Blockchain: Why investors need to watch this space

By

In the late 70s and early 80s we saw the start of the technology boom with Microsoft and Apple beginning to become household names. More than 40 years later I believe we are at the start of a new wave of a technological innovation. So, where is this innovation going to come from? Blockchain technology.

Most people associate blockchain with Bitcoin and other cryptocurrencies, yet this is only a minor part of how blockchain will drive technological change in the future. In simple terms, blockchain provides for the secure, anonymous recording of transactions, which is tamper proof and encrypted data held on multiple servers around the globe.

In fact, I believe blockchain technology will become commonplace in the not-too-distant future, as anything we value can be recorded with blockchain. For example, when purchasing a motor vehicle, you could get a record of every owner, service, accident, insurance claim and more and be confident that the report is 100% accurate, so you have total peace of mind knowing exactly what you are buying. Sounds like stuff of the future. Well, this exact service has just been launched in the US.

blockchain investors

Now think about banking, purchasing a house, getting loans, medical history and the list of applications that blockchain can support, which is why I believe it will explode in the coming years. Even stock exchanges around the world will use the blockchain to record trading activity.

The current COVID-19 pandemic has caused a significant shift in society in many ways and it is highly likely that blockchain will support the changing landscape right now and provide confidence in the security of our data.

Therefore, if you are looking for the next Apple or Microsoft to invest in, maybe they are just a small start-up right now or maybe they are not far off listing, either way this space will be fun to watch.

Best and worst performing sectors this week

Energy is the best performing sector up more than 4% followed by Consumer Discretionary up more than 1% and Communication Services up just under 1%. The worst performing sectors include Healthcare down more than 2% while Materials and Information Technology are down just under 1%.

The best performers in the ASX/S&P top 100 stocks include Bluescope Steel and Stockland as both are up more than 10% followed by ANZ Bank and Alumina who are both up more than 8%. The worst performers include one of last week's best performers IDP Education, which is down more than 11%, followed by Fortescue Metals down more than 7% and Evolution Mining and Northern Star Resources as they are both down more than 6%.

What's next for the Australian share market

The market has continued its pattern of closing higher one day only to fall the next, which is the pattern it has been in since the start of 2021. Currently, the market is up slightly for the week, although I suspect by Friday's close the downward move will continue.

If the market closes lower on Friday, it will confirm the last four weeks have been trending down, which adds weight to the argument that the market is falling into the low I was expecting a few weeks ago. As I indicated last week, this will be confirmed if the market trades below 6770 points.

If that occurs, then we need to be prepared that the current down move could unfold over the next four to six weeks into mid-April and for the market to trade down to below 6500 points. Given this, now is not the time to be entering the market, instead, you would be better sitting back and waiting for the next run-up as there are many great stocks that will present excellent buying opportunities in the second half of this year.

Get stories like this in our newsletters.

Related Stories

TAGS

Dale Gillham is chief analyst for Wealth Within (AFSL 226347). He has an Advanced Diploma and Diploma of Share Trading and Investment and more than 25 years' experience in the financial services industry.