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.
And before we turn to this week’s questions, I’d like to let readers know about a special event coming up next Wednesday.
I’ve just returned to Silicon Valley for the first time since the pandemic… That’s where many of the top technology companies in the world have their headquarters.
But while many exciting tech companies have recently gone public, regular investors have been locked out of most of the profits. The venture capitalists and institutional buyers reap all the rewards by the time these companies access the public markets.
So I wanted to find companies that still give regular investors the chance to become wealthy with a small stake… Like 20+ years ago when Amazon went public. A mere $486 investment in Amazon back then could have made anyone a millionaire.
Now, though, these kinds of opportunities have become much rarer…
That’s why I’ve been building my list… With stocks that still have this same kind of potential. I call them “Penny IPOs.”
And now I’m ready to tell readers all about what I’ve found during my research. I’ll share the details at my event, Silicon Valley “Unlocked.” It’s taking place on June 23 at 8 p.m. ET.
To attend, all you need to do is go right here to RSVP.
I’m excited to show readers what I’ve been seeing during my trip to the Valley. And I’ll even share my favorite private Penny IPO with attendees as a thank you for tuning in. I hope to see you there next Wednesday.
And now, let’s turn to this week’s questions. If you have a question you’d like answered next week, be sure you submit it right here.
Is this technology a threat?
Let’s begin with a question on whether AI and quantum computing will threaten blockchain:
Thank you for the informative remarks about the race with China for dominance in AI. What I cannot understand is the virtually inevitable destruction of blockchain integrity as a result of the combination of AI and quantum computing. What is your insight about this topic? I do not see any discussion of the apparent conflict. Thank you.
– Daniel T.
Hi, Daniel – thanks for writing in. This is a topic that has worried people ever since Google achieved quantum supremacy back in September 2019.
That’s the point at which a quantum computer can outperform the most powerful classical supercomputer on earth.
Google ran tests on its 53-qubit quantum computer. Researchers gave the quantum computer a task that would take the world’s most powerful quantum computer, Summit, 10,000 years to complete.
The quantum computer solved it in 200 seconds…
And now that we’re seeing developments in AI by countries like China, I can understand the cause for concern. These technologies are both advancing at exponential rates… And creating new challenges alongside all the problems they’re solving.
That said, AI isn’t much of an imminent threat to blockchain technology. While powerful, the advantage of blockchain technology is its decentralized architecture. Every blockchain network, by design, is distributed and not centralized.
Blockchains are also immutable, which makes it nearly impossible for an AI to reverse or alter a transaction.
The concern you raise about quantum computing, however, is a very legitimate one.
And a quantum computer doesn’t need AI to be a threat to blockchain technology. After all, blockchains are cryptographically secured, but the threat is that a quantum computer can hack the cryptography…
For some background, a 53-qubit quantum computer like Google’s has the potential to crack our 256-bit encryption, which is the current standard for security, in as little as a couple of days.
To be clear, the current quantum computers are too “noisy” right now to do it. Said another way, they are not fault-tolerant enough to perform such a feat… but they are getting close.
As we wrote back in February, IBM is already on track to release a 127-qubit quantum processor this year. And it plans to have a 433-qubit quantum computer by next year. We could even see 1,000 qubits by 2023.
This kind of computing power could crack 256-bit encryption in seconds.
And this is why the cybersecurity industry is scrambling. The National Institute for Standards and Technology (NIST), a division of the U.S. Department of Commerce, is already working on quantum-resistant encryption technology, and it’s not alone.
Specifically with regards to blockchain technology, there is a lot of nuance in this subject that is worth mentioning. For example, proof-of-work blockchain technology is very much at risk of being cracked by quantum computers. Proof-of-stake blockchain technology is actually more resistant to quantum computers, though.
And while quantum computers will threaten the integrity of blockchain technology, there is one very important thing to remember.
Blockchain technology is software. And like all software, it can be upgraded. That’s one reason why I’m still very bullish about the future of the blockchain industry.
Private companies are currently working on solutions to make blockchains “quantum-proof.” One blockchain project called Quantum Resistant Ledger has even developed its blockchain technology from the ground up to be quantum-resistant.
And we’re going to see a lot more work in this area as we get closer to universal fault-tolerant quantum computers.
Ultimately, the industry hasn’t been sitting on the sidelines. There’s plenty of motivation to solve this problem.
After all, if quantum computers pose a threat to popular blockchains, they also threaten the encryption that protects our governments, militaries, corporations, and e-commerce websites.
So any company that manages to solve these problems will be in high demand.
That’s why we’ll be keeping a close eye on the developments in cryptography and cybersecurity over the next couple of years. Promising companies in this area may make a very smart investment as we adjust to a world full of quantum computers.
Sorting out the details on floating spaceports…
Next, a reader wants to know more about SpaceX’s plans for floating spaceports:
Nice article updating us on all things space technical. I wonder – will those floating launch platforms be towed out into international waters? Will they be free of government interference as barges, or must they be self-propelled? What will their homeports of registry be? Looks like a topic for a lawyer.
– Thomas M.
Hello, Thomas, and thanks for writing in. Longtime readers might recall that my background is in aeronautical and astronautical engineering, so I find these kinds of developments fascinating. And I’m glad you do, too.
For new readers, earlier this month I wrote about how SpaceX is converting floating oil rigs into spaceports for launching rockets into space.
SpaceX intends to launch both its Falcon 9 and its Falcon Heavy rockets from these spaceports. The Falcon 9 is the rocket that SpaceX has been using to launch its Crew Dragon spacecraft to the International Space Station (ISS).
And the Falcon Heavy is the rocket that will launch the Starship and other spacecraft directly to the Moon and Mars.
In addition, these floating platforms will likely help SpaceX put its ambitions for hypersonic flight into action. These high-altitude flights could take travelers from New York City to Tokyo in just a couple of hours.
However, you’re absolutely correct that many details will need to be sorted out for this to happen.
At present, the first two retrofitted platforms will be stationed in the Gulf of Mexico near SpaceX’s development site in Texas. And yes, I believe that these platforms will be retrofitted and towed into place around the world.
Most likely, SpaceX will purchase oil rigs relatively close to the desired location for the spaceport, retrofit them, and then tow them into place.
My prediction is that SpaceX will look to locate these spaceports close to large population centers that are near major coastal cities. After all, this is where the water and the wealth are located to support these kinds of services.
In that regard, I do not think that they’ll be located in international waters, but more likely will require a short “hop” via boat or helicopter to a major city center.
This would obviously require cooperation with local governments to ensure safety, but I envision that this is a far easier process than trying to get the permits and licenses that would be necessary to build a spaceport on land close to a city center.
As we already know, spaceports are located in areas that are sparsely populated for good reason (safety and noise).
And maritime law has innate complexity such as “flags of convenience” for registering moveable territories like ships and platforms. That means SpaceX could potentially “register” a launchpad in a different country with beneficial regulations or tax advantages.
That said, the goal of SpaceX is to enable both regular launch services and, ultimately, regular commercial international travel around the world to major city centers. This would suggest that once a platform is put in place, it will likely stay there for some time.
It will be interesting to see how SpaceX tackles these challenges. Because as soon as it proves these kinds of launch sites are profitable, other operators will almost certainly become more active in this space…
Working hard 365 days a year…
Let’s conclude with a kind note from a reader:
Hi Jeff and Team, I would like to thank you so much for your tireless work and research. Sometimes I find it challenging to keep up with the daily emails as I am an Unlimited member.
However, I remind myself that if Jeff is up at 4 a.m. and works 365 days a year for me, I can at least do my due diligence and review your work so I can make an informed decision with my stock picks.
I am reading the mailbag and notice many individuals are questioning your recommendations in this volatile market. Rest assured, I am enjoying the sales and topping up my existing portfolio. No questions for you, just wanted to say thank you for the tireless work you do. God bless you all.
– Angela B.
Hi, Angela – thank you for being a member of Brownstone Unlimited. I’m glad to hear you’re finding my research services worth your time – one of our most valuable resources.
Subscribers like you are truly a motivation for me every day. I’m a big believer in consistency and the quality of my work. I simply don’t want to send anything to you that isn’t worth your time. Otherwise, I shouldn’t publish it at all.
Brownstone Research is at the stage where we do publish a lot of fantastic content every day. And with the plans that I have over the next 12–18 months, we’ll be publishing even more. I know that it can feel like we’re drinking from a firehose sometimes – in truth, I feel that way every day.
But my goal is to capture all of the fantastic information and investment ideas that I find each and every day and make them available to my subscribers.
And as I build out my vision for this range of investment research, my goal is to make sure that I have research that is useful and suitable for any investor – no matter what stage they’re in from a career standpoint, or what investment goals they are trying to accomplish.
I often joke internally that the last investment research service that I’ll offer will be one dedicated to tax-free municipal bonds. Anyone who is looking for high-quality, independent, conflict-free, objective investment research is obviously looking to grow their wealth.
But eventually, all successful investors reach a stage were they simply want to preserve that wealth, have it grow a little, and ideally do it in a tax-efficient way.
Your attitude is fantastic. You’ve taken a very responsible approach by using my research as a tool for making informed decisions.
As I can’t give individualized investment advice, this is exactly my goal. I want to empower and educate my subscribers so that they can make confident, informed decisions that are most suitable for their own circumstances.
Put another way, I want to give my readers the information I would want to have if I were in your place. Thanks again for your comments. You’ve made my day.
As for worried reader comments in mailbags, I’m always happy to address concerns my readers have. We don’t hide under any rocks here at Brownstone Research. Even a pandemic can’t stop me from travel and research.
Volatility is a normal part of investing. I know it can be difficult to see positions drop. It’s always important to keep the bigger picture in perspective, which is what I try to provide.
As long as the investment thesis is intact, and we’re not experiencing the conditions for a massive market crash, dips can make a great opportunity for buying, as you well noted.
Thanks for writing in and sharing your kind words.
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.
Editor, The Bleeding Edge
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