(Australian Associated Press)
WHY ARE AUSTRALIANS BUYING CRYPTOCURRENCIES?
Some are long-term investors, others are short-term traders, and some are true believers who want currency to be beyond the control of governments and central banks. All are hoping the value of Bitcoin (or their chosen asset) will appreciate over time as they become more readily accepted.
WHY DO AUSTRALIANS NEED USE AUSTRALIAN EXCHANGES?
Most people buy their first Bitcoin, Ethereum or other cryptocurrency using their day-to-day currency. If you hold Australian dollars and want to buy your first cryptocurrency, you need to use an exchange that accepts the Aussie. This is why an estimated 66 per cent of Australia’s digital currency market functions across seven locally based exchanges. Once purchased, cryptos can be transferred to other exchanges.
WHY ARE THERE SO MANY CRYPTOCURRENCIES?
Cryptocurrencies can be designed to prioritise different capabilities. Some are designed for privacy, some for security, and others for speed of transfer or to keep fees low. Time will tell which, if any, will be widely adopted.
ARE ALL CRYPTOCURRENCIES ACTUALLY CURRENCIES?
No, but Bitcoin, Litecoin, Monero and Dash are among those that can be classed as currencies – that is a means of exchange, a store of value and a unit of account. Unlike national currencies, cryptocurrencies are not backed by any government or central bank.
SO WHAT ABOUT THE OTHERS?
Broadly speaking, there are also commodities – such as storage or computing power – and tokens to service goods and services. Ethereum can be treated as an example of the former, while Ripple and PowerLedger, an Australian project to enable the trading of electricity, are tokens.
ARE ALL CRYPTOS WORTH BUYING?
No. Investing in crypto looks a lot like investing in the stock market. Some projects will succeed and rise in value, some will fail despite the best intentions of all involved, and some will turn out to have served no purpose than to part investors from their cash.
(*Sources: Accenture, Australian Digital Commerce Association, Cryptoassets: The Innovative Investors Guide to Bitcoin and Beyond, CoinMarketCap.com)