It's The New Thing

"Change is the law of life. And those who only look to the past or present are certain to miss the future"

-JFK

Welcome to The Golden Sense! A Hungarian team of engineers has been working on a new way to fly the friendly skies. Their invention is called the Flike tricopter, a flying bicycle designed to allow a person or equivalent weight of roughly 220 pounds to reach airspeed of up to 62 mph. Back in May, the Flike got liftoff for about 1.5 minutes—an impressive display you can view for yourself on YouTube. The Flike, which is powered by lithium polymer batteries, offers 15 to 20 minutes of hover flight or 30 to 40 minutes of cruise flight. The contraption is expected to make its market debut in 2016 at a cost of around $200k— comparable to a sports car. In most countries, an ultra-light pilot’s license will allow a flight enthusiast to take the Flike for a spin. (Brown, 2015)

Speaking of flying. The advent of new technology seems to be really taking flight. Most of the new technology is ultimately for the better as it creates more credibility and speed of process for people to interact with each other.

The following article is written by E.B. Tucker, editor of The Casey Report. I thought it was an excellent identification of a trend and I couldn’t leave it off the The Golden Sense.

-As you read this, Wall Street CEOs are panicking. They’re holding secret meetings about a new technology that’s going to change the financial world…and potentially make them obsolete.

Soon, you’ll be reading about this technology on the front page of The Wall Street Journal and The New York Times.

It’s going to radically change how people do business…just like the Internet changed how people share information.

I know these are big claims. Let me explain…

The new technology is called “blockchain.” You may know it as the engine behind bitcoin, the digital currency created in 2008.

You can think of blockchain as the plumbing that makes bitcoin work. But blockchain is not bitcoin.

Unlike bitcoin, blockchain is not a currency, and it’s not money. It’s a technology that’s going to change the way people buy and sell things.

It’s more secure, cheaper, and far more reliable than any system of payment that exists today – including cash, checks, and credit cards.

Soon, you’ll use blockchain to buy a TV, a car, or a stereo. You’ll also use it to buy things like stocks, bonds, and real estate.

Blockchain 101

Blockchain is an “open ledger.” It keeps track of transactions, just like an old-fashioned ledger on a store clerk’s counter.

But the store clerk’s ledger is only for him to see. You’ll need a warrant to see it even if you’re a paying customer. If you do get a warrant, he might change it before you see it.

An open ledger is different. It’s visible to everyone involved in a transaction. Buyers, sellers, regulators, and anyone granted access can see the ledger. Plus, everyone involved in the transaction has their own copy of the ledger on their computer, and all copies must agree. This prevents stealing or fraud.

Here’s an example. When you buy a pair of shoes using blockchain, both you and the seller “broadcast” the transaction over the Internet. Everyone updates their copy of the ledger for your transaction. Then everyone compares ledgers. When there’s disagreement about the content, the most common ledger is accepted as the “truth.”

Then the transaction becomes permanent. The record in the ledger can’t be changed unless all people in the transaction agree to it.

We call this “decentralization”…because it takes the power out of the hands of a single institution like a bank. And it puts the power in the hands of the people doing the transaction.

With blockchain, no central authority or group can manage or manipulate a transaction. And no one can steal things that are secured by blockchain. Not thieves, hackers, or even the U.S. government.

This incredible security is what makes blockchain so amazing.

In 2013, the U.S. government tried to seize over 600,000 bitcoins worth over $100 million. The Department of Justice claimed the owner of these bitcoins was breaking the law.

However, because bitcoins are built on blockchain technology, the bitcoins were worthless to the U.S. government. Only the owner could sell or spend them. If he didn’t agree to the transaction, they could not be sold or spent. Period.

Changing the Way We Buy and Sell

A long time ago, people bought and sold things face-to-face. If you wanted a pair of shoes, you bought them from the town shoemaker.

This changed as technology advanced. Today, you can buy something from China without ever knowing the seller.

Companies like Amazon, the gigantic online retailer, make this possible. In exchange for connecting buyers and sellers and making sure the transactions run smoothly, Amazon generates tens of billions of dollars in sales per year. Amazon is the sixth-largest publicly traded company in the U.S., worth $317 billion.

Or think of it this way. You’re reading a financial newsletter, so you likely buy and sell stocks. When you buy a stock, how do you know the seller actually owns the stock? How do you know he won’t take your money and run? And how does he know you’ll actually pay for the stock?

You may never think about these things. But making sure stock transactions run smoothly is big business for Wall Street. It’s a full-time job for tens of thousands of highly paid lawyers, accountants, bankers, brokers, and custodians. In exchange, we pay them hundreds of billions of dollars in fees and commissions.

In 2008, we saw these “middlemen” collapse. Markets froze up. These pillars of our financial system are not as strong as we thought they were.

Blockchain can replace these middlemen. It’s faster, cheaper, and more secure than the middlemen.

For example, when you place an order with your broker to buy a share of stock, it takes three full business days to “settle” (for you to actually own the share of stock). This means it takes 72 hours to buy, pay for, and officially own a share of stock.

This same process would take less than a minute on a blockchain. It’s like the difference between mailing a letter and sending an email.

And stock ownership recorded on a blockchain isn’t some far-off dream. It’s about to happen right now. Online discount retailer Overstock.com (OSTK) just got clearance from the U.S. Securities and Exchange Commission (SEC) to issue up to $500 million worth of stock on a blockchain. Other companies will follow suit.

NASDAQ announced a blockchain-based stock-trading platform called Linq last year. Other exchanges will follow.

Credit card companies like American Express, Visa, and MasterCard have also invested millions in blockchain. They know the way we buy and sell things is about to radically change. And they don’t want to be left behind.

-The future looks pretty good. One day we may just be flying a bike and buying stocks with our smart phone using a blockchain system.

It all seems cool to me...

Over and Out

T. Norman

References:

Brown. 2015 Bank Investment Daily

Tucker. 2015 Casey Daily Dispatch