Month: March 2020

We should scrap compulsory retirement savings systems – now!

For the vast majority of us – superannuation and other retirement products have failed us dismally. It is time to scrap these systems and products… and start over.

A short time ago I introduced a new page to Goldsmith Money, titled ‘Lost Retirement’. In light of Coronavirus, I thought it timely to expand upon this topic.

We previously discussed the depleted balances of superannuation and pension accounts attributable to stock market crashes. It is certain now that the market crashes of 2008 and 2020, accompanied by negative interest rates and excessive money printing, will see these products fall well short of the promises they made.

The compulsory superannuation and pension systems of the world have completely failed the working class of the past 20-30 years. Meanwhile the ultra-wealthy were able to use these systems to minimise their income tax obligations for 3 decades and potentially enrich themselves selling these failing products.

And the products will not only fail to deliver the retirement income stream that the vast majority of workers will need – they have left workers highly vulnerable to economic downturns and the Black Swan events such as Coronavirus.

Photo by Nathan Cowley on

Nations of the world have been forcing their citizens to contribute a percentage of their wages and salary to retirement products. In doing so they have significantly reduced their ability to:

  1. Save money for times of financial hardship.
  2. Repay their debts more quickly.
  3. Build a alternative passive income streams to replace lost wages and salary.

At present, millions of workers have been left unemployed due to a worldwide economic coronavirus shutdown. Readily acessible personal savings and alternative income streams would have saved a great deal of hardship, for a great many. It would have also saved governments a great deal in support payments.

Regardless of major catastrophes however, workers should have personal savings set aside for all manner of contingency. Sickness; redundancy; repairs and maintenance. Workers should also have funds available to take advantage of investment opportunities which might arise.

The points I have made here might be considered personal liberty arguments for the scrapping of compulsory superannuation. Giving an individual the freedom to invest and save for their own retirement, as they choose. In addition to personal liberties however, there is also data to show that current systems are not simply failing the workers, but the economy as a whole.

Cameron Murray of the University of Sydney, in his article titled Superannuation isn’t a retirement income system – we should scrap it argues that these compulsory superannuation systems are inefficient, costly and ultimately depresses the economy. He eloquently states:

It is better thought of as a growth-sapping, resource-wasting, tax-advantaged asset purchase scheme aimed at the already wealthy, which is unlikely to do much to reduce reliance on the age pension.

There are many reasons to scrap this system which has failed so many and I have touched on just a few here. It is up all of us now to capture all the reasons and then petition our governments to do so.


Why pay taxes…

when they can just print money?

Day 1 in Coronavirus Home Isolation, we are thankful that the governments of the world are printing trillions of dollars to keep us fed and paying our bills.

Day 2 we start to wonder… if the governments of the world can simply print money… why have I been paying taxes for all these years?

Image credit

The taxes we have paid all our working lives pales into insignificance to the amount of currency printed by governments over the past month.

If you have been reading this blog and other similar blogs, you are part of the Financial Awakening. You understand that there is a finite amount of resources in the world. You also understand that currency is a claim over these resources.

When currency is printed by banks and governments, it is creating new claims on the finite resources. In effect, it is stealing resources from those who had been saving their currency and allocating those resources to others.

Once the panic of coronavirus is over, the reality of what we have done will set in and the inflation will begin.

Pay attention to how different countries attempt to combat this inflation. There will be:

  • price fixing;
  • rent fixing;
  • wage fixing;
  • loan fixing;
  • more printing; and,

many combinations of the above.

Of course this has all been tried before and by potentially every failed civilization in human history.

The Financially Awakened (especially those in the US) will be on the lookout for a currency reset. A reset to a gold or silver standard would be a reset back to good money. However, a reset to a new fiat currency, would be simply be starting a debt based system over again.

There has been some talk about a new Digital Dollar. This is not a cryptocurrency. This is simply another fiat currency, which will be electronically printed and issued at the discretion of those in control.

Regardless of many good intentions at this time, we must remember that no country has ever printed itself into prosperity.

To finish I would like to say – citizens paying taxes can be a wonderful thing. Taxes can build great nations. Just as important however is the Golden Rule – Governments should be spending less than they earn. Additionally, well managed countries with plenty of savings, would have no trouble managing pandemics, without the need to print.

So tell me…

  1. What would you do if you were the leader of a country, which was tens of $ trillions in debt?
  2. How will you protect yourself against consumer price inflation?

Please stay healthy… and wealthy.


The run on Gold and Silver has begun

The rush for Good Money will soon be a stampede

According to those in the know – being those speaking with bullion dealers, wholesalers and the mints daily…

‘The shelves are now empty!’

Much like the toilet paper and grocery runs we are seeing at the supermarkets, demand for physical gold and silver is up 10 fold in the past 7 days.

Speaking with a dealer yesterday – they claimed they were experiencing ‘unprecedented account registrations’ as people sought to buy physical. Unfortunately for these new comers, this dealer had no stock on hand and the orders they would take – expect an 8 week delivery time-frame.  

Tuesday night the Perth Mint sent out a message to distributors – they were no longer taking orders for their 100 ounce and 10 ounce silver bars due to ‘unprecedented demand’. Yesterday their website was updated to indicate that they had no silver bullion in stock at all.

There is still gold available, however be prepared to pay $AU2,700+ per ounce plus delivery costs.

Photo by Tim Mossholder on

At this time the gold and silver paper spot prices continue to be the prices quoted by the media.  These paper prices are down. However, there is now a huge disconnect between the physical prices being charged. 

Customers are reporting that dealers who do have stock on hand are charging 25%+ premiums over the spot price for gold, with anything from 50-100% on silver.  As one industry observer put it – ‘the dealers aren’t even looking at the spot prices anymore.’

At present the silver spot price is $US12.50 per ounce. Single ounce Liberty Eagles however are now selling for around $20+ on ebay.

I expect that the news of this surging demand will go mainstream within a week.  At this stage the only discussion is taking place is on Twitter and in other social media sites. 

There have now been a couple of industry articles published explaining current conditions in more detail than I will here – excerpts and links follow.


The disconnect between paper prices for precious metals and demand in the bullion markets has never been clearer. Nervous investors are frantically buying coins, rounds, and bars. Dealer shelves quickly emptied of more popular products and delays are now being quoted on many products – especially in silver.

TEX Metals

The demand experienced industry-wide over the past 5 days has been unprecedented. This is worse than Y2K, 9/11, or the Great Financial Crisis. It is the speed at which demand spiked (seemingly overnight) that has crippled the industry. Volume is up over 10x (in some cases much more) in a matter of days. This has strained customer service, logistics, and – relevant to this article – supply. The industry is built for elasticity. We are used to big spikes in demand. We can handle a 1 or 2 standard deviation move. We can’t handle a 5 standard deviation move in 5 days.

Distributors sold out of stockpiles in 48 hours. Dealer inventory disappeared immediately. Precious metals are the toilet paper rolls of the financial markets – under appreciated until there isn’t much left


Sales of the one-ounce American Silver Eagle coins were at 3.1 million so far this month, as of Wednesday, compared with total sales of 650,000 in the month of February, according to data from the Mint.

As discussed previously, it is important to hold ‘Good Money’ – not the paper promises which are currently being printed by the trillions. Some people are waking up to this and a new trend is forming. Perhaps for most however, it is already too late.


Good Money and Cryptocurrency

Could cryptocurrency be considered ‘good money’?

In our previous two posts on the topic of cryptocurrency, we learned what blockchain and cryptocurrency is and briefly examined the technological leaps it had made over the past decade.

In this post we shift our focus back to GOOD MONEY, by asking the question – does cryptocurrency really cover all the criteria necessary to be considered ‘good’ money?

Photo by Worldspectrum on

Let’s revisit the criteria – one at a time.

  1. A Store of Value

    This is the most contentiously argued point in regard to cryptocurrency being considered ‘good money’. 

    Some argue there is simply no store of value for a unit of cryptocurrency whatsoever, and its price is merely a result of speculation. I do not accept this premise.

    There is an inherent value in the computing infrastructure which runs the individual blockchains. There is value derived from the skills, efforts and energies of those actively maintaining and developing the capabilities of these cryptocurrency networks and platforms.

    There is value being created by those developing the applications to tap into these blockchains.

    There is ultimately value being derived from the use and adoption.

    I will accept the argument that if the internet fails and the world stops producing electricity, and as such cryptocurrencies have no value. However, the likelihood of this happening in our modern world is so extremely minute – it is a poor argument. Besides, if for some reason we lost the internet or our ability to produce electricity on a global scale – we would have much bigger problems to worry about than how we access our cryptocurrency tokens.

    Finally, it is argued that the creation of new tokens at a rate in excess of the growth of the participation in that particular blockchain will be value destructive, similar to the destruction in the value of the dollar. However, unlike dollars,  blockchain currency expansion can be easily monitored and the market is able to adjust prices accordingly.

    So I would argue, YES, cryptocurrency can be a store of value. Especially those cryptocurrencies which end up being highly utilised and responsibly governed.
  2. Scarce and difficult to create

    Within an individual cryptocurrency network, all tokens can be seen and are only ever created as per the rules of that blockchain.  The rules of an individual blockchain can be altered. However, this is transparent for all involved and therefore the market can reprice tokens based on the changes.

    In cryptocurrency, inflation is measured in its true sense – as the expansion of the token supply.  So unlike dollars, where nobody knows how many dollars are actually in circulation – cryptocurrencies are very much a known quantity and inflation can be measured with 100% accuracy.

    It is true that new cryptocurrency blockchains can be created quite easily. Creation of a new cryptocurrency though is akin to the creation of a new monetary system, not inflation of the current. There is no guarantee that this new monetary system will be adopted though and  new cryptocurrencies do act as competition for the existing. Which is not a bad thing in that it is keeping the blockchain engineers and application developers busy constructing bigger and better financial ecosystems.
  3. Generally acceptable.

    Cryptocurrencies such as Bitcoin are growing in acceptance.  It is believed that over 20 million people worldwide are using Bitcoin and other currencies on a regular basis.  More and more desktop and mobile wallet applications are being developed to facilitate quick and easy trade. 

    Some countries are considered to be very friendly toward cryptocurrency based trade and business development. Some of these countries include: Malta; Switzerland; Singapore; Honk Kong; Japan Belarus; and, Estonia.

    We have had indications out of Russia and China that they are working on their own national cryptocurrencies, which in itself would compel acceptance.

    There has been speculation that Chinese and Russian cryptocurrency tokens might be backed by their national gold reserves – which would resolve any question around ‘Store of Value’. 

    The concept of a gold backed cryptocurrency would freely encourage mass adoption, quickly becoming an accepted and desirable medium of exchange. It is for this reason that I do not speculate in Bitcoin. A gold backed cryptocurrency, where say a single cryptocurrency token could be exchanged for a gram of gold, might end Bitcoin’s appeal very quickly.
  1. Trustless

    A decentralised cryptocurrency such as Bitcoin has no single point of failure as it is run on computers all over the world simultaneously.

    Furthermore, a Bitcoin held on the Bitcoin blockchain belongs only to the one who holds the private key to the account. Meaning the Bitcoin is not the liability of a bank or other third party. As such, we should consider cryptocurrency to be trustless.
  2. Durable and indestructible

    As mentioned previously, Bitcoin is the most powerful decentralised computer network on the planet.  It would be virtually impossible for a hacker, company or government to bring down the network. This makes Bitcoin virtually indestructible. There is no reason that other blockchains will not be constructed with similar or even enhanced durability and indestructibility features.
  3. Portable

    Accessing your cryptocurrency can be as easy as carrying around a unique 50 digit password in your pocket. This password can be easily carried anywhere in the world.

    To access the cryptocurrency you simply need a PC or mobile phone wallet. Establishing a wallet is now as easy as downloading a free Android or App Store app.  Try setting up a bank account this quickly.
  4. Divisible

    Yes! Generally speaking a cryptocurrency can be divided up into smaller units – often utilising between 4-6 decimal places.
  5. Homogenous and fungible

    Yes! Every Bitcoin is the same as every other Bitcoin on that blockchain. Other blockchains are similar in that their native tokens are identical.

It is clear that ‘cryptocurrency’ may have all the characteristics of ‘good money’, yet as established previously, ‘fiat currencies‘ do not. For this very reason it is possible that those in government, banking and finance will attempt to regulate cryptocurrency and/or discredit it.  Afterall, if you were allowed to print all the currency you wanted to – wouldn’t you try to put a stop to a competing system, which does not? 

Regardless, the world of blockchain is here to stay and the disruption to the established monetary and banking systems will be total.

Instantaneous and free international transactions will be available on trustless and infallible payment systems.

Public blockchains, private blockchains and national blockchains are all possibilities. Blockchains with physical backing of precious metals and other commodities and resources are likely to emerge.

The winners and losers with regard to blockchain is the unknown. However, over the next 10 years expect that the complete replacement of current systems will take place. And for the Financial Awakened – there will be a smorgasbord of opportunities.

In coming posts we will look at some of the opportunities which have already begun to arise. Please be sure to subscribe.


Lost Retirement

Lessons in retirement planning

Witnessing the wild mechanisations of The Great 2020 Coronavirus Stockmarket Crash presents the perfect opportunity to open up a new discussion on the matter of retirement savings. More specifically – superannuation, retirement and pension products and the government regulations which compel us to use them.

For the past 30 years Governments around the world have been ‘encouraging’ their citizens to save for their retirement.  Well ‘encouraging’ may not be a strong enough word. Governments have generally ‘forced’ their citizens to contribute 9-15% of their wages and salaries towards retirement savings products. And over the past 3 weeks, we have seen trillions of dollars wiped off the value of these products. So let’s examine.

Let’s assume the average worker is likely to spend their wages and salary in the following proportions:

  1. Income Tax – 30%
  2. Housing – rent or loan repayments – 25%
  3. Generally living expenses – 25%
  4. Surplus funds available for other investment or luxury spending – 20%

Then the Government came along and said ‘no, we want you workers to put your final 9-15% into special financial products which you cannot touch until you retire’.  The diligent workers are now left with disposable income of a mere 5-11% of their gross pay.

So the workers did as they were told. They allowed for their employers to deduct part of their wages and salaries and send it off to these retirement product providers. Putting their faith in the promises which the politicians, the bankers and their union representatives had made.

Every payday they effective transferred money into these products. Many of which were paying large fees to the product trustees and the investment managers.  This didn’t matter though – for in the end they would have a sizable nest-egg to see them through retirement.

Meanwhile the workers were forced to forego the early repayment of their home loans; the purchase of investment properties; the investment in hard assets; or, simply the enjoyment of life through the purchase of luxury goods and services.

Then along came the GFC. These retirement products lost half their value in 12 months… but this was okay, as there would be time to build it back up.

Now the Coronavirus Crash is upon us, markets are down 35% and so too are the retirement savings products.  Only this time – we are 11 years on from the end of the GFC.  Is there still time to make it back up? 

Interest rates at Nil%, even negative.  Corporate profitability is down and is likely to stay this way for a  number of years. An entire generation has now seen their retirement plans lost. 

So here is a question – why couldn’t the workers simply be trusted to use their additional disposable income to repay their home loans quicker?  

Photo by Kelly Lacy from Pexels

Surely the best way to provide for yourself in retirement is to own your own home outright – yes?

As explained in this previous post – the early repayment of a home loan generally provides you with a risk-free and tax-free return, equivalent to the going home loan interest rate.

So another question – if those in power genuinely wanted to assist citizens to prepare for retirement – why didn’t they incentivise them to simply purchase a home and repay the debt as fast as they could?

Not enough questions were asked of politicians and bankers post the GFC – will they be allowed to get away with this for a third time?

The importance of the topic cannot be understated. This post will now become a new feature page of the Goldsmith Money website.

I would love to get your thoughts on this topicplease be sure to comment below.

Be well.


Innovation through cryptocurrencies II

Blockchain – Generations 2 and 3

In a recent post titled Innovation through cryptocurrencies we provided you with an introductory explanation of blockchain, along with a quick brief on the original, 1st Generation blockchain and our most well known cryptocurrency – Bitcoin.

Over the years however, blockchain has evolved. It is no longer simply a transaction platform for transferring electronic tokens. Generation 2 and 3 blockchains are doing much, much more.

Photo by Launchpresso on

Second generation blockchain Ethereum (launched 30 July 2015), was the first smart contract blockchain, which not only allowed the transfer of tokens, but allowed conditions to be attached to the transfer.  Meaning a transfer would only be executed when the conditions of the contract had been satisfied. Smart contracts have opened up blockchain to an unlimited array of commercial opportunities. Unfortunately, Ethereum like Bitcoin is limited by speed to approximately 15 transactions per second. 

Both Bitcoin and Ethereum transactions incur transaction fees which are paid to the miners.   These fees are are difficult to gauge as they change depending on how business the network is. They have also been known to get very expensive in busy times, causing both delays in transaction times and high transaction costs.

In the end, the fees make it next to impossible to use Bitcoin or Ethereum for small purchases – your morning coffee for example. So again this comes as a drawback to mainstream adoption for Generation 1 and 2 blockchains.

Third generation blockchains, such as the EOSIO blockchains (first launched in 2018) can now process thousands of transactions per second, near instantaneously, with no transaction fees.

These EOSIO blockchains are run efficiently by 21 specialised and elected block producers, with paid backup block producers on call should any top 21 servers be taken offline.  

They come with smart contract capability, multiple account permissions, human readable account names and multiple token functionality. They are opening up a huge range of trade and commercial opportunities for individuals, businesses and other organisations.

Third generation blockchains could theoretically connect people in every country throughout the world – allowing them to freely and securely communicate; trade and transact instantaneously and, all completely outside of current banking and finance systems.

As a part of your financial awakening you should strive to understand blockchain technology. Consider the evolution it will take over the next decade; and, the role it could play as a future monetary supply and global transaction platform. 

So does cryptocurrency really cover all the criteria to be considered ‘good’ money?

Be sure to subscribe to Goldsmith Money, so as not to miss our next blog, which will answer this very question.


Gillette v Egard

Trends – The Conservative Counterculture.

In January 2019, Gillette launched a bold marketing campaign which aimed to hold men to what they consider to be a higher moral standard. Their television commercial appeared to portray men as privileged bullies, catcallers, misogynists, among other things. The ad ended with the question ‘is this the best a man can get?’ A variation of their iconic ‘Gillette the best a man can get’ slogan.

The advertisement was a hit with many feminists and the metoo movement for its stance against so-called ‘toxic masculinity’. Unfortunately for Gillette, this is not their customer base. The customer backlash against Gillette was enormous. Men who had looked upon the Gillette brand as a symbol of strength and virility, were deliberately destroying their Gillette razors. Also women, tired of the constant bashing of their boys and men, were protesting in a similar manner.  

In August 2019, the true power of the consumer was revealed when Gillette’s corporate owner, Procter & Gamble, announced an $8 billion dollar write-down in the value of the Gillette brand. The result was a $5.24 billion loss for the parent company.  

The entire write-down may not have been a direct result of the campaign, however it is clear that the ad was a very expensive mistake. Gillette had simply failed to notice a major shift in political and social trends. More careful analysis should have revealed that the long running ‘social justice’ movement was drawing to a close and the new ‘conservative counterculture’ was rapidly emerging.

Conservative (right-wing) YouTube news commentators operating out of their homes had subscribers in the millions. Some of them were engaging larger audiences than of their left-wing, commercial television news network rivals.  

Conservative cable news network Fox News, remained the top rated commercial news network in the US, whilst the ratings for its non-conservative rivals were falling terribly.

Then of course there was the ‘populist’ political revolution mentioned previously, which was seeking to reassert national culture, custom and tradition; and, was taking the world by storm. 

Despite all the signs, Gillette failed to see the trend and paid the price.

For those who do see the political and social trends and run with them, the rewards can be great. In a response to the Gillette ad, Egard Watch Company swiftly released an advertisement it had been working on which acknowledged the amazing achievement and sacrifices made by men worldwide. Instead of focusing on ‘toxic masculinity’ and the worst in male behaviour – the watch company decided it was time to celebrate the very best.

The Edgard Watch ad was visually effective in depicting men in various and emotion stirring situations. Through each situation it asked a single question, such as ‘Is a man brave?’ It then provided written statistics to answer each question.  With regard to this question, the statistic read – “Men account for 93% of workplace fatalities”. At the same time we were watching an heroic fireman carry a young girl out of a burning building.

The response for Edgard Watches was overwhelmingly positive and they were sold out of stock within days. The company had read the changing political and social trends correctly and was very well rewarded by the consumer.

There have been a number of recent marketing initiatives which have triggered a conservative backlash – can you name one or two?


What is a man? A response to Gillette


Coronavirus – a shifting sentiment?

Trends – special update

When word started spreading about this new ‘Coronavirus’, I was surprised at how slow the general public and stock markets reacted. I was watching the data come through and seeing the Chinese reactions and I was taking precautions.

Now we have had the stock markets crash and we have seen the public get into punch-ups over toilet paper. However these events do not last forever. So is Coronavirus sentiment already moving on now?

Photo by Burst on

A part of your financial awakening is learning to look for the trends. Ask, what are the stats saying? What is the media sentiment? What are the experts saying? What are your friends and family saying? And what is everyone doing?

When it comes to Coronavirus there have been media commentators telling us that we were merely weeks away from a new Spanish Flu – this is simply not happening.

All deaths are sad. However, it is important to keep our reactions to death in perspective. When the official stats are presenting total world Corona deaths at 4,000 over the past 3 months, this is immaterial next to world-wide flu related deaths. In the USA alone, they had 34,000 flu related deaths in 2018. This is nearly 3,000 deaths per month in just one country.

I spoke to a pharmacist last week and asked him for his opinion on Coronavirus. His response was quite blunt. He said ‘We (Australia) have 15,000 flu related hospitalizations and deaths per year and nobody cares. We have had 4 Coronavirus deaths in the past 3 months.’ So again, perspective is important.

Then there is the good news. Many, many people are recovering from Coronavirus. Many people being diagnosed with the virus are reporting only mild symptoms from mild fevers, to coughs and cold like symptoms.

There are more reports coming out of children running around infected by the virus, not even aware that they have it. And as far as I am aware, not a single child has died from the virus.

There was at least one case of couple in close proximity for many days, not passing the virus from one to the other. The infected in this circumstance reported getting a fever which lasted about 8 hours and stated that it was effectively treated with Gatorade and has made a full recovery – again another positive.

I have noted that attitudes are now shifting – ‘this virus won’t get me‘ they say. I am going to eat well. Sleep well. Wash my hands more. Get fit. And what a great habits to get into.

Those who are sick seem to be self-quarantining, another positive.

So note the sentiments of those around you. Are they still stocking up on toilet paper or are they now getting on with life?

If you too feel that that people are simply getting on with life and ignoring the media noise, you can be reasonably certain that the fear is coming to an end. It is therefore worthwhile to consider what this might mean with regard to opportunities. Will stock markets start rising again? Will people start travelling again? Going out to public events again?

Finally, there would be many betting that this Coronavirus fear ‘trend’ continues. Well the ‘trend’ is your friend, until it ends. As I have mentioned previously, getting caught swimming against the trending currents can have dire financial consequence. So please be careful.

And stay healthy.


A Political Movement

Trends – Political and Social (Part 3)

When it comes to politics, just like anything else, there are always trends taking place. Long, short, weak, strong.  At present, we are seeing a very strong global trend which is likely to last for many years now.

The trend we are seeing a global push from Globalism back to Nationalism. Please refer to blog post ‘The Political Pendulum‘ should you need a refresher on these political structures.

This swing is being labelled a ‘populist movement’. In truth, it could indeed be considered a working and middle class revolution.

This movement began with the Brexit referendum result in 2016, and was reinforced later that year with the election of US President Donald Trump

The movement has found a strong foothold in European nations such as Italy, Hungary, Russia and Georgia where leaders have turned their backs on open border immigration policies and returning to traditional national values.

On 28 October 2018, the movement returned right-wing conservatism back to South America, with the election of Jair Bolsonaro as the 38th President of Brazil.

The movement is causing an ongoing headache for the center-left French President Emmanuel Macron, with Yellow Vest protests occurring weekly for the past 15 months.

The populist trend continued into Australia in 2019 with the shock re-election of Prime Minister Scott Morrison. The pre-election polls showed Australian citizens were disappointed with the past 6 years of coalition Government. Regardless, the desire of Australians to retain a conservative government saw an overwhelming re-election result for Australia’s conservative party.  

On 1 March this year Slovakia’s right-wing populist party claimed victory, ending a 14 year left-wing government.

Leader of the Ordinary People and Independent Personalities party Igor Matovic addresses his supporters, acknowledging preliminary results of the general election in Trnava, Slovakia, Sunday, March 1, 2020. (AP Photo/Petr David Josek)

Understanding and accepting that the trend towards Nationalism is here and will continue, you want to look out for opportunities which might arise from this.

You should also consider the associated trends, such as the resounding backlash against ‘political correctness’ and ‘virtue signalling’. As mentioned in the Trends home page. You do not want to get caught swimming against this trending currents. The financial consequences can be disastrous.

We will examine both opportunities and threats associated with with current trends, in future posts. In particularly, we will look at examples of some companies which failed to understand these political trends over the past 18 months, to help us avoid making the same mistakes.


Reference and image – Slovakia:

Innovation through cryptocurrencies

Bitcoin and the blockchain – an introduction

Previously I mentioned that there may soon be a new medium of exchange which could one day be a ‘good’ form of money.  This money is what is has been named ‘cryptocurrency’ – a result of combining the internet, cryptography and currency. No doubt the first cryptocurrency to spring everyone’s mind is of course is – Bitcoin.

Photo by Pixabay on

Bitcoin (launched 2009) was the first cryptocurrency, built upon a decentralised blockchain. In essence, a ‘blockchain’ is simply a ‘spreadsheet’.  However, unlike a spreadsheet which is open and running on a single computer, this spreadsheet is run on computers all over the world – simultaneously, with no single point of failure.

Each Bitcoin (or part thereof) represents a unit of currency on the spreadsheet and each Bitcoin account represents a cell.

Only those who hold the password (private key) to an account are able to transfer Bitcoin from this account to others. This means that so long as an account owner keeps their private key safe, their Bitcoin will not leave their account. However, others may send Bitcoin to the first owner’s account if they know the account address (the public key).

Blockchain can be trustless, to the extent that responsibility for operating and maintaining the blockchain can be spread across multiple third parties, across multiple jurisdictions and can be kept outside the boundaries of any one government, regulator or bank.

Transactions are near instantaneous, are borderless and permanent. Compare this to the transfer of monies to foreign bank accounts which can take many days to complete the transactions. Bitcoin and other cryptocurrencies make transfers happen in minutes and with some, mere seconds.

Once a transaction has been made, it becomes forever written upon a single block within the blockchain. Each block is compressed, encrypted and verified by the miners or block producers. The ending ‘hash’ of one block then becomes the ‘header’ of the next, thereby forming the chain.  And the more blocks in the chain, the more difficult it becomes to alter earlier transactions.

Bitcoin itself is now the most powerful computer network on Earth and it is virtually impossible for any one organisation to hack and fraudulently alter transactions.

We are still in the very early stages of cryptocurrency, however blockchains are evolving rapidly. Bitcoin itself, whilst the most commonly used blockchain is only capable of a maximum 10-12 transactions per second. This is nowhere near quick enough to be a mainstream transaction platform – at least not in its current state. Visa for instance, processes thousands of transactions a second.

In addition to transaction limitations, Bitcoin also requires enormous quantities of electricity to maintain the blockchain.  The servers (called ‘miners’) which are running the Bitcoin blockchain, are said to be collectively using enough electricity to power a small country. Unless Bitcoin can overcome this inefficiency, its future again looks limited.

As I have said in the opening – Bitcoin was just the very beginning of blockchain and cryptocurrency – the 1st generation. The technological advancement of blockchain over the past 5 years though has been remarkable.

In upcoming posts we will discuss 2nd and 3rd generation blockchain technology. We will also examine cryptocurrency with respect to the 8 characteristics of ‘good money’. All part of your…

Financial Awakening!