if the person you paid sends it back to you.

Therefore, it is wise to know the seller’s reputation, where they’re based, and how to contact them before you buy. Do your research to double-check these details before hitting the “buy” button.

 

Cryptocurrency Scams

Cryptocurrency scams are worth watching out for.

According to Consumer New Zealand, “crypto scams reported to Cert NZ, a cybersecurity government agency, cost New Zealanders $500,000 from March through June 2021. But that’s likely just the tip of the iceberg because few victims report their losses”.

Scammers use various methods to con people looking to buy cryptocurrency or to purchase items and are told they must pay using crypto. In fact, being told you “must pay using cryptocurrency” is a pretty sure sign of a scam.

Another sure sign of a scam is when someone rings you up offering “guaranteed” returns - usually very high returns - if you invest with them. They may sound compelling but beware. No reputable trader will ever promise “guaranteed” profits.

Anyone can be the victim of a scam, not just the more vulnerable members of society, and the best defence is knowing about scams and how they work.

An excellent publication, The Little Black Book of Scams, published by the Commission for Financial Capability, lists the most common scams, along with tips on how to protect yourself.

It is well worth taking the time to read and digest the information in this book, which can be downloaded as a PDF, or you can ask for a copy to be posted to you.

BitPrime also has an excellent article called “Common Cryptocurrency Scams, How to Recognise Them and What to Do if You Think You Have Been Scammed”.

The best quick advice to help you avoid being scammed is never to buy cryptocurrency unless you buy from a New Zealand-based platform listed on the Financial Services Providers Register.

 

Taxes on Crypto

Finally, you may need to pay tax if you are a cryptocurrency investor. New Zealand law firm Stace Hammond has provided an excellent article on the taxation of cryptocurrency.

It’s advisable to know how much tax you will need to pay on the money you make before beginning your rewarding journey with cryptocurrency.

Although New Zealand has a tax system where there is “no general capital gains tax”, the Inland Revenue Department’s crypto guidance clarifies that the default position is that this is not the case for crypto, Stace Hammond points out.

As well as outlining when you will need to pay tax, the article also covers when you may be able to claim for a loss.

The good thing is, of course, that you are making money and, at the same time, contributing to New Zealand financially.

Blockchain technology is undoubtedly changing the way we do financial transactions. So happy cryptocurrency trading, Kiwis. Hopefully, you've found this a useful guide on buying cryptocurrency in New Zealand.

 


About the author:

Frank Neill

Disclaimer:

The above references an opinion and is for informational purposes only. Do not take this as personalised financial advice or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.

 

Last updated: 22/02/2022

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