It wasn’t long ago that Bitcoin was something only tech-heads and risk-takers dabbled in. But fast forward to today, and crypto has found its way into everyday conversations.
According to Crypto News Australia, 20% of Aussies are using it to invest, transact, and even save for retirement. Many are even doing it in favour of traditional assets like real estate or shares.
But with the Reserve Bank of Australia (RBA) moving closer to launching its own digital dollar (eAUD), many are starting to wonder: Does this mean the end of Bitcoin in Australia?
Let’s break it down.
What Is the RBA’s Digital Dollar?
The RBA’s digital dollar (also known as the eAUD) is part of a growing global trend among central banks to create digital versions of fiat currencies.
It is important to recognise that it is not a new coin or token on the blockchain in the traditional sense. Instead, it’s a government-backed digital form of money, issued by the central bank, that is designed to integrate seamlessly with Australia’s existing financial system.
In 2023, the RBA ran a CBDC pilot in collaboration with banks, fintechs, and payment service providers. Their aim was to test how the eAUD might improve settlement speeds, reduce transaction costs, and generally support innovation within the finance industry.
Crucially, it’s not meant to replace cash overnight. Rather, it’s designed to enhance how we transact, particularly in areas like programmable money, tokenised assets, and cross-border payments.
Bitcoin’s Role in Australia’s Economy
While the eAUD is still being tested, Bitcoin is already here, and thanks to platforms like Bitcoin.com.au, it is thriving in Australia.
Indeed, for many investors, Bitcoin is “digital gold” due to its fixed supply, while others use it to diversify their super, hedge against inflation, or send money abroad without banks taking a cut.
Australia, in fact, has one of the highest rates of cryptocurrency adoption in the world. So much so that the government has even explored tax, licensing, and regulation frameworks to help legitimise the space.
Unlike the eAUD, Bitcoin isn’t tied to any government. It exists on a decentralised network and operates according to rules coded into its software, as opposed to policies made by a central bank.
Key Differences Between a CBDC and Bitcoin
While both the eAUD and Bitcoin are digital currencies, they’re built with widely different purposes in mind. They include the following:
1. Control
The most obvious difference between the two is that eAUD is issued, tracked, and controlled by the RBA, while Bitcoin exists on a decentralised network.
As a result, the latter operates according to rules coded into its software. These are independent of governments and, therefore, are not affected by policy shifts and censorship.
2. Supply
The RBA will be able to create more eAUD as required to support monetary policy. However, as Bitcoin has a hard cap of 21 million coins, it is scarce and potentially deflationary.
Such a limited supply is one reason why some Australians have turned to Bitcoin to preserve their wealth over the long term.
3. Privacy
A CBDC is likely to be fully traceable. While this might help fight financial crime, it also raises legitimate concerns about government surveillance.
Bitcoin transactions are public on the blockchain, but are typically under pseudonyms. This gives users some degree of privacy, albeit not total anonymity.
4. Technology
Finally, there’s the technology itself. Bitcoin runs on a permissionless, open blockchain that anyone can use. However, the eAUD will likely operate on a permissioned ledger, which will only be accessible to approved institutions like banks or payment providers.
What Problem Is the RBA Trying to Solve?
Many people believe the RBA is launching a digital dollar to compete with Bitcoin, but this isn’t really true. Instead, their primary goal is to modernise Australia’s financial system and address what is perceived to be emerging gaps in the payments ecosystem.
Some of their key motivations can be summarised as follows:
- Reducing reliance on physical cash as usage continues to drop
- Improving transaction speeds, especially for high-value payments and settlements
- Enabling programmable money for conditional transfers or government benefits
- Supporting innovations in areas like tokenised assets and smart contracts
- Enhancing compliance with anti-money laundering and taxation laws
While these objectives are particularly practical, it must be said that they don’t overlap much with why people are drawn to Bitcoin in the first place.
Will the Digital Dollar Compete With or Complement Bitcoin?
This is where the debate gets lively.
Some people believe the eAUD will make Bitcoin redundant, especially if digital dollars are easier to use, government-backed, and widely accepted. But this argument assumes Australians use Bitcoin the same way they use cash or bank transfers, which isn’t entirely true.
Bitcoin, in fact, serves a different purpose. For many Australians, it’s a long-term investment, a tool for financial independence, or a way to avoid the pitfalls of inflation and government monetary control. For all its benefits of convenience, the eAUD doesn’t offer the autonomy that Bitcoin does.
That said, there is no reason why the two couldn’t easily coexist. For example, the eAUD could be used for day-to-day payments, while Bitcoin can continue to be seen as a store of value and hedge against economic uncertainty.
How Australians Might Respond
We Aussies are generally fast adopters of tech. Indeed, we were among the first nations in the world to embrace contactless payments and are on track to become a cashless country. But, at the same time, we’re also wary of big institutions having too much oversight.
For this reason, if the eAUD comes with spending limits, usage restrictions, or extensive tracking, it could push privacy-conscious Australians even further toward Bitcoin.
On the other hand, if it offers seamless, fee-free payments with strong security and ease of use, it could gain traction. This could especially be the case among older generations who aren’t as comfortable with crypto exchanges and wallets.
Having said that, millennials and Gen Z are already down with Bitcoin and blockchain. So, their trust lies more in decentralised systems than in government-backed ones. As a result, this generational shift in mindset means Bitcoin is unlikely to vanish anytime soon.