Bitcoin's "blockchain" technology would enable transactions without a third party in close to real time. Picture / Bloomberg
Bitcoin's "blockchain" technology would enable transactions without a third party in close to real time. Picture / Bloomberg
Digital currency has potential to revolutionise transactions.
Opinions differ about the value of Bitcoin but one thing is for sure - the technology that underpins the alternative currency has got stock exchanges, clearing houses, banks and central banks talking.
It's early days, but the "blockchain" technology behind Bitcoin has the potential to bring profound changes to the way investment transactions are settled.
Commentators say its introduction could result in the biggest shake up in 20 years for financial transactions by taking the trusted counterparty, such as a bank of exchange, out of the equation.
Bitcoin, a digital or "crypto-currency" that is not backed by any country's central bank or government, seems to be in the realms of the technical types.
But regardless of how people view Bitcoin, the technology behind it is seen as being robust and very quick, ensuring that verifiable transactions can take place between individuals, within a large network of computers, without the need for an intermediary.
Blockchain, which is also called "distributed ledger" technology, has the potential to seriously disrupt the way transactions are settled. "Old world" intermediaries could be forgiven for putting their heads in the sand, but they do so at their peril.
ASX ahead of pack?
Across the Tasman, the Australian Securities Exchange dipped its toes into blockchain technology by paying A$15.9 million ($17.1 million) for a 5 per cent stake in New York-based encryption specialist Digital Asset Holdings.
ASX and Digital are working to build a "distributed ledger" - or blockchain - that could ultimately replace the clearing and settlement systems provided by the ASX through its Chess settlement platform.
In January, Elmer Funke Kupper, ASX's then managing director and chief executive, said there had been very little innovation in the post-trade services that have operated around the world for the better part of 20 years.
"Rather than replace Chess with a new version that is based on the same legacy processes that operate in the market today, we should aim to re-engineer and simplify those processes to deliver significant benefits to the users of the market," he said then.
Central banks are looking at the technology. In February the European Central Bank (ECB) said it is looking at distributed ledger technology to help run payment and settlement systems.
Computershare, the Australian stock transfer company that provides corporate trust, stock transfer and employee share plan services in Australia, New Zealand and other countries, is likely to be exposed to the technology, one way or another. The company said last month that blockchain technology was "interesting" and potentially offered significant cost savings in the post trade environment.
For adoption, it would require broad capital markets' and central banks' support but it said Computershare was well placed.
"We have developed a deep understanding and see more opportunities than threats," it said. "In our judgment, our role as the leading global issuer agent will endure."
NZX watching
NZX continues to monitor and assess developments in the distributed ledger and blockchain landscape globally, particularly where it relates to capital markets infrastructure.
"We are in the early stages of working with our technology partners and considering where and how a blockchain solution could provide benefits to New Zealand's capital markets," Mandy Simpson, Chief Operating Officer, told Stock Takes.
"We are initially focussed on areas of the market that are not served by the existing markets' infrastructure, and where there is potential future demand for a simpler and more efficient solution," she said.
Simpson said the NZX was not looking to replace its existing systems.
"NZX uses NASDAQ's X-stream trading platform, which provides excellent flexibility to create new products to support further innovation and growth in our markets."
Coats vote
Shareholders in Coats Group will vote in London next Wednesday on whether to de-list the company, once part of Sir Ron Brierley's Guinness Peat Group (GPG), from the NZX and ASX boards.
If the motion is approved, Coats will delist from the NZX main board on June 24, thereby ending GPG's 25-year presence on the local market.
Coats, an industrial thread and consumer textile crafts business whose heritage dates back to the 1750s, operates in more than 60 countries and employs about 19,000 people.
More than 65 per cent of Coats shareholders are now UK based.
Brierley quit the Coats board in April last year after narrowly holding on to his seat in 2012. Coats will remain listed on the London exchange. The stock last traded locally at 63c.
Pilbara Minerals' share price trebled on growing interest in electric vehicles. Photo / AP
The hardy band of New Zealand investors who gathered in Auckland last year for a Pilbara Minerals presentation will have watched the company's explosive performance with interest.
The stock has more than tripled to A80.5c from A25c last December and from just A5.6c last June.
Enthusiasm for the stock came from the anticipated demand for lithium battery-powered cars. The much vaunted Tesla model 3 will be powered by lithium ion batteries, as will vehicles from Mercedes, Volkswagen and Porsche. About 2 per cent of the world's lithium demand comes from vehicles, but that is expected to soar to 60 per cent by 2020.
The company's Pilgangoora Project, 100km south of Port Hedland, West Australia, contains the world's second-largest lithium-tantalite deposit - after Greenbushes - which is also in WA.
It is also an emerging tantalite producer from its Tabba Tabba project, 75km south of Port Hedland. Tantalite, when refined into tantalum, is used in capacitors for smartphones and tablets and as a protective coating for jet turbine engines blades.
Tabba Tabba is expected to be in production soon, while Pilgangoora is likely to come into production mid-way through next year.
Another Western Australia company, General Mining, which hopes to begin exports by July of the lithium-bearing mineral spodumene from the Mt Cattlin project, has enjoyed a similarly spectacular rise in its share price. A year ago, the stock was at A5c. Today they trade at A64.5c.
