Dear Reader,
Great news to share in the world of 5G in the U.S.…
The Federal Communications Commission (FCC) approved T-Mobile’s $26.5 billion takeover of Sprint. Incredibly, it was a 3-2 vote on partisan lines. I say incredible because not allowing the combination of the two wireless carriers would have resulted in less consumer choice and less competition.
The faulty logic of the two opposing votes was based on the beliefs that there would be less competition with only three national wireless operators versus four and that consumers would have to pay more for wireless services.
Ironically, this is exactly what would happen if the combination would have been denied. This thinking is incredibly naïve and demonstrates a lack of knowledge about the economics of these businesses.
Why? Neither T-Mobile nor Sprint as a standalone company had enough spectrum or financial resources to build out its own 5G network. They would have both gone bankrupt or chosen to just maintain their 4G networks… and painfully watch subscribers switch over to Verizon and AT&T to get access to 5G technology. The U.S. market would have been left with only two 5G carriers… and thus less competition and higher pricing.
With the FCC’s approval of the combination, the U.S. market will have three major wireless carriers with the resources and spectrum to build out nationwide 5G networks. And all three will be racing to do it as quickly as they can. Consumers will have a healthy competitive market for 5G products and services.
It doesn’t matter which side of the aisle we sit on. Having three strong wireless operators in the U.S. is not only good for economic growth in America; it will also help other countries. New technological services leveraging 5G wireless networks will be developed quickly and exported to other markets, which will spur on further economic growth around the world.
The wireless industry floodgates are open now, and we have a lot to look forward to in 2020.
As always, I’ll keep monitoring this story. But for now, let’s turn to today’s insights…
The president of the Federal Reserve Bank of Dallas, Rob Kaplan, just made some surprisingly frank comments…
He said that the U.S. Federal Reserve (the Fed) is “actively looking at and debating” the issuance of a digital currency. To be clear, Kaplan is talking about a cryptocurrency-like version of the U.S. dollar. This digital asset wouldn’t be “dollar-backed.” It would be the U.S. dollar.
These are the most direct comments we’ve heard from top officials at the Fed on this matter. It’s clear the discussion has come to a head in the last few weeks, given the buzz around Facebook’s plan to launch a digital currency called Libra.
And Kaplan’s words come on the back of comments made by former Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo.
Giancarlo wrote an op-ed published in the Wall Street Journal calling for the U.S. to create its own digital currency. In it, he said that the U.S. dollar risks losing its world reserve currency status unless it goes digital.
Right now, the U.S. dollar makes up 62% of central bank foreign exchange reserves. That gives the U.S. dollar an enviable status among world reserve currencies. It allows the U.S. government the ability to issue large amounts of dollar-denominated debt at low rates. There will always be a willing buyer for it.
But numerous other countries, including China, are working on state-backed digital currencies to replace their fiat money systems. If another country is successful in deploying a globally adopted digital currency, it could threaten the dollar’s status on a global scale.
This would directly impact the Fed’s control over monetary policy. Specifically, it would lead to higher interest rates because the demand for U.S. Treasurys would drop.
If that were to happen, Kaplan estimates that interest payments on the U.S. national debt could jump by $200 billion a year almost immediately. That’s quite a significant jump, especially considering the government’s budget deficit is approaching $1 trillion per year.
This is what’s driving the sudden interest in the U.S. to launch a digital currency.
It is obvious to me that the Fed is starting to realize how quickly a digital currency could be adopted by billions of people. It’s not like fiat currency. Digital currencies move at the speed of light. There’s no reason for people to wait two or three business days for transactions to clear anymore.
So the age of fiat currency is coming to an end. There’s no doubt that the future is digital currency.
We already have a plethora of private digital currencies in circulation. Next, we’ll see governments and large corporations get into the game. They now know that the faster they make this migration, the better off they will be. And large governments have the most to lose if they don’t make the transition.
We shouldn’t be surprised in the near future when physical bills disappear, and our paychecks are deposited directly into a digital wallet.
Napster founder Sean Parker, who was also an early investor in Facebook and its first president, recently founded a biotechnology company called Arsenal Biosciences. On the surface, this may sound like an odd match, but Arsenal Bio is absolutely a company to watch.
Despite what we might expect, Mr. Parker is not a stranger to the biotech world. He was a supporter of the earliest CRISPR trials at the University of Pennsylvania. In fact, the first human trial patient was dosed with a CRISPR therapy to cure cancer in one of those trials.
Parker has also been a major donor to various cancer institutes. And he founded the Parker Institute for Cancer Immunotherapy, which does great research.
So Parker has become an insider in the biotech space. And he has become familiar with its top players. This has put him in a great position to launch his own biotech company.
That’s why Arsenal Bio is going to be a major player in the space. The company plans to pair CRISPR genetic editing technology with synthetic biology to engineer immune cell therapies that can kill cancer cells.
And Parker has assembled a superstar management team…
The chief executive officer (CEO) is Ken Drazan, M.D., who was formerly the president of a company called Grail. Bill Gates backed Grail. Its focus is on liquid biopsies to detect cancer.
The chief technology officer (CTO) is Tarjei Mikkelsen, Ph.D., who was formerly a vice president at 10X Genomics. I’ve been excited about 10X Genomics for years now. And the company finally went public last month.
And the chief scientific officer (CSO) is Jane Grogan, Ph.D., who was formerly the head of adaptive tumor immunity and principal scientist at Genentech, one of the successful biotech companies in history.
This is just an incredible team. And they are working on bleeding-edge technology with an important objective.
I can’t wait to watch Arsenal Bio in action. This is definitely a company to add to our watchlist.
Cryptocurrency-powered internet browser Brave is having a breakthrough.
Regular readers may remember Brave. We first covered the browser when it launched its ad program back in April. We said that Google should be terrified of this company… and for good reason.
As a reminder, Brave is a browser just like Google’s Chrome. The difference is that it doesn’t track users, hoping to steal and sell their data. Instead, it flips that model on its head.
Brave allows users to opt-in to its advertising program. Then Brave pays out 70% of its advertising revenues to those users, based on the ads that they view.
These payments come in the form of Brave’s cryptocurrency, the Basic Attention Token (BAT). And to store BAT, Brave comes complete with a cryptocurrency wallet. It’s a seamless process.
What’s more, Brave doesn’t violate users’ privacy in the process. It is a responsible custodian of our data.
Compare that to Google, which doesn’t pay users a dime. It keeps 100% of its ad revenues… which it only generates by “confiscating” users’ data and selling it to the highest bidder.
Unfortunately, Google holds nearly 90% of the global search market hostage right now. It’s a monopoly the company has abused for years.
But that’s about to change…
And that’s because Brave adoption is growing by leaps and bounds.
Brave now boasts eight million monthly active users. That’s how many people are using the browser every month. This number is up 45% since the start of 2019.
And Brave’s daily active user total just passed 2.8 million. That means nearly three million people are using the browser every day.
Brave also announced that 385 advertising campaigns have now run on the platform. These campaigns sparked 97 million views from users.
And these ads enjoyed record engagement levels. The first ad campaigns saw click-through rates of 14%. That means 14% of the people who were served the ad clicked on it.
This is phenomenal. For comparison, the industry average is only 2%. That means Brave’s click-through rate is seven times the industry average.
Now, I recognize that these numbers are tiny compared to what Google does every day, but Brave is experiencing exponential growth right now in usage. If it can keep up the growth and get to 100 million-plus daily active users, then Brave will have a real shot at disrupting the search industry. As a reference, Twitter has 126 million daily active users.
I believe this business model is the future. And it won’t just be for search engines. This model is a perfect match for social media as well.
As I said back in April, I believe this shared advertising model will become the disruptive force that leads to the downfall and/or disruption of companies like Google and Facebook. The worst-case scenario would be to force a business model change on these monopolies.
This won’t happen right away, of course. It’s still early days. But ultimately Google and Facebook will have to adopt this model… or die.
Regards,
Jeff Brown
Editor, The Bleeding Edge
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
