Blockchain Will Change the World, But Not Just Yet
Editor’s note: It’s no secret that we’re wary of cryptocurrencies. Finding ways to make this trend work for readers is not our specialty. We don’t recommend cryptos in any of our publications, but we thought you might want to see this event from our sister publication Next Wave Crypto Fortunes. If any readers are interested in these strategies, they can click here to get early access.
Below, you’ll see our latest issue covering bitcoin, and it’s revolutionary technology: blockchain. — Annie Stevenson, Managing Editor, American Investor Today
The “currency that will change the world” hit a new all-time high of over $19,850 this week.
You’ve probably heard what’s going on with bitcoin. In fact, we wrote about it last month.
The famous cryptocurrency is continuing to ride a slew of good news. It’s up over 160% this year as I write.
Now, we told you that we wouldn’t be talking much about bitcoin in American Investor Today. And we stand by the idea that it doesn’t count as a currency until you can easily buy a cup of coffee or pay your rent with it.
But bitcoin’s rise has us excited for another reason: the technology behind it.
That’s because blockchain technology does a heck of a lot more than just power bitcoin. And it may one day become as important as the internet…
A Revolution in the Making
I won’t sugarcoat it: Blockchain is probably going to change the world. But like a lot of new technologies, it’s also hard to understand.
And here at American Investor Today, we make sure that our readers are getting big Wall Street ideas made Main Street simple.
So today, we want to give you the quick and dirty version…
When you take away all the tech jargon, blockchain is just a digital database that’s housed in multiple places.
It uses networks of computers — usually hundreds or thousands. Each computer has to agree to confirm new data. No single person or group has control.
The data entered is permanently recorded and can’t be tampered with. Any changes are logged as new data points. Anyone on the network can view and track every single update.
This unique way of verifying information is the heart of blockchain. It’s the kind of technology that can let us store and exchange data in a secure and low-cost way.
Technically, you could have a blockchain on just a few computers. It wouldn’t be as effective or secure, but the essence would still be the same. The computers would work together to verify information and keep the records. That’s how the blockchain technology works.
If that sounds simple, that’s because it is.
But most of the time, when you see someone talking about blockchain, they’re talking about bitcoin.
So, let’s talk about it.
The blockchain behind bitcoin runs on more than 40,000 computers throughout the world. They all have to agree to verify new transactions and data points.
It would be next to impossible to hack all 40,000-plus computers to attempt to post fraudulent information. That’s why bitcoin is considered “unhackable.”
And all other cryptocurrencies (things like bitcoin) are hosted on similar blockchains.
But this technology can transform all sorts of processes by making them safer and cheaper. So, they can host many things other than just cryptos…
There are blockchains being put to use to securely track food as it moves across the country. This is helping grocery stores ensure that their produce and meats aren’t contaminated. Or if a batch has been contaminated, they can see precisely which one and how widespread the problem is.
Immediately, you may be able to see where this could be useful.
When I bought a new car a few years ago, the financing agent showed me how they were forced fill out paper forms with every new car sale and mail the forms to the company headquarters.
There, the forms were scanned into a computer and then shredded. All because the company didn’t believe that emailing a document was secure.
Imagine how much time and expense could be saved if the company could rely on something to store and send that information.
We’re not exaggerating when we say that blockchain could change the entire business world. But we’re also being honest with you when we say that we’re not interested in investing in blockchain today.
We’re Not In … Yet
You might be wondering why we’re not going all in on blockchain. If it really could be the next revolution, what are we waiting for?
Let me remind you what things were like back in the 1990s, in the early days of the internet…
We all knew it would be revolutionary. And hey, we were right — who among us doesn’t use the internet daily in 2020? I mean, the newsletter you’re reading right now is delivered exclusively over the internet.
But the people who said that they could pinpoint the exact companies that would profit from the internet boom were wrong. They talked about things like Pets.com and Webvan and how these businesses would change the world.
But they didn’t. Between January 2000 and June 2001, more than 500 internet companies crashed and went out of business — including Pets.com and Webvan. And those are just the ones that had significant funding from investors.
At least $1.7 trillion disappeared from the market in the dot-com bust. Lots of investors thought they were picking the revolutionaries, but they were just picking duds.
The same story is playing out in the blockchain space today. Many companies are coming out with million-dollar promises and $10 results. There are few applications outside of cryptocurrencies. And as we’ve said, we don’t believe cryptocurrencies are worth much right now.
So, we don’t want to pick the duds of blockchain. We want to pick the companies that’ll make it out alive. We want to invest in companies like Amazon and eBay — internet companies that have grown massively since 2000.
Now, there’s a light at the end of the tunnel. More and more companies are embracing blockchain technology. And we may finally see the shape of this revolution more clearly very soon. In fact, behind the scenes here, we’re hoping to bring you a lot more information about blockchain very soon.
We hope you stay tuned!
Managing Editor, American Investor Today
I’ve been investing for more than 25 years. I started my career on Wall Street in 1991 as an assistant portfolio manager at Bankers Trust. I quickly advanced to prominent positions at Deutsche Bank and ING, managing multimillion-dollar accounts. In 2006, the owners of a $6 billion firm named Kinetics Asset Management recruited me to manage their hedge fund.