Why the cryptocurrency Bitcoin is fading away in Australia
As signs increase that there are potential crime and environmental threats associated with the cryptocurrency Bitcoin, the currency’s mainstream appeal is fading away as several Australian banks and businesses have stopped accepting it.
Australia’s organised crime agency believes Bitcoin’s untraceable nature makes it susceptible to money laundering and selling illegal drugs.
Last month, multiple Australian banks closed the accounts of 13 of the nation’s 17 bitcoin exchanges, each of which has since shut down operations. The other four have had their accounts frozen with the ultimatum of closing, relocating overseas or dividing up their business into several smaller bank accounts to avoid being detected.
In addition, the country’s “Big Four” banks — Commonwealth Bank of Australia, Westpac, ANZ Bank, National Australia Bank — have each sent inquiries about Bitcoin to the Australian Bankers Association.
The latest news is a tough pill to swallow for bitcoin supporters who hope to see it have a prominent role in daily business transactions in developed countries. With Australia believed to have seven per cent of the company’s $3.5 billion global value, it is perceived to be one of Bitcoin’s top markets.
RELATED TOPIC: Bitcoins Part One: What is cryptocurrency?
Even though several main banks have already refused to maintain Bitcoin accounts in the U.S. and Europe, Australia will be the first coordinated termination of bitcoin exchanges by a nation’s banking system. This will make it much harder to exchange regular currency in to bitcoin, and vice versa, which negatively affects its long-term value.
While banks don’t have a legal obligation to close bitcoin accounts, as Germany’s Fidor Bank AG and tech-based U.S. lender Silicon Valley Bank both still support the currency, some analysts believe uncertainty is Bitcoin’s biggest downfall. So far, at least six Aussie retailers have said they are considering ridding itself of the currency.
Furthermore, insiders have noticed a threat of increasing environmental damage from the electricity used in the design of the Bitcoin system. Bitcoin “mining” essentially adds to the demand for coal-fired power, and since Bitcoin computers run continuously, it creates a demand that matches the supply characteristics of coal.
RELATED TOPIC: Bitcoin Part Two: Should your business accept bitcoins?
Basically, the creation of new bitcoin requires the performance of a complex calculation that has no value other than verifying that it has been done. Although this calculation is very difficult to perform, it is quite easy to confirm once finished.
The amount of electricity it would take to generate four bitcoins worth just under $1000 is about the same amount the average U.S. household uses each year. Transferring even a small amount of a normal household’s financial transactions to Bitcoin would take a large increase of electricity use.
While it’s unlikely Bitcoin will be around long enough to create the environmental disaster many envision if it becomes a major part of the financial system, its design feature that requires the use of large amounts of electricity will eventually doom Bitcoin’s attempt of becoming a mainstream form of currency.
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.