1. Choosing a Crypto Exchange
If you’re interested in purchasing Tether (USDT) or any other digital currency, the first step is to set up an account with a reputable cryptocurrency exchange.
With a variety of exchanges available to Australian investors, it’s important to choose one that offers a user-friendly interface, minimal fees, and strong security measures. Newcomers may prefer a simpler platform, while experienced investors may want more sophisticated tools for trading.
Make sure the exchange you choose offers access to Tether, as it is the third largest cryptocurrency and should be readily available.
2. Signing Up and Verification
Once you’ve selected an exchange, the next step is to create an account. In Australia, crypto exchanges must comply with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws, which requires them to go through a Know-Your-Customer (KYC) process for new users. This involves providing personal details, government identification, tax file number, and potentially proof of address.
While this may seem unfamiliar to those new to cryptocurrency, it’s similar to setting up a bank account. Just as banks must comply with financial regulations, crypto exchanges do as well to ensure the security of transactions and adherence to anti-money laundering laws.
3. Choosing a Payment Method
After signing up and being verified, you’ll need to deposit funds into your account in order to purchase Tether. The funding options vary by exchange and may include bank transfers, PayPal, a crypto wallet, or credit/debit cards.
It’s important to note that using a credit card may come with additional transaction fees, so it’s best to use caution when using this method for crypto purchases. For most cost-effective option, electronic transfers from a bank account are usually the way to go. It’s also worth noting that purchasing cryptocurrency with a credit card is usually considered a cash advance, which could incur higher interest rates.
4. Placing an Order
Once your account is funded, you can place a buy order. The process may differ depending on the platform, but typically involves clicking a button or inputting USDT’s ticker symbol and specifying the amount you want to buy. After the transaction is complete, you will own a share of Tether.
Since Tether is pegged to the US dollar, your investment will directly reflect the equivalent amount in USDT. This is different from other cryptocurrencies, which have fluctuating values.
As an Australian investor, any changes in your Tether’s value will be directly tied to the AUD to USD conversion rate. If the AUD falls against the USD, your investment will increase in AUD terms, and vice versa.
5. Choosing a Secure Storage Option
Many exchanges offer an integrated Tether wallet or recommend a trusted third-party wallet for storing your USDT. However, some investors prefer to keep their digital currencies offline to protect against potential hacking incidents.
Several leading exchanges now offer private insurance to cover losses from such incidents and store the majority of customer assets in “cold storage,” which is offline and less susceptible to online threats. However, there is still a risk of loss, as seen with the collapse of previously trusted exchanges like FTX.
For added security, it’s recommended to store your Tether in a personal wallet away from the exchange. There are different types of wallets available, including custodial, software, and hardware wallets, each with varying levels of security. While custodial wallets are convenient, they pose similar risks to centralized exchanges. Software wallets are more secure since they eliminate third-party risks, but they can still be vulnerable to online threats.
Hardware wallets, which store private keys offline on a physical device, are the safest option for storing large amounts of USDT. They require physical confirmation for transactions, but it’s important to follow security best practices and keep your passphrase safe. Keep in mind that transferring your USDT to a different wallet may incur a small fee, so it’s important to choose the best storage option from the start to avoid multiple transfers.
Related: Best Crypto Wallets for Australians
