Australia’s Growing Interest In Cryptocurrency

Across Australia, and specifically among millennials, there has been a significant spike in interest in cryptocurrencies.

The numbers are so staggering in fact, that now 4 in 10 Aussies are planning to use cryptocurrencies within the next year, with respect to Mastercard’s New Payment Index survey.

So why is cryptocurrency interest blossoming, and what does this mean for the Australian market?

Earlier this year, Bitcoin overtaken its previous all-time high.

While cryptocurrencies have long been acknowledged with a degree of skepticism, a boom in performance is seeing these attitudes change.

In the Australian market, a the greater part of cryptocurrency investors held Bitcoin at ~13%. The second most popular was Ethereum at 6% followed by XRP at 5% and then strongly followed by Litecoin and Bitcoin Cash.

Of all age brackets, millennials show the the majority interest in investing in and learning more about cryptocurrencies.

As it stands, nearly one in five Australians or 13% of the population now own cryptocurrency. This is only required to grow, and their reasons for making an investment are varied.

Shortly after its creation in 2009, Bitcoin was highly valued at a mere $0.01. As of April 14th 2021, Bitcoin was highly valued at an all-time high of $83,104 AUD and surpassed a market cap of $1 trillion AUD in February. While volatility is always a factor with digital currencies, to say Bitcoin has experienced exponential growth in its 12-years of existence is an understatement.

Speaking of growth, 2020 alone recorded impressive statistics across Australia’s cryptocurrency market. Australian national survey, the Independent Reserve Cryptocurrency Index (IRCI) seeks to benchmark confidence and awareness all over digital currencies. Their survey unveiled that 78.2% of crypto owners had either broken even or made a profit in 2020.

If we were to look spine a decade, the early adopters of digital currencies saw revenue of more than 5,000% on certain coins. While once a blip on the international media radar, cryptocurrencies now garner major curiosity and ongoing speculation about “the next bitcoin.”

Like any investment, there are no insures with coins and all come with varying degrees of risk. For serious digital currencies though, it has surely been a very bullish trend.

Its growth has surely spurred an attitude change towards the profitability of crypto, but good reasons are a little more diverse than that.

A survey revealed 45% of cryptocurrency investors had invested in crypto due to its appreciating value.

Another well-known motivation was to diversify portfolios. For years it has been speculated cryptocurrency could be the future and a substitute of fiat currency. Whether this is true or not, a more various range of assets has generally been viewed as a safer investment.

Finally, as we see inflation rise across the globe with fiat currencies, many investors see crypto as a means to hedge against inflation.

If its skyrocketing value alone wasn’t linked to a perception change around crypto, adoption by major market leaders surely helped.

Both major and even scaled-down companies in the US now accept Bitcoin as a form of payment. In the US, even Paypal users can now buy, sell and checkout using cryptocurrencies by way of their account.

One notable, and highly publicised example, was Elon Musk and Tesla’s $1.5 billion dollar investment in Bitcoin. Alongside this, Musk also introduced the company would start agreeing to Bitcoin as payment for its products.

This lead in a market upturn for crypto, dubbed the ‘Musk Boom’.

Yet, Musk has since backflipped on his primary statement, announcing on Twitter that Tesla has suspended ‘vehicle purchases with Bitcoin.’

Closer to home, more and more Australian retailers are starting up to accept Bitcoin as well, such as the likes of Subway.

While investment in cryptocurrency grows, we aren’t really seeing a dramatic enhance in the spending of cryptocurrency.

Perhaps the best case to explain why this may be is the case of Laszlo Hanyacz.

In 2010, Laszlo became the first man ever to use cryptocurrency as a payment.

He bought himself two pizzas, which at the time cost him 10,000 Bitcoins. Today, that level of Bitcoin would be worth over $700 million Australian dollars.

An extremely unlucky turn of events for Laszlo, but one that shows the potential for crypto’s dramatic growth.

It’s by no means uncommon for Bitcoin value to jump (or drop) by thousands within a 24-hour period, but overall it generally behaves in a bull-like manner.

Due to the significant returns many coins have seen over the years, investors seem unwilling to part with their cryptocurrencies just yet.

Despite its increasing popularity, Australia’s financial market is still a bit in back of the eight ball when it comes to cryptocurrency.

A lot of this comes down to regulations and policymakers unwillingness to adopt the currency.

ASIC and the RBA, according to Independent Reserve CEO Adrian Przelozny, aren’t being particularly proactive or available when it comes to policies around cryptocurrency.

Additionally, no Australian super fund to date supplies the option to invest in cryptocurrency. This is despite the fact that over a third of Australians have conveyed interest in investing retirement savings into it.

Many policymakers still state risk as the major reason for their lack of confidence in the currency. While it’s true 43% of Australians do admit volatility as one of their largest deterrents, all statistics and global trends point to cryptocurrency only continuing to grow.

The Australian Financial Review asks two questions around cryptocurrencies: Do we have the best suited protections in place for consumers, and can we – as a country – keep pace with global developments?

They don’t ask if cryptocurrency adoption will become much more prominent, but when.

There are a lot of speculative talks about crypto being the future of currency. The ABC has even departed as far as to speculate it could be the new gold.

In 2007, cash made up three quarters of all payments in Australia. Do a comparison of this to just over one-quarter of payments in 2019 and it’s easy to see how these forecasts have come about.

Distribution of Australian consumer payment methods 2007 – 2019. Source Statista.

There’s no questioning the digital world moves fast and cryptocurrency is no exception. Already, we’re viewing crypto increasingly used as an investment or store of value.

The AFR has gone on to say Australia could potentially turn out to be a new global leader in a new financial system hub, bringing in vital investment and the creation of countless jobs.

Yet, Australia’s big four banks have run in a minimally aggressive market for decades. As overseas players that offer cryptocurrency look to set up shop in Australia, a hesitance to adopt digital currencies could lead to them falling behind.

As financial authorities both abroad and in Australia start looking at digital currencies more seriously, the end result will very likely be a better regulated, safer and more popular cryptocurrency system.

Ultimately, there are no insures in the world of investments. Digital currencies can be risky, and it’s always best to seek professional advice.

Yet with more Australians following cryptocurrencies, it’s clear that the value of and role crypto plays in our nation will only continue to grow.