Cryptocurrency has been around for a while now and it’s not going anywhere. Australians are buying more cryptocurrencies such as Bitcoin than ever before with the value of these digital coins skyrocketing in recent months.
Many people believe that buying a few of these coins and holding onto them will eventually lead to a life where they can retire early and live off the money they’ve made from giving advice on trading. Although crypto is a lucrative space and it’s rapidly growing with the success of NFTs and exchanges, people don’t always understand that there are hidden costs with investing and things you’ll need to wrap your head around to make the most of your crypto journey.
The number one question on most people’s minds is how to buy these cryptocurrencies here in Australia, but what they don’t always think about is all of the costs involved when converting your fiat currency into cryptocurrency. We’re here to break down some of those hidden costs and provide you with an idea for hidden costs and how much it will actually cost you to convert your money from Australian dollars to bitcoins or another cryptocurrency like Ethereum or Ripple.
The Cost of Converting
Here’s how much it will cost you to convert your money from Australian dollars to bitcoins or another cryptocurrency like Ethereum or Ripple.
The first thing you have to realize when converting your money from Australian dollars into any other form of currency, including cryptocurrency, is that there are two currencies involved. There’s the fiat currency you’re using to buy your digital coin with and then there are the digital coins you’re trying to acquire.
The costs involved with both of these currencies are not always made clear, but you can often find exchanges online that can get you the digital currency you’re after with minimal fees.
Taxes Will Creep Up On You
The biggest hidden cost for crypto isn’t the fees you’ll pay or any memberships, or even training courses to learn everything – it’s the taxes.
Cryptocurrencies here in Australia operate under a Capital Gains Tax system, which means you’ll have to pay taxes on the gains you receive via crypto.
According to Fullstack, a cryptocurrency tax firm with some of the most experienced crypto accountants in Australia, if you invest $5,000, and then you increase your portfolio via earnings up to $15,000 – then you’ll pay taxes on the additional $10,000 you’ve earned.
What are the Hidden Fees When Converting Fiat Currency into Cryptocurrencies?
As you may already understand, the exchange of fiat currency into cryptocurrency is not all that simple. You can’t just pay $AUD to acquire bitcoins or any other form of digital coinage. There are certain costs involved in every transaction and each of these transactions is unique.
Before you purchase your digital coins you usually need to provide the right documents to show you are who you say you are. These documents can include identification cards, bank statements, and any other relevant information that shows the exchange of fiat currency into cryptocurrency is legitimate.
The next thing that comes into play when looking at how much it will cost to convert your Australian dollars into bitcoins is the blockchain transaction fees, which can quickly build up.
Australia has a great crypto future ahead of it, but with the government here making the most of crypto and taxing those gains, it can become quite costly to make those gains and acquire digital coins.
So before you start trading or investing in any crypto here in Australia, be sure to seek proper advice on your newfound hobby and how it should fit into your financial strategy.