Over the past several years, cryptocurrency has emerged from the shadows to become an established technology. 2020 marked a watershed, and it’s now clear that crypto and blockchain are here to stay. Global governments have reacted in different ways, ranging from outright bans to enthusiastic embrace, via regulation of varying degrees of thoughtfulness. Over the coming years, it’s clear that crypto will have much to offer those economies that actively explore and leverage its advantages, and that countries that do not adopt these technologies risk being left behind. The last few months have shown which nations are willing to welcome change, and which have elected to fight for the status quo.
Riding The Crypto Wave
Like many other countries, Australia has experienced a surge of interest in crypto over the past 18 months. The drivers are the same as elsewhere in the world: the effect of the coronavirus pandemic on employment and earnings, and the broader impact on central banks’ monetary policy. As furloughed workers have time on their hands, they have researched the opportunities provided by this new asset class. At the same time, the macro environment has been a tailwind to crypto adoption, with money printing on an unimaginable scale prompting institutions and individuals alike to seek a store of value.
According to the latest Bitcoin Market Report, the 2020-2021 financial year saw a 175% increase in crypto trades, with those in the 25-44 age bracket being responsible for almost 70% of all activity. The primary reason for buying crypto was to build wealth, with early retirement and portfolio diversification coming next. Overall, some one in six Australians now has exposure to crypto, one of the highest rates in the world, and there are around 400 crypto exchanges in the country. Others are interested, but are holding back due to concerns around volatility.
Australia: A Crypto Friendly Jurisdiction
There’s no question that crypto adoption in Aus has been spurred by the country’s progressive approach to regulation. While legislation always lags technological developments, Australia hasn’t been asleep at the wheel, and regulators have come up with a straightforward, intelligent approach for blockchain and crypto assets that protects consumers and curtails money laundering without threatening to stifle innovation. The process of creating that framework began back in 2014, when few governments understood crypto, let alone saw offering clear guidelines for blockchain businesses and investors as a priority.
Immediate Drivers of Crypto Adoption
This crypto-friendly regulatory stance has enabled rapid adoption in Australia. Individual crypto investors have embraced bitcoin and other popular cryptos. TimeX, one of the leading Australian crypto exchanges, has seen its user base increase by almost 4,000% since January 2020 as regular Australians rush to explore this new asset class.
While the boom has minted plenty of new millionaires, it’s Australian blockchain businesses that have been the real success stories in the crypto revolution, creating the infrastructure that has enabled this increase in users, and exporting their services all over the world (blockchain is, after all, nothing if not decentralised). While investment is currently the primary use case for crypto in Australia and other high-income countries – as demonstrated by the proliferation of high-quality exchanges like CoinJar, TimeX, Swiftx and Coinspot – Australian blockchain products are being used to push the boundaries and facilitate new global use cases.
Some of these products offer understated but vital services. AUDT.to, for example, acts as a gateway that enables customers to move money from their Australian bank accounts into the world of the blockchain, quickly and easily. A deposit of Australian dollars becomes an equivalent quantity of AUDT – a token that lives on the Ethereum blockchain and that can therefore be transferred and traded instantly with users anywhere in the world. Another service, PaymentX, provides crypto payroll functionality, allowing companies to pay their employees and contractors in bitcoin and other cryptocurrencies against invoices raised. Both of these might appear to be pedestrian, unsexy pieces of blockchain infrastructure, but are critical for plugging conventional businesses and systems into the world of the blockchain, with all its advantages and opportunities.
Recruitment And Work
Other initiatives start to give a sense of the true potential of blockchain in revolutionising the way people live, work and play. The pandemic has seen more people shift into remote gig work, picking up ad hoc jobs from freelancer websites. Unfortunately, these sites suffer from a variety of problems, including commission fees of 20% or more and restrictions on who it is possible to work with due to the limitations of traditional payment systems.
LaborX, an Australian blockchain-based freelancer platform, is an answer to the problems of these centralised sites. The service enables anyone looking for work to sign up, create a profile, and post fixed-price Gigs. Customers can also post custom Jobs for freelancers to browse. There are no middlemen. Instead, smart contracts – software that runs on the blockchain – are used to create digital work agreements that safely escrow funds until the work is complete, and then automatically pay the freelancer. A secure reputation module gathers feedback, partially based on blockchain transactions from completed work, giving both parties a reliable sense of the other’s track record. The fees paid by freelancers are half of those charged by LaborX’s centralised competitors, and settlement via cryptocurrency is practically instant.
LaborX gives a sense of what blockchain might achieve: access to a truly global market of labour and employment, with efficient crypto payments. This in itself has the potential to revolutionise recruitment, especially for those locked out of traditional opportunities simply due to accidents of geography.
But blockchain isn’t just revolutionising existing sectors. It’s creating whole new ones. The emerging play-to-earn sector allows gamers to make a meaningful income by engaging with their favourite blockchain-based titles. Games like Axie Infinity and Gods Unchained use new economic models that pay players in tokens that can be traded on exchanges and cashed out into their local currency. These games also integrate NFTs, an exciting new branch of blockchain technology used to create digital collectibles, which are used to represent in-game characters and items that can be developed by players and then sold for profit.
While gamers in high-income countries might play predominantly for fun, those in low-income countries can actually make a reasonable living out of games like Axie Infinity. New initiatives like Crypto Gaming United make it easier for such players to access these games and earn money by lending them valuable NFTs in return for a proportion of daily earnings. One of the most popular forms of Gig on LaborX is for Axie Scholarships, in which gamers advertise their services with the aim of connecting with NFT owners.
The Future Of Blockchain In Australia
Having established itself as an early adopter of crypto and a forward-thinking jurisdiction for decentralised technologies, the future is bright for the Australian crypto scene. The country boasts a large number of crypto startups, and some well-established names in the space. As the government takes interest and deploys blockchain-based solutions for public services, the momentum the sector experiences is only likely to increase – positioning the country at the forefront of the digital revolution.