Cryptocurrency Resurrection: A Look At Crypto Stocks Listed On ASX

What is Cryptocurrency?

Cryptocurrency is a digital or virtual currency that can be bought, sold and transferred securely using cryptography. Its security feature prevents it from being counterfeited. Cryptography protects and encrypts the data, that is used for identification and tracking of cryptocurrency transactions. This currency exists exclusively in the internet. A defining feature of a cryptocurrency is that it is not issued or handled by an authorized third party like government or a bank.

Types of Cryptocurrency

The first blockchain-based cryptocurrency created in January 2009 was Bitcoin. Operated by a decentralized authority and having no physical existence, Bitcoin offers lower transaction fees than traditional online payment mechanisms. After the launch of Bitcoin, many other cryptocurrencies with various functions or specifications were created. However, Bitcoin still charts high on popularity and valuation.

Let us have a look at some of the other most important Cryptocurrencies besides Bitcoin:

• Litecoin (LTC) - Launched in 2011, Litecoin is a peer-to-peer Internet currency that has often been referred to as “silver to bitcoin’s gold.” It offers a faster transaction confirmation and has a faster block generation rate.
• Ethereum (ETH) - It is a decentralized software platform that was launched in 2015 to enable creation and working of Smart Contracts and Distributed Applications (DApps) without any interference from a third party.
• Zcash (ZEC) - Launched in 2016, Zcash provides selective transparency of transactions along with privacy. It enables the encryption of content using an advanced cryptographic technique.
• Dash (DASH) - In January 2014, Dash was created, that makes transactions almost untraceable by operating on a decentralized master code network.
• Ripple (XRP) - A real-time global settlement network, Ripple, was launched in 2012 that allows instant, certain and low-cost international payments.

Another type of Crypto that helps smart contracts interact with real-world data is Chainlink (LINK). It is a decentralized oracle middleware project, that offers reliable forgery-proof inputs and outputs for tricky smart contracts on any kind of blockchain.

Cryptocurrency Exchanges

A place where one kind of digital asset can be exchanged, with the other type of asset is termed as cryptocurrency exchanges. The cryptocurrency exchanges can be segregated into Centralized (CEX), Decentralized (DEX) and Hybrid exchange.

A brief description of these exchanges is given below:

Centralized Cryptocurrency Exchanges (CEX) - It plays the role of a middleman and works similar to the traditional stock exchanges. However, vulnerability to hacks is one of the major issues with centralized cryptocurrency exchanges. The exchanges under this segment include Coinbase, Bitterex, Kraken, Robinhood, Gemini, Binance, Huobi, KuCoin and Bitfinex.

Decentralized Cryptocurrency Exchanges (DEX) – Under this type of exchange, the middleman to hold one’s funds does not exist. The exchange facilitates peer-to-peer trades as here; the transactions are processed directly between the buyers and sellers. Some of the popular decentralized cryptocurrency exchanges are Stellar DEX, Bisq DEX, Waves DEX and IDEX.

Hybrids – Such exchanges merge the benefits from both centralized and decentralized exchanges. They seek to offer the functionality and liquidity of Centralized Cryptocurrency Exchanges, with the privacy and security of Decentralized Cryptocurrency Exchanges. Qurrex was the first ever hybrid exchange launched in 2018.

Cryptocurrency Resurrection

Majority of the top cryptocurrencies have witnessed a growth in 2019. The table below demonstrates the performance of some cryptocurrencies from January 1, 2019 to June 10, 2019:

From trading merely at $327 five years ago to surpassing the $8,000 mark currently, there has been a huge increase in Bitcoin’s price over the years. Bitcoin has passed through several troughs and crests in these years with one of the biggest setback witnessed in ‘2018 Cryptocurrency Crash’. The total value of all the world’s cryptocurrencies dropped to approximately $130 billion by December 2018 end from ~$600 billion recorded by the end of 2017.

In May 2019, the price of the bitcoin touched a new high of $8,000, which was the highest mark achieved by the cryptocurrency since December 2018. Few days after touching $8,000 level, the bitcoin’s price traded near $9,000 mark due to a rise in acceptance of the digital currency as a mean for the financial transaction.

At 9:04 am UTC on 13^th June 2019, the Bitcoin is trading at USD 8,118.35.

Cryptocurrency Stocks

Some of the companies listed on the Australian Stock Exchange have significant exposure to the crypto sector. Let us have a look at these ASX-listed companies in detail:

Fatfish Blockchain Limited

A global tech venture investment and development firm, Fatfish Blockchain Limited (ASX: FFG) has been investing strategically across diverse sectors of fintech, blockchain and consumer internet technologies. The company is engaged in building and growing tech businesses via a co-entrepreneurship model. It works from its international venture hubs situated in Kuala Lumpur, Stockholm and Singapore.

Operational Performance

On 14^th May 2019, the company provided an update on its 51 owned blockchain mining investee company, Minerium Technology Ltd. The company declared that there has been a positive impact on the operating environment for Minerium with the recent increase in the global market prices of cryptocurrencies.

The proposed IPO of Minerium at the London Stock Exchange was postponed on 12^th March 2019 in view of the uncertain market sentiment in cryptocurrency, as informed by FFG.

The Swedish subsidiary of FFG, Fatfish Global Ventures AB completed the acquisition of Snaefell AB on 27^th February 2019. This led to the dilution of the FFG’s shareholding in FGV to approximately 81 percent. The company also received a 1 million US dollars investment from a strategic investor, Explosive Growth Limited on 24^th January 2019 for the 33 percent of the enlarged capital of Epsilon Capital.

Financial Performance

The company announced its annual report for the year ending 31^st December 2018 in April this year. According to the report, the company’s gross profit improved in 2018 to $1,347,156 from $766,033 in 2017. However, it reported a net loss of $21,940,839 during the period.

Stock Performance

The stock of the company closed flat at AUD 0.013 today (on 13 June 2019). Around 280,000 number of company’s shares were in trade today. The stock performance has not been up to the mark in past months. It has delivered a negative return on a YTD basis of 18.75 percent.

Change Financial Limited

A US-focused fintech company, Change Financial Limited (ASX: CCA) is engaged in the development of innovative and scalable payments technology, to offer solutions for various financial institutions and businesses.

Operating Performance

In its recently released quarterly report, for the quarter ending 31^st March 2019, the company mentioned that it has focussed on implementing its corporate restructure during the period. The following are the quarterly report highlights of the company:

• Monetisation of investment in the Ivy Project for cash proceeds of 1.5 million US dollars.
• Restructuring of agreements signed with its US banking partner, Central Bank of Kansas City.
• Successful Capital Raising by the company of $792,000.

Financial Performance

On 28^th Feb 2019, the company released its half-year Financial Report for the period ended 31 December 2018. The company reported a total comprehensive loss for the period of US$4.3 million during the period. The loss was comparatively less than the one reported in the prior corresponding period of US$5.3 million. However, the company’s revenue improved from US$428,891 in pcp to 507,513 in the half- year ending 31^st December 2018.

Stock Performance

The company’s stock ended up lower on the Australian Stock Exchange today (on 13 June 2019) at AUD 0.043, down by 2.273 percent relative to the last close. The market cap of the stock was recorded at AUD 4.35m at the time of writing the report. The stock has performed unsatisfactorily in the previous months, generating a negative return of 21.14 per cent on a YTD basis.

DigitalX Limited

A blockchain and crypto-asset finance company, DigitalX Limited (ASX: DCC) deals in offering blockchain technology development, asset management and global token sale advisory services. The company operates from San Francisco, Malta, Sydney, Perth and New York.

Operational Performance

Recently, the Company’s Share Purchase Plan had closed oversubscribed with a total of A$2,460,000 raised in SPP and Top Up Placement. The funds raised were to be used for the general working capital, evaluation of potential investment and acceleration opportunities, as informed by the company.

In the March quarter 2019, the company delivered smart contracting services to a Singapore-based firm, Bullion Asset Management (BAM) for the launch of XGold stablecoin. The company secured an additional funding post quarter end to promote the evaluation of potential investment, and for its development as a management leader in stablecoin market.

Financial Performance

The company released its interim financial report for the period ended 31 December 2018 on 28^th February 2019. The company’s financial results were not so appealing, as it reported a drop of 78 percent in its revenue from ordinary activities at US$764,955 in comparison to the financial period ending 31^st Dec 2017. Along with this, the company reported a ‘loss from ordinary activities after tax attributable to members’ of around US$3.9 million during the period.

Stock Performance

The company’s stock ended flat at AUD 0.057 today (on 13 June 2019), with 955,365 number of shares in trade. The stock of the company fluctuated between a high and low value of AUD 0.058 and AUD 0.055, respectively during the intraday session. The stock’s 52-week high value was recorded at AUD 0.185 at the time of writing the report. The stock’s performance has been quite well in the past as it has generated a YTD return of 9.62 percent.

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