Cryptocurrency is a digital asset that uses cryptography and blockchain technology to record transactions and control supply. Unlike traditional money issued by governments, most cryptocurrencies are decentralised, meaning they operate on distributed computer networks rather than through central banks. A blockchain is essentially a public ledger stored across thousands of computers. Transactions are verified by network participants and grouped into “blocks,” which are then permanently added to the chain.
Bitcoin was launched in 2009 by a pseudonymous creator, Satoshi Nakamoto, following the Global Financial Crisis. Its core idea was peer-to-peer money without banks. For several years, it was niche and mostly used by technologists. In 2015, Ethereum introduced programmable “smart contracts,” allowing developers to build decentralised applications.
That dramatically expanded crypto’s scope beyond simple payments. The 2017 boom saw a wave of “initial coin offerings” (ICOs), followed by a crash in 2018. Another surge occurred in 2020–2021, fuelled by low interest rates, retail participation and institutional entry. This cycle included the rise of decentralised finance (DeFi), NFTs and large exchange platforms.
The 2022 downturn (triggered by collapses such as major exchanges and lending platforms) reinforced that crypto is volatile and still maturing. Since then, the market has become more institutional, with regulated products such as spot Bitcoin ETFs in major markets helping bring traditional investors into the space.
No. Bitcoin was first, but today there are thousands of cryptocurrencies. Bitcoin is unique and often described as “digital gold” because of its capped supply and store-of-value narrative. The next most popular, Ethereum, is more like a decentralised computing platform.
The next most popular, Ethereum, is more like a decentralised computing platform. Beyond those two, there are: Stablecoins (pegged to currencies like the US dollar), Layer-1 networks competing with Ethereum; Utility tokens used within specific ecosystems, and Meme coins with little underlying utility but strong social momentum. Bitcoin remains the largest by market capitalisation and often drives overall market direction, but it is far from the only crypto.
There are several pathways available. You can buy crypto directly through Australian-registered exchanges (for example, platforms like Swyftx, CoinSpot or international exchanges with Australian access). You create an account, complete identity checks and purchase crypto much like shares. You can invest via ETFs listed on the ASX that track Bitcoin or Ethereum prices. These allow exposure without managing wallets or private keys. You can invest in crypto-adjacent companies (for example, miners, exchanges or tech firms with crypto exposure). Direct ownership requires deciding whether to store assets on an exchange or transfer them to a private wallet (hardware wallets provide greater security but more responsibility).
Cold storage refers to storing cryptocurrency offline rather than keeping it on an exchange. When your crypto sits on an exchange, the exchange controls the private keys. With cold storage, you control the private keys yourself. This is usually done using a hardware wallet, which is a small device that stores your private keys offline and signs transactions securely. It can also involve storing your recovery seed phrase — the series of words that can restore access to your wallet — written down and kept securely. More advanced users sometimes use air-gapped devices that never connect to the internet.
Cold storage reduces exposure to exchange failures and online hacks because your private keys are not stored on internet-connected servers. However, it increases personal responsibility. If you lose your seed phrase, forget your access details, or fail to leave clear instructions for your executor, your crypto may be permanently inaccessible.
In Australia, the Australian Taxation Office (ATO) treats cryptocurrency as property rather than as foreign currency. That means most crypto transactions fall under capital gains tax (CGT) rules. You generally trigger a taxable event when you dispose of crypto. Disposal includes selling crypto for Australian dollars, swapping one cryptocurrency for another, using crypto to purchase goods or services, or gifting it. A common misunderstanding is that tax only applies when converting back into Australian dollars. In fact, trading Bitcoin for Ethereum, for example, is a taxable event because you have disposed of one asset and acquired another.
Your capital gain is calculated as the difference between what you received in Australian dollar terms at the time of disposal and your cost base, which is what you originally paid in Australian dollars including transaction fees. If you hold the asset for more than twelve months before selling, you may qualify for the 50 percent CGT discount as an individual taxpayer. That means only half the gain is added to your taxable income and taxed at your marginal rate. If you sell within twelve months, the full gain is assessable.
Some crypto activities are taxed as ordinary income rather than capital gains. Mining rewards, staking income, airdrops in many circumstances, or payment received in crypto for services are generally taxed at their Australian dollar value at the time they are received. Later selling those tokens can then create a separate capital gain or loss. Record keeping is critical. The ATO expects investors to keep records of transaction dates, the Australian dollar value at the time of each transaction, what the transaction was for, and relevant wallet or exchange details. Australian exchanges share data with the ATO, and the regulator runs data-matching programs, so compliance matters.
The crypto market (generally) has always been volatile. But in the 2010s it was centred mostly around memecoin hype, these days it is increasingly institutional. Large asset managers have launched ETFs. Traditional banks and payment networks are experimenting with tokenisation and blockchain settlement. Regulatory frameworks are tightening globally. Bitcoin tends to dominate headlines and market direction, but Ethereum and other ecosystems continue to develop scaling solutions and enterprise use cases. We could do a whole article on the bitcoin market but that is for another occasion. What is unique to all cryptocurrencies is volatility.
Prices can swing double digits in days. Liquidity has improved compared with early years, but crypto still behaves more like a high-risk growth asset than a stable store of value. Crypto prices are driven by a mix of: Macroeconomic factors, supply dynamics, regulation and even the market narrative. Many factors influencing other asset classes impact crypto too such as Interest rates, inflation expectations and liquidity conditions. When global liquidity expands, crypto often rallies. When rates rise, it often falls. Bitcoin’s “halving” events reduce new supply roughly every four years, historically influencing cycles. This was less so during the most recent halving event, but perhaps next time we’ll see a major impact.
But whatever else goes on, Crypto markets are highly sentiment-driven, and leverage can amplify moves both up and down. Unlike equities, crypto valuations are not typically anchored to earnings or cash flows, making them more narrative-driven.
CAN YOU GET RICH QUICK OFF CRYPTOCURRENCIES? Most likely…no. Look, is it entirely impossible? No. Have some people done it? Yes. Have some people done extraordinary returns in crypto? Yes. Early Bitcoin buyers saw life-changing gains. Traders who entered and exited at the right moments during bull markets did extremely well.
But survivorship bias is powerful. For every dramatic success story, many others bought at peaks or held failing tokens that went to zero. Crypto is volatile enough to create rapid gains — and equally rapid losses. It is not a reliable or predictable way to build wealth quickly. Treating it as such is closer to speculation than long-term investing.
The long-term outlook depends on whether blockchain technology continues integrating into mainstream finance and commerce. Bullish arguments include increasing institutional participation, tokenisation of real-world assets, growing global distrust of fiat systems in some regions, and technological maturation. Bearish arguments include regulatory tightening, competition from central bank digital currencies, technological risks and the possibility that crypto remains largely speculative rather than transformative. Crypto is likely to remain cyclical. Extreme boom-and-bust phases may moderate over time as the market matures, but volatility is unlikely to disappear.
For most Australian investors, crypto is generally viewed as a speculative allocation within a diversified portfolio, not a replacement for equities or bonds. Equities represent ownership in businesses generating earnings. Bonds provide income and defensive characteristics. Crypto does not generate earnings or yield (unless through staking or lending, which adds risk). If you’re considering crypto, many financial planners suggest treating it as a small percentage allocation you can afford to lose without jeopardising long-term goals. Whether it makes sense should depend on your risk tolerance, time horizon, existing asset mix, understanding of volatility and financial goals. Crypto can offer diversification because it sometimes behaves differently from traditional markets — but it can also move in tandem with high-risk tech stocks during stress.
Cryptocurrency is a high-volatility, emerging asset class with significant upside potential and meaningful downside risk. It is not just Bitcoin, and it is not guaranteed wealth. For Australian investors, cryptocurrencies may serve as a speculative satellite holding rather than a core portfolio replacement. Cryptocurrency is a digital asset that uses cryptography and blockchain technology to record transactions and control supply. It serves multiple roles—from digital money to programmable smart contracts and decentralized applications—and remains a highly volatile asset class. Investors should recognise that crypto is not guaranteed wealth and is subject to rapid price swings driven by sentiment and regulation.
In Australia, investors can access crypto through registered exchanges, ASX-listed ETFs that track Bitcoin or Ethereum, and crypto-focused companies. Direct ownership requires managing wallets and private keys, while storing through exchanges reduces personal responsibility but increases counterparty risk. For security, many use cold storage with hardware wallets and recovery seeds to protect access. Tax rules treat cryptocurrency as property in Australia, with capital gains tax applying on disposal and a 50 percent CGT discount for assets held over twelve months. Keep detailed records of transaction dates, values, and wallet or exchange details, as regulators and data sharing with the ATO are common. While diversification is possible, crypto typically remains a speculative allocation within a broader, risk-managed portfolio.
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