Dear Reader,
When stock markets are running hot and I’m seeing valuations that just don’t make much sense, I tend to spend a lot more time thinking about what possible catalysts might bring the markets down.
These kinds of market conditions do not mean there is impending doom.
The reality is that our bull market can continue for several more years. We are virtually guaranteed to have record levels of stimulus (money printing) for the next three years and a continuation of near zero interest rates during that time.
Threats of any tightening by the Federal Reserve are only that. They carry no weight. Action will only be taken in the event of runaway inflation, a point at which there would be no choice but to start raising interest rates quickly in hopes of getting inflation in check. The results of doing so would be devastating for the economy and for investors.
I don’t see that happening in the near future, but that doesn’t mean that there aren’t other risks that we need to keep our eyes on.
One of which being Taiwan. The last week or so has not been encouraging.
Over this last weekend, China marked its National Day holiday by sending about 80 People’s Liberation Army (PLA) aircraft to probe Taiwan’s airspace. And over the last week, about 150 military flights by the PLA flew into Taiwan’s air defense zone.
These are record levels of military activity. They are provocative, destabilizing, and very intentional. And sadly, they may be a sign of what’s to come.
I mention this because if Taiwan were to be taken over by China, the ramifications for the global economy and stock markets could be devastating. Taiwan has become a beacon for peace in Asia and is absolutely critical with regard to technology and manufacturing supply chains.
The global semiconductor industry particularly relies on Taiwan to manufacture chips for just about any kind of electronics that we can imagine. The semiconductors that Taiwan Semiconductor Manufacturing (TSMC) makes are used in smartphones, watches, laptops, game consoles, cars, and much more. Without them, these products simply couldn’t be manufactured.
And it’s not just TSMC – there is a long list of other Taiwan-based companies that are key suppliers and manufacturers for the semiconductor industry. If companies like Apple, NVIDIA, Advanced Micro Devices (AMD), Qualcomm, and so many others can’t get their chips from TSMC, the market would collapse.
Which is why these developments are so critical and concerning.
I’ve been to Taiwan more times than I can remember. Taking a flight from Tokyo’s Haneda airport to Taipei was as normal for me as a flight from Chicago to San Francisco. A few times, I even made day trips to Taiwan when my schedule was particularly busy. It was a long day, but still possible to do.
Taiwan is a fantastic place, and I always enjoyed my time there. Incredible innovation in technology, and a beautiful culture with very close ties to Japan. And the world needs Taiwan to continue to thrive and innovate independently; otherwise, the systemic risk to global supply chains will simply be too large.
I’ll be watching this closely, and of course, hoping for a peaceful outcome. But I just can’t help but think that from China’s perspective, there has never been a better time to strike. With a U.S. administration that is so eagerly kowtowing to China’s government, China certainly sees the window of opportunity.
And Taiwan is definitely a prize that would not only bring more wealth and economic growth, but outright power and control on a global basis that would give China a chokehold to extract whatever it wanted from countries around the world.
This is why it is so critical that manufacturing needs to return to a decentralized structure. Whatever plans are in place now, they need to be accelerated. Without doing so, the risks are simply too high.
Just a few days ago, a new blockchain project launched with an incredible $200 million raise.
Among the backers are a who’s-who of venture capitalists (VC) in the blockchain space. Andreessen Horowitz, Sequoia Capital, Pantera Capital, Polychain Capital, Distributed Global, and even Coinbase poured money into this new project.
It’s called Decentralized Social. Or DeSo for short. And as the name implies, it’s a decentralized social media platform built on the blockchain.
DeSo will have many of the same features as Facebook and Twitter. In fact, over one hundred applications have already been built for it. And the project is in the process of creating a foundation to fund additional app development. That will help expand the ecosystem even more.
And here’s the key feature – DeSo is not owned by any corporation or government. There’s no single entity that controls it.
And that means DeSo is impervious to the types of censorship that we have seen on the big-tech platforms like Facebook, Twitter, YouTube, and others. Each of those platforms has recently banned speech that does not fit their own political narrative. This includes deleting content and banning users, and even censoring peer-reviewed scientific research.
We need something that will restore free speech, all the free exchange of ideas, and not filter information. DeSo may very well be the solution.
DeSo was founded by Nader Al-Naji. Al-Naji is a former software engineer from Google who also anonymously founded the crypto-based social network BitClout under the pseudonym “Diamondhands.”
BitClout will now live on the DeSo blockchain, and its native token CLOUT will move over to the DeSo blockchain as well. It will be renamed as the DESO token.
What makes Al-Naji so interesting is what he did before starting BitClout. In late 2017, Al-Naji was the founder of a stablecoin startup called Basis. I was close to some team members at Basis, and I followed it very closely.
Basis attempted to pioneer an algorithmic stablecoin. That’s a stablecoin whose supply – and thus its value – was governed by computer software.
This is very different from the stablecoins we know today like the U.S. Dollar Coin (USDC) and Tether (USDT). USDC and USDT are supposed to be backed one-to-one with U.S. dollars. They are asset-backed coins, which is why their value is stable.
Of course, asset-backed stablecoins require dollars held in a centralized account somewhere. That means they rely on a third party to maintain the assets and thus their value.
Basis wanted to remove those third parties from the picture by eliminating the need for asset backing. The problem was the team couldn’t find a way to get the stablecoin approved within the current regulatory framework. That’s why the project shut down.
And when that happened, Al-Naji did something very unique. He returned all the money he had raised back to his investors. That very rarely happens.
By doing this, Al-Naji engendered a lot of trust in the VC community. And that’s why DeSo was able to launch with such incredible VC backing.
So what we are witnessing here is the birth of what very well could be a legitimate competitor to Facebook and Twitter. DeSo has the right idea at the right time, and it has a trustworthy team driving its growth forward. That’s the recipe for success.
And it shows us once more the incredible opportunity we have with blockchain technology. We’re going to develop not only new forms of social media, but a next-generation internet… And so much more.
Right now is the time to get in position as these enormous shifts begin picking up speed. If you haven’t yet checked out my newest research service where I discuss my top recommendations in the blockchain space, then I encourage you to do so right now.
The University of Science and Technology of China (USTC) just reached quantum supremacy. The university’s quantum computer managed to solve a calculation in 200 seconds that would take the fastest computer in China 2.5 billion years to solve.
This comes almost exactly two years after Google achieved quantum supremacy for the first time in September 2019. And USTC’s quantum computer raised the bar. The problem it solved was three orders of magnitude more difficult than Google’s prior calculation.
Of course, USTC had more quantum computing power to work with. Its quantum computer is a 56-qubit machine. Google was only working with 54 qubits back in 2019, only 53 of which were working. Important to note is that qubits don’t scale linearly. Just by adding a few extra quantum bits, the computing power grows exponentially.
This is another major breakthrough in the world of quantum computing. Quantum computers have advanced to solve more complex problems. And they are becoming less error-prone. In industry speak, there is less “noise” in the system.
And I think there’s a bigger story at work here…
Two years have passed since Google’s first quantum announcement. Yet it hasn’t published any major announcements about its quantum computing research. Interesting…
I am absolutely certain that Google’s quantum program is far ahead of what USTC just announced. Google has poured too much time, energy, and capital into quantum computing to just stop advancing the program.
So I think Google has something extraordinary right now in the quantum computing space. Leading up to its announcement in 2019, its progress had been improving exponentially. The same has been happening over the last two years.
Google is keeping everything under wraps while continuing its work behind closed doors.
As I look into 2022, I predict we’re going to see some more breakthroughs with quantum computing. There is so much happening in the space, and with error correction, these computing systems will be capable of tackling and solving problems that were impossible to address even a year ago.
We’re in for some incredible excitement.
Another early stage funding round just caught my eye. A startup called Sorare just raised an astounding $680 million in its Series B round at an incredible $4.3 billion valuation.
Sorare is a non-fungible token (NFT) platform focused on digital collectibles and gaming in the global football industry – soccer, for those of us in the United States.
Sorare has licenses in place with players from about 200 football organizations around the world. This allows users to trade NFTs – digital trading cards – of their favorite players.
Trading Card NFTs
Source: Sorare
What’s more, Sorare will allow users to build a “fantasy” football team with their NFTs. Their team will earn points based on their players’ individual performances in live games. This allows fantasy football teams to compete against each other for weekly prizes.
To me, this is the perfect example of how NFTs represent the next generation of the collectibles industry. They encompass everything that traditional collectors love – in this case, trading cards, plus a wide range of other attributes that make ownership that much more compelling.
NFTs allow for interactive gaming applications where players can make real money in the form of cryptocurrency and digital assets. That takes collecting to the next level. And Sorare is becoming a massive platform in its own right.
About $150 million worth of digital cards have traded on the platform in this year alone. That’s remarkable given that only a small number of people working in the blockchain industry had heard of NFTs at this time last year. The space was almost unknown.
Of note, Sorare’s Series B round was led by SoftBank. As we know, SoftBank has a history of investing in companies at inflated valuations. And at first glance, it may seem like SoftBank is making yet another investment at an absurd valuation.
That said, if Sorare can keep up its incredible growth trajectory, that $4.3 billion valuation may look cheap this time next year. SoftBank may indeed have gotten this one right. There is some incredible growth ahead.
That’s why I’ve tried so hard to put the explosive adoption of NFTs on my readers’ radar. The “tokenization” trend is one that’s just getting started. I’m incredibly excited by what we’re seeing develop.
So if you’d like to learn more about how to invest in NFTs, then simply go right here for more details. I don’t want anyone to miss out on this budding opportunity…
Regards,
Jeff Brown
Editor, The Bleeding Edge
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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.
