Life in the fast lane for cryptocurrency crowd as Bitcoin races back

Like a phoenix from the digital ashes, Bitcoin has risen again. But this time, Australian crypto­currency investors say it’s for real.

Bullish Bitcoin investor Kane Ellis with the $200,000 Maserati — complete with ironic number plates — that he bought with his profits. Picture: Roy VanDerVegt

Like a phoenix from the digital ashes, Bitcoin has risen again. But this time, Australian crypto­currency investors say it’s for real.

Three years after the price of Bitcoin fell off a cliff — plummeting by 45 per cent in just five days in early December 2017 — the cryptocurrency has rebounded back to record levels.

After sinking to just $US5000 in March, Bitcoin has smashed through the $US20,000 price mark as many of the world’s ­biggest institutional investors add the currency to their holdings.

Despite entrenched scepticism among sectors of the global financial community, Australian crypto investors are convinced the product is the perfect investment vehicle for the digital era. They reject claims it is useful only for speculators and criminal enterprises.

After clocking on to Bitcoin in 2010, when the price was just $US1.70, Kane Ellis began “mining” Bitcoin — creating the currency by solving a computational problem. At one point he held 169 coins, or about $US500,000 ($658,000) in today’s value.

But it’s the early days, when Mr Ellis thought $US16 was the limit to heights Bitcoin would reach, that make him laugh.

“I ended up spending something like 3.9 Bitcoin on a McDonald’s meal,” Mr Ellis tells The Australian with a chuckle.

Though some might wince at having spent what is now more than $100,000 on a burger and fries, Mr Ellis notes that some people have lost computers containing hundreds of Bitcoin.

“It could have been a lot worse,” he says.

Dabbling in alternative cryptocurrencies, Mr Ellis reaped the benefits as the price soared in 2017, treating himself to a $200,000 Maserati after cashing in part of his investment.

Invented in 2009, Bitcoin is a virtual currency that offers investors a way to bypass traditional financial institutions. While initially being promulgated as a libertarian financial utopia, free of the shackles of central banks or governments, it has faced persistent doubts since its inception.

One Australian investor who believes those doubts are overblown is Craig Cobb. After hearing about the digital currency in 2013, the former currency, stock and commodities trader began to seriously consider the viability of the product when he took a call from his former mentor in May 2017.

“If you look at the pure supply and demand, Bitcoin makes perfect sense,” Cobb, the managing director of cryptocurrency education platform Trader Cobb, says.

With only 21 million Bitcoins in existence and able to be “mined”, Cobb says the finite supply means the price is bound to increase with sufficient demand — and it isn’t ­affected by inflation or deflation.

Despite the price volatility, the relative lack of regulation and the emergence of thousands of “altcoins”, Cobb says Bitcoin has an “enormous amount of growth potential”, particularly with investors such as PayPal and Square beginning to enter the crypto space.

As for the future, Mr Ellis is firmly in “hold” territory. “I cannot see it ever going to zero,” he says. “A person can’t shut this down and a nuclear war can’t take this down. It will be here as long as we’re on this planet … or until the internet goes down.”