How to invest in blockchain stocks from Australia

Blockchain technology is gaining traction as cryptocurrencies reach new highs. A way to get in on the action is by investing in blockchain stocks. We break down the benefits and risks of investing in them — and how to buy in from Australia.

What are blockchain stocks?

Blockchain stocks are shares in companies like IBM (IBM) and Square (SQ) that use blockchain technology in their applications. Pure play blockchain stocks are limited on major exchanges, but you can find stocks from businesses involved in blockchain technology — crypto mining hardware startups, Bitcoin exchanges, supply chains and more.

Blockchain technology uses a decentralised public ledger that records transactions and payments. It’s a peer-to-peer application — meaning no third parties — that paves the way for faster financial, medical and other transactions, each combined into timestamped blocks connected to one another in a never-ending chain.

With each passing year, it’s become more common for businesses to get involved in this rising technology. Even Google Cloud inked a deal in 2020 with venture-backed blockchain company Theta Labs that allows Google Cloud to run nodes of Theta’s blockchain network.

Why invest in blockchain stocks?

Blockchain is an emerging technology that can help companies conduct business more efficiently. Here are some ways blockchain can help companies grow their business and add value, which in turn could mean bigger profits for shareholders.

• Security and privacy. The blockchain replaces sensitive data required to buy stocks, currencies, bonds and commodities with a secure token. That potential for stronger security and privacy makes it a highly sought-after technology for investors.
• More efficient transactions. Blockchain helps companies settle transactions more quickly and efficiently than methods that rely on paperwork and processing of sensitive information. Records are encrypted and kept securely within a single digital ledger, saving time and money — and increasing value to investors.
• Data security and privacy. Data on a blockchain ledger is signed, encrypted and cross-checked by the network. To hack into the ledger, you’d need access to each device holding a copy of the transaction history. By limiting the potential for data breaches, blockchain technology bolsters consumer — and investor — trust in a company over competitors.

Risks of investing in blockchain stocks

A look at the headlines can give any Australian investor room to pause and expose them to spikes and dips that can vary by the hour, among other potential drawbacks.

• Regulatory uncertainty. Governments around the globe are considering how to regulate cryptocurrencies in an effort to thwart their use in illegal transactions. Bitcoin and altcoins underlie blockchain technology, making its future unclear.
• Volatile market. Based entirely on supply and demand, cryptocurrency is subject to rapid and unpredictable changes that make its value harder to predict than, say, currencies or stocks.

Blockchain stocks

Australian-listed blockchain stocks include:

• Security Matters (SMX.AU)

  Company summary

  Security Matters Limited engages in the development and commercialization of track and trace technologies for various industries in Australia. It owns and commercializes technology to mark various objects, such as solid, liquid, or gas allowing identification, circularity, proof of authenticity, tracking supply chain movements, and quality assurance. The company's technology comprises a chemical-based hidden barcode system, as well as a reader to identify these codes; and a blockchain record to store and protect ownership data. It serves brand owners and manufacturers. The company was incorporated in 2018 and is based in Melbourne, Australia.

  Historical performance

  Stock information

  • Market capitalization: $43642300
  • Dividend yield: 0%

• Identitii (ID8.AU)

  Company summary

  Identitii Limited, a regulatory technology company, engages in the development and licensing of software products to regulated entities in Asia, Australia, and the United States. The company offers Identitii, an AUSTRAC and NZ PTR reporting platform that provide automation and submission solution for IFTI, TTR, and SMR reporting data, as well as provides payment investigation solutions. It is also involved in the provision of professional and maintenance services. The company was incorporated in 2014 and is based in Sydney, Australia.

  Historical performance

• Kyckr (KYK.AU)

  Company summary

  Kyckr Limited provides data and technology solutions in Australia and Ireland. The company provides structured profiles, and original registry documents and filings; Company Watch that automates the detection of material changes to company data without manual intervention; Registry Portal, which offers authoritative company information and registry filings; and UBO Verify for identifying beneficial owners and the ownership structure. It also provides solutions for onboarding workflow; entity verification solutions; and Data Cleanse solution, which automates the cleansing of outdated customer records. Kyckr Limited was incorporated in 2015 and is based in Sydney, Australia.

  Historical performance

  Stock information

  • Market capitalization: $42953964
  • Dividend yield: 0%

• Crowd Mobile (CM8.AU)

  Company summary

  Crowd Media Holdings Limited, together with its subsidiaries, sells information, entertainment, and content and utility services for mobile phones and tablets in Australasia, Europe, Latin America, and internationally. The company operates two segments, Mobile Content-Subscription and Crowd Direct. The Mobile Content-Subscription segment offers subscription based broad content products, such as mobile security, games, and video portals through an m-payments network. The Crowd Direct segment works with brands and digital influencers to sell products and services. The company was formerly known as Crowd Mobile Limited and changed its name to Crowd Media Holdings Limited in December 2018. Crowd Media Holdings Limited is headquartered in Amsterdam, the Netherlands.

  Historical performance

  Stock information

  • Market capitalization: $22308360
  • Dividend yield: 0%

• Digitalx (DCC.AU)

  Company summary

  DigitalX Limited provides blockchain product development and digital asset funds management services in Australia. The company operates through Product Development and Asset Management segments. The Product Development segment provides consulting, technical due diligence, and design and development solutions to businesses. This segment also develops blockchain, RegTech, and FinTech products. The Asset Management segment operates digital assets portfolio under the DigitalX Fund and DigitalX BTC Fund for high net worth and institutional investors. Its products include Drawbridge, a regtech solution that supports listed companies to manage their compliance and corporate governance policies; and Sell My Shares, an online share sales solution. The company was formerly known as Digital CC Limited and changed its name to DigitalX Limited in December 2015. DigitalX Limited was incorporated in 1988 and is based in West Perth, Australia.

  Historical performance

• Fatfish Internet Group (FFG.AU)

  Company summary

  Fatfish Group Limited is an incubator and venture capital firm specializing in incubation, start-ups and growth stage investments. It invests in the Internet sector with a focus on cryptocurrency, blockchain technologies, technology, internet, and consumer Internet venture. It prefers to take majority controlling stake. Fatfish Group Limited was founded in 2011 and is based in Melbourne, Australia with additional offices in Singapore; Jakarta, Indonesia; and Kuala Lumpur, Malaysia.

  Historical performance

• Change Financial (CCA.AU)

  Company summary

  Change Financial Limited, a fintech company, offers payment as a service solutions in South East Asia, Oceania, Latin America, the United States, and internationally. It provides Vertexon PaaS, a physical and virtual card issuing and transaction processing platform; and PaySim, payment testing solution. The company was formerly known as ChimpChange Limited and changed its name to Change Financial Limited in July 2017. Change Financial Limited was incorporated in 2011 and is based in Brisbane, Australia.

  Historical performance

Some major global blockchain stocks include:

• Nvidia (NVDA). The company’s GPUs are vital hardware components when it comes to mining cryptocurrency. Mining hardware is not Nvidia’s main business, but it could become more important if cryptocurrency prices increase.
• CME Group (CME). A main platform for buying Bitcoin futures, CME is fully regulated and gives investors a legal avenue for future Bitcoin price speculation.
• Square (SQ). This merchant services company is a blockchain through its Cash App, helping users to more easily buy and sell Bitcoin. Square also has a team of bitcoin developers known as Square Crypto. More than $US 500 million in Bitcoin was sold on its platform in 2019.
• IBM (IBM). IBM Blockchain offers solutions for clients like Kroger (KR) in the form of ticket-authentication company True Tickets. This stock could become more relevant if blockchain solutions continue gaining in popularity.
• Canaan (CAN). This Chinese business makes hardware that is used in cryptocurrency servers and mining.
• Bank of America (BAC). BofA has created a large number of blockchain patents — more than even Google or Microsoft.
• Alibaba Group (BABA). Alibaba has amassed more than 100 blockchain patents and uses blockchain in such subsidiaries as Lynx International.

Which ETFs track blockchain stocks?

To date, there are no blockchain ETFs listed in Australia.

Blockchain stock trading platforms

Online brokerages in Australia that let you trade blockchain stocks include:

1 - 6 of 6

Updated regularly

Name	Product	Price per trade	Inactivity fee	Asset class	International
eToro Finder AwardExclusive		$0	US$10 per month if there’s been no log-in for 12 months	ASX shares, Global shares, US shares, ETFs	Yes	Finder exclusive: Get 12 months of investment tracking app Delta PRO for free when you fund your eToro account (T&Cs apply). CFD service. Capital at risk. Join the world's biggest social trading network when you trade stocks, commodities and currencies from the one account.	Go to siteMore Info Compare	loading Fetching your data...
CMC Invest Finder Award		$0	$0	ASX shares, Global shares, Options trading, US shares, ETFs	Yes	$0 brokerage on US, UK, Canadian and Japanese markets (FX spreads apply). Trade over 45,000 shares and ETFs from Australia and 15 major global markets. Plus, buy Aussie shares or ETFs for $0 brokerage up to $1,000 (First buy order of each security, each day - excludes margin loan settled trades).	Go to siteMore Info Compare	loading Fetching your data...
Moomoo Share Trading Exclusive		US$0.99	$0	ASX shares, Global shares, US shares, ETFs	Yes	Finder exclusive: Get $100 to trade when you deposit $1,000, or $200 when you deposit $5,000 or more. Earn 6.8% p.a. on uninvested cash. T&Cs apply. Trade shares on the ASX, the US markets and buy ETFs with Moomoo. Plus join a community over 20 million investors.	Go to siteMore Info Compare	loading Fetching your data...
Tiger Brokers Exclusive		US$2	$0	ASX shares, Global shares, US shares, ETFs	Yes	Finder exclusive: 10 no-brokerage US or ASX market trades in the first 180 days + 7% p.a. on uninvested cash with first deposit of any amount, plus US$30 TSLA + US$30 NVDA shares with deposits up to AU$2000. T&Cs apply. Trade Australian, US and Asian stocks with no minimum deposit on Tiger Broker’s feature-packed platform.	Go to siteMore Info Compare	loading Fetching your data...
Webull		US$0.25	$0	ASX shares, Global shares, Options trading, US shares, ETFs	Yes	Get advanced research and trading tools with $0 brokerage and free lvl 2 NASDAQ stock data for 30 days. T&Cs apply. Trade ASX and US stocks and US options, plus gain access to inbuilt news platforms and educational resources. You can also start trading for less with fractional shares.	Go to siteMore Info Compare	loading Fetching your data...
Saxo Invested		US$1	$0	ASX shares, Global shares, Options trading, US shares, ETFs	Yes	Access 22,000+ stocks on 50+ exchanges worldwide Low fees for Australian and global share trading, no inactivity fees, low currency conversion fee and optimised for mobile.	Go to siteMore Info Compare	loading Fetching your data...

loading

Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

The future of the blockchain industry

Worth $US 3 billion in 2021, the global blockchain technologies market is expected to reach $US 39 billion by 2025. Projections are supported by the fact that blockchain technology is beginning to mature, and companies are more confident they can use it to add value to their business.

A 2020 blockchain trends study from Deloitte found that 40% of businesses plan to invest more than $US 5 million in blockchain in 2021. Adopting this technology would mostly settle in data validation (43%), data access sharing (40%) and identity protection (39%). Today, more than 60% of blockchain’s market value is concentrated in the financial sector.

This doesn't mean you should invest in blockchain stocks without due diligence. In fact, some companies have put “blockchain” in their names and saw share prices spike, without any clear evidence of whether it could add value to their business.

And keep in mind that the blockchain industry is young. A 2020 outlook study by Gartner notes that while it has the potential to transform industries and the overall economy, blockchain is expected to mature as it becomes more scalable and better integrates with, for example, AI and the Internet of Things.

Bottom line

Blockchain stocks can yield great results for those looking to invest in disruptive, future-thinking technology. But don’t overlook the risks inherent in these highly unregulated and volatile investments.

Frequently asked questions

• What is a cryptocurrency?

  A cryptocurrency is a virtual currency that uses cryptography to secure financial and other transactions through a digital ledger called the blockchain. Among the most traded cryptocurrencies are Bitcoin and Ethereum.

• How do I choose which blockchain stock to invest in?

  Before investing in a blockchain stock, make sure you examine the financial statements of the company. You can find useful information on the company's balance sheet and income statement, which you can usually find on the investor relations section of the company's website. Online, you can also track the performance of a blockchain stock over time. Together, these can give you a good indication of the company's financial health and where it can go in the future.

• What can we expect from blockchain moving forward?

  Blockchain is an emerging technology. But as described above, companies have seen its effectiveness in fields like logistics, financial services, and data security. As blockchain matures, it can be adopted by more companies that can use it to add value. This can translate to bigger returns for blockchain stockholders.