The Potential Impact of Digital Currencies on the Australian Economy

Abstract: Crypto-currencies like Bitcoins are relatively recent phenomena on the online Internet landscape and an emerging force in the financial sector. While not conforming to traditional institutional practices, they are gaining increasing acceptance as viable commercial currencies. In this conceptual paper we discuss the potential impact of digital currency technology on the Australian economy, including the (i) payments sector, (ii) retail sector, and (iii) banking sector; and explore potential ways in which Australia can take advantage of digital currency technology to establish itself as a market leader in this field. The emergence of this new and potentially disruptive technology provides both opportunities as well as risks. In order to support innovation and the needs of the growing Australian digital currency industry it is important to define digital currencies and examine the impact regulatory frameworks could have on the further adoption and diffusion of the technology.