The Minister for the Digital Economy, Jane Hume, has said that cryptocurrencies are “not a fad.”
In a speech on Monday at the AFR Super and Wealth Summit, Hume stated that with 17 percent of Australians investing in cryptocurrency, it is “an asset class that has captured hearts and minds” of Australians.
“Whatever you might personally think—it’s a technology that’s not going away any time soon.”
“Don’t be the person in 1995 who said the internet was just a place for geeks and criminals and would never become mainstream.”
A cryptocurrency is a form of payment that can be exchanged digitally for goods and services. Many companies have issued their own currencies, often called tokens, and these tokens can be traded for the goods or services the companies provide. Of these, the most popular form of cryptocurrency is bitcoin.
The primary difference between cryptocurrency and fiat currency—which is the paper money in our wallets or the money in our credit cards—is that the currency is not provided nor controlled by a central figure of authority. Instead, the government prints and therefore controls paper money, and the bank controls the money within our accounts.
Cryptocurrency is decentralised finance, it works using a technology called blockchain, where every user of the currency can see all the transactions taking place, but the transactions are anonymous as compared to centralised finance where one would only see one’s own transactions but would not be able to see the transactions in other accounts.
This makes cryptocurrency a more secure way of making payments as the transactions are more transparent, and an individual’s currency is not controlled by an entity other than the account holder.
Currently, cryptocurrency still lacks stability; values of currencies go up and down; therefore, it is still generally not recommended as an investment opportunity for would-be investors.
Reserve Bank’s Head of Payments Policy Tony Richards last week said many regulators internationally are still “sceptical” of developments in the market.
Richards questioned how widely cryptocurrencies were held in Australia.
Despite a recent Senate inquiry finding 17 per cent of Australians are investing in cryptocurrency, Richard said he found these statistics “somewhat implausible” and questioned if the findings of the surveys are representative of the population.
However, Hume said at the summit that Australia must acknowledge “this is not a fad”.
Australia must “forge our own trail” on decentralised finance built on blockchain, she said.
“Decentralised finance underpinned by blockchain technology will present incredible opportunities—Australia mustn’t be left behind by fear of the unknown.”
“If the last 20 or 30 years have taught us anything, it’s that all innovation begins as disruption and ends as a household name.”
The Commonwealth Bank has made a change to allow its customers to hold and use bitcoin, a form of cryptocurrency, through its banking app.
The federal government have yet to roll out regulations for these developments.