Extra Aussies Again Bitcoin, the underdog
In January this year, the world watched in horror as sky-high fires pierced 44 million acres of Australian bushland, devouring property, wildlife and humanity. Just as victims emerged from the ashes, COVID-19 hit and the local economy stalled. Gross domestic product contracted 7% in the three months to June, unemployment rose to 7.5% and Australia entered its first recession in 30 years.
Aside from the gritty headlines and the general economic downturn, I've found evidence that a sizable segment of the Australian population view Bitcoin as a ray of hope.
This post is part of CoinDesk's 2020 Year in Review – a collection of posts, essays, and interviews about the year in Crypto and beyond. Adrian Przelozny is CEO of Independent Reserve, a cryptocurrency exchange.
In November 2020 we ran the annual Independent Reserve Cryptocurrency Index (IRCI) where we surveyed over 1,100 common Australians to get an overview of their current sentiments about crypto. Crucially, we neither looked for existing crypto users nor examined the users of our own exchanges. We wanted to hear from everyday Australians from all walks of life and made our survey representative of Australian demographics.
The data showed that their confidence in digital currencies had improved significantly. Almost one in five Australians now owns crypto, and at 91.4% almost everyone had heard of it. But what is perhaps even more poignant was the huge change in the number of people who thought Bitcoin was a scam – only $ 17.3 are cautious now, compared to 21.3% in 2019. Instead, Australians are more likely to see the world now dominant crypto as a store of value, investment vehicle or money.
We saw this growing confidence in our exchange as well as we welcomed new traders in droves. Our worst month for registering accounts in 2020 saw 50% more signups than our best month in 2019. These are some of the most extraordinary growth numbers we've seen since the Independent Reserve began in 2013.
To me, this is proof that Aussies are behind crypto like never before, which is not surprising when you know how much we love to support the underdog. This ancient story – one of willful perseverance and stoic resilience in the face of adversity – is burned into our national psyche. We love to see the little guy take over the system.
In 2020, Bitcoin is that outsider. In contrast to the old and properly established world of centralized banking and government, emerging technology has drawn a fair share of haters. JPMorgan CEO Jamie Dimon in particular has enjoyed every opportunity to label Bitcoin a scam and compare its meteoric rise in price to the tulip bulb bubble. He has even attacked bitcoin holders themselves, telling them that if they are "stupid enough to buy it" they "will one day pay the price".
The last three years of the crypto winter have been bitterly cold and painfully long and it is true that Bitcoin has plunged close to rock bottom. But those who really believed in his ideology never lost hope.
And then Bitcoin recovers with breathtaking gusto, silencing its naysayers to break its previous all-time high and achieve an impressive new personal best. It has also won many new fans, such as MassMutual, the 169-year-old insurance giant who has never identified himself as a Bitcoin creditor, but only bought Bitcoin worth $ 100 million in order to diversify its own treasury . This caught the world's attention as Elon Musk is now considering diversifying part of Tesla's balance sheet.
Even Jamie's crew warm up to it. JP Morgan strategists admit that purchases like MassMutual's are a clear signal of rising institutional demand for Bitcoin and, most importantly, a significant milestone as we get closer to mainstream adoption.
As with Bitcoin, we'll stay tuned.
All of this is just an endorsement for those who have already wagered on Bitcoin for their future. At Independent Reserve, we have over 8,000 Self-Managed Super Funds (SMSF) set up by people who have been crypto-invested for long enough to invest their retirement savings in these funds. The first was created in 2016 when an accomplished punter put A $ 41,000 in Bitcoin. Today that account is worth over A $ 1.2 million. This corresponds to an annualized return of almost 100% compared to the previous year.
Comparatively, Australia's leading “aggressively growing” industry pension funds returned 9% year over year over a five year period.
So it's not hard to imagine why 13% of respondents to the IRCI survey are pushing for their super fund to start investing in digital assets. That number is even higher if you ask the under 34 age group. Almost 30% are excited about the idea, and another 25% said they would likely set up and do an SMSF themselves if they had to wait longer.
This is an important lesson to learn when the Australian population is aging rapidly. Most pension funds are in the drain, striving to demonstrate their relevance to the next generation. This could be the story that defines or disrupts an era.
This lack of trust in institutions has been brewing for some time. That year, as big investors like Paul Tudor Jones told the world, they bought crypto as a hedge against central bank and government action, and the money printer spread like a virus on Twitter, nearly a third of those under 45-year old said us that they too are concerned about the process of quantitative easing (QE), which is devaluing their wealth.
As such, any headline about a crypto bubble about to burst or a talking head dismissing it as a scam is likely to do more to support adoption than it realizes. They forget the positive tendency of our nation for those who are not supposed to win but still fight. The one who was told to go home is still here. This is the little guy we're going to cheer for until the end.
See also: Michael Casey – Money reinvented: memes mean money
I anticipate that in the coming year we will face major difficulties due to the impact of QE as well as the unforeseen and unintended consequences of many COVID-19 policies. However, I suspect that this will only help to bolster Australia's conviction. For the general public, Bitcoin is still the climber, shunned by the traditional set and difficult to spot on the main stage. To be honest, that's what makes it so personable. And with 7.7% of IRCI respondents admitting they planned to buy crypto in 2020, but not because of COVID-related economic pressures, I can only assume they will hit the market once they do meet greener pastures.
To me, this is a classic example of that iconic Australian resilience that holds us together in times of fear, uncertainty and doubt. Times may be tough, but we never stop working toward our goals and our optimism about the future is unwavering. We're still ready to take a dip, we're still keen to give it a try, and we choose to see the uptrend where others are only focused on risk. As with Bitcoin, we'll stay tuned. Because we like to believe that anything is possible.