The cryptocurrency industry in Australia has undergone tremendous growth in a short time. Cryptocurrency has gone from being a niche technology to become widely popular with the general public.
2021 was a particularly bountiful year, as a record number of people joined the crypto space. Estimates say that more than 28% of Australian investors hold one crypto or the other. According to Allied Matters Research, "the global cryptocurrencymarket size was valued at $1.49 billion in 2020 and is projected to reach $4.94 billion by 2030." While that growth is still ongoing, many are curious about the future of cryptocurrency in Australia.
Knowing the future of blockchain and cryptocurrency will enable you to position yourself to derive some benefits from this growth. In this article, we analyse the future of cryptocurrency in Australia and how you can best reap some benefits from the changes in the industry.
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What is The Future of Cryptocurrency in Australia? Trends to Look out for
The future of cryptocurrency in Australia will be defined by a number of trends ranging from DeFi to government regulation. Here, we analyse the future trends relating to cryptocurrency in Australia in detail:
1. Further Development of New Areas in Cryptocurrency
Until recently, most interaction and dealing in cryptocurrency and blockchain had to do with speculation.Essentially, investors only wanted to profit from the often massive boost in prices of tokens. Finally, however, people are starting to take an interest in the emerging niches. One of such is DeFi, short for Decentralized Finance.
The term 'DeFi' refers to a collection of applications and innovations that enable people to conduct financial operations on a decentralised platform without having to deal with a formal financial system. In essence, users can carry out financial transactions without needing a bank, insurance company or central exchange. In addition to sending and receiving money anywhere in the world, you can access loans using your crypto assets as security. You can also lend money to others, all on peer-to-peer exchange. Furthermore, you can save and invest your money and watch your digital cash generate returns for you.
With DeFis, you get to avoid the stringent regulations that come with the traditional financial system. For instance, you can access credit seamlessly, completely eliminating the need for a credit score or card approval. You enjoy complete privacy and anonymity, and you can derive more returns on your investments than you get with legacy institutions.
The other niche area that will experience a boom is the Non-fungible Token (NFT), which allows users to authenticate any digital content or asset. Before now, the most popular usecase has been for digital artworks, but there is now increasingly in use of NFTs for everything from virtual real estate to videos and gaming. Across both NFTs and DeFis, crypto tokens are the means of transactions.
2. Government Regulation
We can say that the most essential factor in the future of Cryptocurrency in Australia is the role that the government gets to play going forward.The cryptocurrency industry has grown massively in scale and importance, and it is only prudent that the government be involved. However, unlike other jurisdictions, the Australian government has given only little direction on its stance regarding cryptocurrency. Nonetheless, we should not expect any ban orrestriction like is the case in countries such as China.
Instead, the industry may even get some support from the government. For instance, in 2021, the Reserve Bank of Australia (RBA) referred to digital currencies as the "future of payments." Yet, the policy direction of the government isn't clear. Nevertheless, there are chances of the RBA issuing a Central Bank Digital Currency (CBDC) to replace all private cryptocurrencies. The government's policy objectives in the crypto space include preventing scams, protecting users, and implementing a tax system.
It is noteworthy to mention that the government's entry into the cryptocurrency space has some benefits. Firstly,the government's entry into the cryptocurrency space will reduce the rate of criminality in the ecosystem. The government will most likely beef up security to protect the average crypto user leading to fewer scams and hacks. Furthermore, we may get to see some stabilisation and reduction in the volatility of crypto prices. It will also generate much legitimacy for the crypto world, which may spur established institutions to consider adopting crypto seriously.
There are, however, downsides, one of which is that there will undoubtedly be an increase in government surveillance and control. As a result, we may see a reduction in the anonymity the crypto family has come to love. We should also expect to see crypto being used less for cross-border transactions as there will be more scrutiny on such money movements. Finally, the costs of using crypto may increase as transaction charges rise due to such things as taxation and regulatory fees.
3. Institutional Involvement in Cryptocurrency
The future of cryptocurrency in Australia will likely see more established companies come into the cryptocurrency ecosystem. Their adoption of crypto may come in various forms,including accepting crypto as payments for goods and services they offer. They may also invest in crypto assets. Furthermore, we may see traditional fintech enable dealing in cryptocurrency.
An industry where we are set to see a massive crypto embrace is banking, and there are evident signs. For example, one of the country's largest banking conglomerates, Commonwealth Bank, introduced a feature in 2021 that enables its users to buy and hold crypto assets within its CommBank app. The bank explained that this move was based on discovering that as many as 500,000 of its customers are active crypto investors.
A factor that will spur even more involvement of large companies is government regulation.
4. Cryptocurrency Investing
For many, the allure of generating multiple returns on capital drove them into crypto investing, and that trend will remain for a while. However, no one can predict if the markets will still be as profitable as they were going forward. For instance, Bitcoin may hit $100,000 or not.
Nonetheless, one particular drift is that more capital than ever will flow into altcoins, that is, cryptocurrencies apart from Bitcoin. This is because many investors sense that there are limited potential upsides for Bitcoin price moves and, as such, will seek returns elsewhere. Altcoins present that opportunity. Interestingly, this is already happening.
How to Benefit from the Future of Cryptocurrency in Australia
The future of Cryptocurrency in Australia will herald some changes in the industry, and you should be best positioned for them. Here's how you can ensure that you are prepared:
1. Stay Informed
The changes that are likely to happen in the cryptocurrency space in Australia will present several opportunities. However, you can only derive benefits from them if you know about the opportunities in the first place. The best approach is to get yourself acquainted with the goings-on in the industry. You can do this by subscribing to our social media pages, email newsletters, and frequenting our website for updates.
Furthermore, if you want more interactive content, you can keep an eye on social media by following the profiles of industry leaders, say on Twitter. On Reddit, you can join forums (subreddits) dedicated to cryptocurrency. YouTube is also a great avenue to get good content.
Ensure that you are following the right profiles and listening to only experts. You can determine the credibility of a so-called expert by doing a Google search on them.
2. Invest, but Do So Carefully
You can position yourself for the forthcoming perks by investing in the right companies, projects, innovations and trends. Once you get informed about the available opportunities, conduct some research to ascertain the ones in which you'd like to invest. Do not, however, commit too much of your funds to any asset, as there are no assurances of return.
3. Be on the Right Side of the Law
One of the best things you can do for yourself is to ensure that you are not contravening any laws while involved in the cryptocurrency industry. One of the priorities of the government in the crypto space is taxation. While there are currently no definite rules, there are still guidelines you comply with.
For instance, the government somewhat regards cryptos as assets or securities, and as such, you might have to pay a capital gains tax whenever you profit from your crypto investments.
Having discovered the perks that come with participating in the crypto space, it is essential that you take note of some risks and developments. For instance, the industry has attracted huge government attention due to its exponential growth. Thus, we should expect some government intervention in the industry. Alongside governments are the big technology companies and banks who don't want to be left out.
Nonetheless, you can benefit from these trends by being informed, following regulations and investing wisely. In addition, you can consult with us to help you remain ahead of the curve and being a better position so that you don't get caught unawares when the changes keep happening.
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