The Next Big Winner in the Crypto Revolution

Cryptocurrency started out as an alternative to fiat money. That was certainly the idea behind bitcoin, the first crypto. And if bitcoin’s price growth and gradually widening use are any indicator, it’s working. But some of the most exciting possibilities today are in other, new uses for crypto.

Bitcoin’s phenomenal price growth gets most of the headlines. But long term, it may be the blockchain technology behind bitcoin that proves to be more revolutionary. And it’s some of the newer cryptos that are exploring that potential.

French insurance giant AXA have launched a new product to take advantage of that potential. At first glance it seems like a straightforward insurance product. Customers can insure their flights, in case they’re cancelled or delayed by two hours or more. Simple, right? Except that this product is powered by blockchain tech.

As AXA representative Jean-Baptiste Mounier told CoinDesk:

The smart contract is the party that decides whether or not we should indemnify the policy holder and triggers a payment request to our system. The use of a smart contract to trigger claims will add trust in the insurer / policy holder relationship.

‘Smart contracts’ are part of the ‘Ethereum’ blockchain network. Ethereum is an open source network. It’s based on the same blockchain technology as bitcoin, which means that it’s open and secure for anyone to use. It’s all powered by a cryptocurrency token, ‘Ether’. Ethereum users can pay one another for computations performed on the Ethereum network, with ether coins.

In essence, ethereum lets users buy idle computer time from one another. Which can then be used to execute smart contracts. That’s it. It’s a simple idea, but a very powerful one.

Because the network is open and secure, anyone can participate. Including insurers like AXA, who can build a more transparent and fair insurance product based on ethereum.

It’s a rare example of everyone winning. Consumers get better options. AXA profit. And the ethereum network is enriched by increased use.

This is a less straightforward, obvious use of the blockchain than bitcoin’s alternative currency. That’s why it’s taken longer to appear. But, as ethereum’s greater than 2,000% price growth this year shows, people are beginning to clue in to the possibilities. The price has gone from US$8.26 on 1 January this year to US$232.37 as of Friday.

Ethereum 15-09-17
Source: Coindesk
[Click to open new window]

It’s these newly discovered uses for blockchain tech that are most exciting, if you ask me. I think we’ll see more and more of these cropping up. And my guess is that they’ll get farther and farther away from bitcoin’s original currency focus. It’s just a matter of the potential filtering out into the other parts of society. Where people will discover it, and find ways to apply it to their own world.

AXA is one of the world’s largest insurers. To see it dipping its toes into blockchain technology is encouraging for any crypto investor. But they aren’t the first in the corporate world to take notice. And they won’t be the last. The Enterprise Ethereum Alliance is a group of 86 companies backing ethereum. Including big names like JPMorgan, Credit Suisse and Microsoft.

Every day, more uses are found for cryptocurrencies blockchain tech. They’re already revolutionising the world of finance. But perhaps the biggest gains could come from uses no one has even thought of yet.

This week in Money Morning

Environmental chaos is highlighting political chaos in the US. Uncertainty is growing. In Monday’s Money Morning, Ryan looked at how these events are driving investors toward safe haven assets. And some of those safe havens are doing better than others. For Ryan’s discussion of why, click here.

The financial fallout from politics continued on Tuesday. Ryan looked at how the Aussie market has been affected by our government’s energy policy. Or lack of one.

Electricity generation has been a political football for both Liberal and Labour governments. But in the back and forth struggle over how Australia will generate power, our politicians have created a market where no one wants to. At all. It’s too risky for companies to make long term investments. Power stations are expensive. Whatever their type. Who would spend millions on an investment that will take decades to pay off, knowing it could be shut down at the next change of government?

This ongoing policy failure may already be hitting you in the hip pocket. Rising energy prices will harm industry and individuals all across Australia. But it has also created a surprising opportunity for investors. Read the details in Tuesday’s Money Morning.

Australia’s banks are the most profitable in the world. So Wednesday’s Money Morning may have come as a bit of a surprise. In it, Ryan warns that they could be headed for a fate similar to Kodak’s. Too enamoured with their enormous short term profits to keep up with long term technological changes.

For Ryan’s take on the big four banks’ best competitive advantage, and the ways that new financial technologies are threatening it, check out Wednesday’s article here.

Conflict and the threat of conflict was still all over the news Thursday. The potential for war is almost always bad for stocks. Just like with any other terrible disaster. But as Ryan explained, we have to invest in the real world.

Our strategy has to take these terrible possibilities into account, like it or not. And there are a few, very narrow, sectors that can benefit in times of conflict and instability. To read about one strategic resource that could be set to rocket in price, and how you can invest in it, you can find Thursday’s article here.

We always enjoy reading your feedback here at Money Morning. And while glowing praise may be nice for our self-esteem, it’s often the criticism that’s of the most use. In Friday’s article, Ryan addressed an email critiquing his Wednesday Money Morning. The reader certainly didn’t pull any punches. But there were some good points raised, which Ryan used to further explore the big four banks’ record profits, and the threats they face. Check it out here.

If you have any criticism, comments, ideas, or just some nice unconditional praise that you’d like to share, feel free to write to letters@moneymorning.com.au. We can’t reply to every letter we receive, but I promise we do read them all.

Regards,

Tyler Jefferson,
Editor, Money Weekend

Publisher’s Pick: ‘Pot Stock Frenzy’ — it’s the fastest-growing investment market in the world today. And now a new imminent pot catalyst is set to kick things up to a whole new level. Click here for more.

Numbers of Interest, as of Friday

Aussie Dollar to US Dollar: 0.8002

Gold: US$1,330.51 (AU$1,663.11) per troy ounce

Silver: US$17.79 (AU$22.23) per troy ounce

Bitcoin: US$3,347.18 (AU$4,183.64)

West Texas Intermediate Crude Oil: US$49.75 per barrel (AU$62.18)

ASX 200: 5,695.00


Tyler Jefferson joined Port Phillip Publishing in 2012. With a background in publishing, he started out as part of the team working behind the scenes with your Editors to bring you Money Morning each day.

When he joined, Tyler was Port Phillip Publishing’s 12th employee. Today that number has grown to over 50, as more and more readers turn to Money Morning as their source for independent financial analysis and ideas.

Today as Managing Editor, Tyler still edits the articles you read each day. Along with that, he occasionally contributes to Money Morning with his own irreverent take on the most interesting news and opportunities for you.


Money Morning Australia