• How can we remedy the drought in the West?

  • My thoughts on “Ensuring Responsible Development of Digital Assets”…

  • The downsides of this “voice” technology…

Dear Reader,

Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology. Today, I’ll do my best to answer them.

But before we turn to today’s questions, I first wanted to share a short video message with readers.

Markets have been a mess this year. They aren’t functioning normally – and inflation is making matters worse. Uncertainty about a possible recession – and further rate hikes – has kept us all on our toes as we try to preserve our capital and generate a return these days.

That’s why I recorded the following video to offer some of my thoughts on how to weather this volatility… survive inflation… and even grow our investment portfolios in a bear market. There’s one key investment class that is thriving right now – no matter what the stock market does.

To watch, simply click the image below.

And if you have a question you’d like answered next week, please be sure you submit it right here.

Solving our water problem…

Let’s begin with a question on how to address the drought…

I would like to know why our leaders in this country are not looking at desalination plants along our Pacific Coast to help remedy the ongoing drought situation in the Western USA.

Also why we don’t build penstocks and subterranean aqueducts to mitigate annual flooding along the Mississippi River and throughout the Eastern Seaboard and Gulf states? They could deliver the water to the West and Southwest as potable water, irrigation, as well as hydroelectric generation. Thank you.

– Donny P.

Hi, Donny, and thanks for writing in. The ongoing drought in the Western U.S. is a complex issue that desperately needs innovative solutions.

Between the population that lives in those regions, and agricultural use, many states simply don’t have enough water to go around. Water sources such as the Colorado River, the Owens Valley, and the Bay Delta are severely overtaxed.

And you’re spot on, the technology exists to build desalinization plants to help alleviate this problem, yet the U.S. is doing nothing about it.

A great example is what has been done in Israel, which is leading the world in desalinization technology.

Israel built five desalinization plans over the last two decades, producing around 600 million cubic meters of water a year. And two more plants will be operational by 2023, bringing online another 300 million cubic meters of water a year.

With all seven plants operational, desalinated water will provide up to 90% of all of Israel’s municipal and industrial water needs.

Israel has also been smart in how it manages its wastewater. Having established 230 reservoirs that are used to store treated wastewater, they provide around 260 million cubic meters of water for the agricultural sector.

These are amazing achievements for a desert country – and they have proven to be highly effective. There is no reason that the U.S. could not achieve something similar, so your instincts are absolutely correct.

In a perfect world, I would prefer to power desalinization plants with 100% clean energy like that of nuclear fission or nuclear fusion (preferably fusion as there are little to no radioactive byproducts). This would be the most efficient and clean way to solve the problem.

I have written before about some research out of MIT that operates using solar power. And San Diego’s Carlsbad plant does make use of solar power rather than fossil fuels.

This isn’t anywhere near as efficient as something that would be powered by a nuclear fusion reactor… but it would work, just not at the scale that is required. There is also promising work being done to use the power of ocean waves to turn salt water into safe drinking water.

There are also some things that can be done to reduce overall water consumption, especially in agriculture. “Micro-irrigation” technology can water plants right at their roots, which uses as much as 50% less water than traditional sprinkler irrigation.

Donny, I share your concerns. I’ve been amazed at how our “leaders” like to talk about clean energy and sustainability, while at the same time increasing the use of a dirty fuel like coal to 25% of all electricity production in the U.S. after a decade of decline. And they push electric vehicles as the solution to clean energy, yet the electricity to fuel those EVs comes primarily from coal and natural gas. 

Makes no sense at all.

My thoughts on this executive order…

Next, a reader wants to know more about President Biden’s recent order…

Has anyone read Presidential Executive Order #14067, Ensuring Responsible Development of DIGITAL ASSETS??? I have read a few pages and would like Mr. Brown’s opinion on this order. Thank you,

– Jenny V.

Hi, Jenny, and I compliment you on paying attention to what’s happening with regard to cryptocurrencies in D.C.

President Biden signed executive order 14067, “Ensuring Responsible Development of Digital Assets,” back in March. It’s recently gotten a little more attention as we’re nearing the end of the open invitation for comments, which wraps up on August 8.

Since the earliest days of blockchain technology and cryptocurrencies, the industry has never experienced such a hostile regulatory environment. The current Presidential administration and chairman of the U.S. Securities and Exchange Commission continue to be openly critical of digital assets, and support within the SEC has nearly grinded to a halt. 

This has been detrimental to the industry, and it has pushed billions of dollars of investment and jobs offshore to regulatory environments that are far more supportive of innovation in the blockchain industry.

The one area of exception, which is contained within section four of the executive order, concerns the implementation of central bank digital currencies (CBDC). I’ll get to the importance of this in a moment, as this is actually the key to the executive order.

On the surface, the order outlines policy surrounding digital assets like Bitcoin, Ethereum, stablecoins, and consumer protections. It also says its objectives include protecting and reinforcing our country’s financial stability and competitiveness, preventing illegal use of digital assets, promoting technological development, and so forth.

Along with all of this, the president has asked the Environmental Protection Agency to submit a report on the environmental impact of cryptocurrencies and blockchain technology in relation to their energy use.

Again, on the surface, this all sounds fine. And the industry has needed clarity in this space for far too long.

The lack of clear regulations, preferably light-handed, and consistent policy has been detrimental to U.S.-based investment, jobs, and growth in the blockchain industry. It has also reduced access to investment for normal investors, something that is very important to me.

But the actual goals of the order are far different. This is a grab for tax revenues. In the fiscal year 2023 budget, the Biden administration proposed nearly $11 billion (over 10 years) of new taxes in the digital asset space.

Likely, the government sees the money flowing into digital assets and blockchain technology as a form of revenue to offset its egregious deficit spending.

But the even bigger thrust that underlies the executive order is the goal to replace the U.S. dollar as we know it and implement a U.S. dollar CBDC.

Again, that might not be a bad thing, but the desired implementation is to enable the CBDC with government software on everyone’s phone. Not only would the government be able to see every transaction, but it would also be able to tax every transaction at will.

And then, couple the executive order with these two congressional bills:

  • HR 6666 (very ominous number – intentional?) – which would give the government the right to track and surveil every transaction

  • HR 3571 – has the ability to control how we spend our own money and what we spend it on

The obvious risk, and deep concern of the industry, is that this kind of implementation will be used to control our lives. Imagine not being able to transact with a business that has been censored or banned for political reasons (much in the way that Facebook, Twitter, and Google colluded with the government to censor and ban scientific research that didn’t align with the current political narrative).

CBDCs could potentially be a very effective and efficient payment system, but the implementation comes with too much centralized power. The risks are immense and frightening.

For what it’s worth, the industry is working hard to avoid a worst-case outcome. This is hard work, especially in this environment – but all hands are on deck. If heavy-handed regulation is implemented, it would be destructive to the entire industry, reduce innovation, reduce financial inclusion, and ultimately push investment and innovation offshore.

Not everyone likes this new tech…

Let’s conclude with a couple of comments about a recent topic…

Hi Jeff, I read every edition of The Bleeding Edge. I find it gives me grounding for my investing in Exponential Tech Investor and The Near Future Report recommendations.

I definitely feel this “Voices from the grave technology” has no place in our society. All of our lives have been exposed to life and death and how we handle and deal with both. Many religions serve all people with death coping services. Bringing a passed person’s voice and thus life back to us for various uses is just wrong.

Please continue your great service to the little guy investor. Your team has my highest respect. God bless you, your family, and your professional team.

– Tim M.

Jeff, re: “Users can provide Alexa with a one-minute-long voice recording of anyone they want. The AI will ingest the data, process it, and then synthesize that voice so that it can read text in the future.”

What’s to stop scammers from tricking someone to talk on the phone long enough to capture their voice and then calling a relative, business associate, or anyone to get a credit card, passwords, or any other data to scam them! This could be a really big “barn door now open,” etc. VERY SCARY.

– Leonard K.

Thank you to everyone who wrote in about this story. As a reminder, Amazon’s Alexa will soon be able to mimic voices with just one minute of audio input. The idea is that we could “preserve” the voices of those who have passed away.

As I shared in the original writeup, one of Amazon’s executives said they used this technology to capture the voice of a grandmother who had passed away. Then they had Alexa read The Wonderful Wizard of Oz to a child in the grandmother’s voice. This allows the child to hear her grandmother read to her again.

Yet, as we might guess, a number of people feel uncomfortable with this development.

As Tim shared, some may feel that Alexa’s ability could harm the grieving and healing process. That’s certainly a concern with this kind of “live forever” technology.

There are also security risks, as Leonard brought up. We’ve discussed the threat of deepfake technology in these pages for many years now, and this voice technology could add another layer of deception.

As one cybersecurity professional put it, “If a cybercriminal can easily and credibly replicate another person’s voice with a small voice sample, they can use that voice sample to impersonate other individuals. That bad actor can then trick others into believing they are the person they are impersonating, which can lead to fraud, data loss, account takeover and more.”

There are also concerns regarding consent and ownership. Should Alexa be required to get our permission to use our voice after we pass on? Who would own the rights to the voice recordings? Ethical issues like this mean there’s more complexity to this topic than we might expect at a cursory glance.

Yet despite the many potentially negative consequences of this technology, there are also positive uses… outside of nostalgia or emotional connection to loved ones. For instance, we could also see this kind of voice recreation assist people who have developed speech disabilities.

It would also be a powerful tool for the 97 million people worldwide who could benefit from adaptive alternative communication (AAC) options. Rather than using a one-size-fits-all robotic-sounding voice, people could adopt a personalized voice with this kind of technology.

Big picture, this technology is a good example of why it’s so important for us to have these kinds of discussions now. We’re going to face more and more of these dilemmas as our technological capabilities continue to advance at an ever more accelerating pace.

And the answers to these debates will play a big part in the kind of world we live in going forward…

That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.

Have a great weekend.

Regards,

Jeff Brown
Editor, The Bleeding Edge

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