Rodney recently wrote about the latest Facebook (Nasdaq: FB) data-mining (and data-losing) scandal. It’s a complex story, no doubt, in that it’s not just about companies tailoring ads for you – Facebook records data on your texts, your phone calls, and your GPS location, among who knows what else.
As Rodney says, Facebook users are Facebook’s product. That’s not going to change anytime soon.
But taken together with the still-unresolved questions surrounding the 2016 election and our voting infrastructure, as well a constant stream of data breaches companies like Equifax (NYSE: EFX), Target (NYSE: TGT), and so on, it’s clear we’re in a cultural shift that’s attempting to reconcile personal privacy and safety with the near-unlimited availability of the internet and subsequent input and output of personal data.
Cryptocurrencies are a big part of this shift — though whether they’ll stick around is another story. The basic idea is ingenious and laudable: a currency impervious to manipulation built on total transparency. Thing is, no one’s using bitcoin like a currency (except for maybe some shadow-world villains and their ilk).
It’s a speculative investment at best… for the time being.
George Soros famously made $1 billion in a single day (back when a billion dollars was “a billion dollars”) by shorting the British pound when it moved beyond a fixed 6% band. These types of moves happen hourly in cryptocurrencies.
It’s as if we’ve combined the shelf-life of the news cycle with billions and billions of dollars’ worth of investments.
Maybe my skepticism comes from my own upbringing in central New York. There’s a bit of conservatism there, rooted in a blue-collar work ethic. Or maybe it’s because I’m Italian. Nothing feels better than a roll of cold, hard cash stuffed into my front pocket – preferably wrapped in a rubber band!
The idea of a currency that exists in the ether – no, I’m not talking about Ethereum, a different cryptocurrency! – makes me feel uncomfortable. But, while I am skeptical about bitcoin and its ilk, I am not skeptical about technology behind it.
Namely, the blockchain, which is both the key to understanding bitcoin and the most complicated part of the whole thing.
See, back in February I found a company for my Hidden Profits readers that quietly got in on the ground floor of blockchain technology, but not just with bitcoin. I learned that blockchain technology could be a complete game-changer for elections and institutional investing.
Most people don’t vote. The weather might be bad or the lines very long. Polling places aren’t the most comfortable venues. Voting can be confusing. The last ballot I encountered was numerous pages and about three feet long.
What’s more is that it seems like there’s a controversy nearly every year. People get turned away or there are phantom votes. Or, maybe worst of all, the votes don’t count. Remember the “hanging chad” controversy from the 2000 presidential election?
Blockchain can simplify and secure the voting process, which has the potential to radically change both the nature of and the public’s engagement in voting. Outside of public elections, the technology can used to ensure the legitimacy of proxy votes for corporate investing.
The company I found at the forefront of this type of system, which is already regulated by the Securities and Exchange Commission as an alternative trading system. This will allow it to operate much like a stock broker but with the transparency and security benefits of blockchain.
As a portfolio manager, I often deal with issues beyond just picking stocks. These are often called “back office activities.” There are many days where there are trading issues that need to be double checked, margin calls to be dealt with or technology issues related to trading platforms that pop up. Operating in a compliant fashion is way more important than picking stocks in this highly regulated environment.
When shorting a stock, for example, you must first locate the stock to borrow before you can short it.
Once you have it “borrowed” you can then sell the stock in the open market and collect the cash in return for the sale. The failure to do so can create regulation problems. tZero digitizes this process. It shows the inventory of “shortable” stock and provides substantial automation for the overall process. The platform creates a digital locate receipt, which is then sent to the fund’s service providers and brokers.
Everyone has the same information at the same time and in a consistent fashion.
I’ll say that again: Everyone has the same information at the same time and in a consistent fashion.
That sounds like a dream, or a good science fiction novel idea. It’s not. It’s developing as we speak.
There are going to be more data security scandals in the months and years to come, and I believe we are close to a reckoning in how to comfortably be as hyper-connected as we are. Blockchain technology could very well be the bridge that gets us to the other side.
Of course, in the meantime, feel free to share this article on Facebook, and give Hidden Profits a look while you’re at it.