Digital currency is a digital unit of value that has all of the following characteristics:
✅ Fully interchangeable with another unit of the same Digital Currency for the purpose of its use as payment;
✅ Can be provided as payment for any types of purchases;
✅ Generally available to the public free of any substantial restrictions
✅ Not denominated in any country's currency;
✅ The value is not derived from or dependent on anything else
✅ Does not give an entitlement or privileges to receive something else.
Some examples of Digital Currencies include:
Bitcoin, Ethereum, Litecoin, Dash, Monero, ZCash, Ripple, YbCoin.
Things that are not Digital Currency for GST purposes include:
❌ Loyalty points provided by retailers that can only be redeemed for products and services specified by that loyalty scheme;
❌ 'Currency' used in online multiplayer games, that cannot be used outside the game under which the 'currency' is made available;
❌ 'Digital Currency' with value based on something else or that gives an entitlement or privileges to something else.
For example: A token that is aligned with an Australian or foreign currency, or gives you an entitlement to use software application services.
Source: ATO Website - GST and digital currency