Blockchain is way of future

When you buy business shares, you do so for its earnings. You believe that the business will increase the earnings it produces over time and so the value of the share of the business will increase concurrently.

So, too, when you buy a farm. You buy the farm because the farm produces crops, which in turn can be sold. Earnings are produced and you can value the farm according to the earnings it produced and is expected to produce.

When you buy a property and rent it out, you earn.

But with Bitcoin being a nonproductive asset, it is difficult to determine its investment value. You are counting on someone else coming in and being willing to buy the “thing” from you at a higher price you bought the “thing” from someone else.

Warren Buffet said: “The cheque is a wonderful idea. Just imagine what the world would have been without the ability to write a cheque or do a wire transfer. But it doesn’t make the cheque itself intricately worth a lot of money.”

What does have value and what will revolutionise our industry is the technology behind Bitcoin and other crypto currencies: blockchain.

It has the ability to cut out the middleman through the use of distributed ledgers, which keeps information to verify transactions in multiple locations. The reason for keeping this data distributed is to increase security, making it more difficult to manipulate, or hack.

Imagine a world where you can buy an ETF with immediate settlement and not have to wait for three days to get settlement confirmation.

Imagine voting on proxies with blockchain technology that will keep records of how shareholders voted.

Imagine your property deed on a blockchain.

This will make sure that a verifiable record of property and land ownership is saved and made available, for ever.

Imagine how seamless this would have made our current land debate.

Imagine the impact of putting food items on a blockchain and tracking food that was responsible for the recent listeriosis crisis.

It’s coming and it will revolutionise not only the investment and finance industry but almost every industry out there.

Hannes Viljoen is the Senior Manager of Alexander Forbes’ Investment Advisory.