The Perth Mint’s Great ‘Blockchain Upgrade’

The Perth Mint’s Great ‘Blockchain Upgrade’

Yesterday we began to explore how blockchain technology is going to upend and recreate industries all over the world.

You didn’t have to look very hard to see it playing out right in front of you.

The front page of The Australian Business Review yesterday had the news that the Perth Mint is developing its own blockchain-related products.

Gold is losing appeal to bitcoin and crypto investors. The Mint’s revenue is down 40% on the previous year.

Already, we can see winners and losers forming here.

The management at the Mint know they have to stay relevant as much as they can.

And there’s one way they are trying to do exactly that…

Perth Mint to implement blockchain?

The chief executive of the Mint says the blockchain means it can offer even greater security and transparency for gold investors.

One concern for gold holders is that whichever bank or firm they’re using (like the Perth Mint) actually has the gold it says it does.

The blockchain can make those concerns redundant. It’s an immutable ledger.

But there are more possibilities…

You could create a gold fund, for example, where the actual gold was only sourced from companies and regions that operated at a high ethical standard.

Ethical and green investing has become a major driver in investment markets in recent years.

This is especially relevant around the natural resource markets.

The Norwegian sovereign wealth fund has US$1 trillion to allocate. It revealed in November last year that it’s considering dumping its oil and gas stocks.

That’s the kind of thing you need to pay attention to if you’re invested in fossil fuels. And, via your super fund, you probably are.

‘Conflict’ diamonds are of major concern in Africa, as are the working conditions of the men and women who mine cobalt in the Congo.

You can see how a blockchain can be used to trace any natural resource from where it’s extracted, to who handles it, to the end user.

The fishing industry is currently testing it to try and stop illegal and unsustainable fishing in the Pacific Islands.

The blockchain can bring great credibility to major corporations that need to protect and enhance their brand via ethical supply chain management.

It can also bring great profits to companies in the right industries…

Increasing revenue and cutting costs worldwide

The Taiwan Semiconductor Manufacturing Company is the world’s largest chip operation.

It’s a key supplier to Apple.

The company’s outgoing chairman just said it expects to see 10-15% US dollar revenue growth this year.

But it’s not because of Apple.

It’s because of the cryptocurrency ‘miners’ buying chips. Blockchain is at the heart of digital currencies. Bitcoin miners, for example, need powerful computers to create each block.

TSMC had a conference call recently. Look at the rate of change in the mentions of crypto (the blue line) in the graph below…

Source: Ark Invest

One of the more interesting earnings announcements coming up is from Nvidia [NASDAQ:NVDA].

It’s due in early February.

Cryptocurrency mining has become an unexpected revenue tailwind for this business.

It’s not the main driver of the company, by any stretch. But it will be most interesting to see what’s happened since November.

Crypto prices exploded — and dipped a bit now — after Nvidia’s last earnings announcement.

And just as we can see how blockchains can create revenue for businesses, it can also cut costs.

The Australian Stock Exchange (ASX) is going to shift its settlement system to a ‘distributed ledger’ (blockchain) system this year.

The Australian estimated on Monday that global investment banks could save 10-15 BILLION dollars in backend costs if they follow the lead of the ASX.

This blockchain revolution is affecting hundreds of billions of dollars…

Just recently, a leak revealed that encrypted messaging service Telegram plans to raise an astonishing US$2 billion via a private token sale and initial coin offering.

The ARK Disrupt newsletter says, ‘Regardless of Telegram’s ultimate success, we are witnessing a new wave of blockchain technology proposals seeking to fill roles that first-movers like Bitcoin and Ethereum have left wanting.’

Ledger, the company that makes hardware wallets to store cryptos, raised US$75 million last week.

The money will primarily be used for research and development (R&D).

Ledger is working on a storage device called the Ledger Vault — aimed at institutional investors and hedge funds.

That gives you an idea of the amount of money about to flood into the crypto sector.

The time to be preparing for this is now.


Callum Newman
Editor, The Daily Reckoning Australia