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‘We’re getting between 100 and 200 new users every day’: Aussie money boosts Bitcoin’s $7000 surge

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Australian money is pouring into Bitcoin, which hit another record high on Friday, swelling the market capitalisation to $US160 billion.

The cryptocurrency was fetching $7044 ($US5452) on Friday afternoon, up 75 per cent in under 30 days.

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The extreme price recovery has emerged in the face of powerful headwinds; China recently banned Initial Coin Offerings [ICO] – a type of internet crowdfunding, Russia pledged to ban Bitcoin exchanges and there is another impending Bitcoin fork.

But a key theme underpinning the extreme price action is the widespread adoption by mainstream investors, curious at the blockchain innovation and seduced by the recent price surge.

Local exchanges are finding new customers are signing up each day, keen to turn their Australian dollars into cryptocurrency.

“We are getting between 100 and 200 new users every day,” says Adrian Przelozny, chief executive of Independent Reserve, a Bitcoin exchange based in Sydney.

“The amount of regulatory work in Australia has people feeling much more confident in Bitcoin so we’re seeing all different kinds of people investing. This is a global trend too.”

He said the typical account was opened with between $20,000 and $50,000 and the company was handling up to $4 million a day.

Local exchanges are finding new customers are signing up each day, keen to turn their Australian dollars into cryptocurrency. Local exchanges are finding new customers are signing up each day, keen to turn their Australian dollars into cryptocurrency. Photo: Bloomberg

Austrac recently amended the Anti-Money Laundering and Counter Terror Financing Act and outlined fines for operating unregistered Bitcoin exchanges.

And the Australian Securities and Investments Commission has provided guidance around ICOs, defining when cryptocurrency tokens might be considered a managed investment scheme, a derivative or even classified as shares.

“These kinds of regulations give new investors confidence,” says Mr Przelozny. “It’s slowly legitimising Bitcoin which gives the price support.”

Australian authorities aren’t the only ones cautiously folding Bitcoin into existing financial architecture – Japan recently issued 11 licences to Bitcoin exchanges, allowing authorities to verify accounts and enforce security mechanisms.

Bitcoin trading volumes in Japan and South Korea have surged in recent weeks, following the closure of Chinese exchanges last month and the banning of ICO activity.

Bitcoin slumped below $US3,000 at the Chinese news, prompting speculation the “bubble had burst”, but the smooth pick-up of transaction activity in Tokyo and Seoul saw the price run up to this week’s record high.

Trading in Japanese yen is now the largest Bitcoin currency pair by volume, representing 58 per cent of the market, according to Crypto Compare, a data provider.

The US dollar trade claims 27 per cent of the market by volume, followed by the Korean Won, which represents 7 per cent.

Elsewhere in cryptocurrency, the impending creation of Bitcoin Gold by the core developers of Bitcoin has investors watching carefully.

The developers are aiming to rebalance the playing field for Bitcoin mining and reduce the speed advantage enjoyed by enormous Bitcoin miners. They are changing the proof-of-work function from one that allows specialised miners to operate 1 million times more efficiently, to only 100 times, making it easier for more computers to participate.

Bitcoin Gold is the name for the duplicate blockchain that will exist once the changes are added on October 25.

Bitcoin withstood another fork in its technology back in July, when Bitcoin cash was created to spread the transaction power, enabling faster transactions.

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