by Jeff Brown, International Man:
That’s the estimate for how many “ghost accounts” were created by banking giant Wells Fargo.
That’s about 1% of the total U.S. population. It’s also roughly the population of the state of Connecticut.
You’ve likely heard the story already, so I won’t go into all the details. But here’s the gist…
Wells Fargo created millions of fake accounts for its customers… to charge them fees for services that they never requested.
It was later discovered that Wells Fargo was signing customers up for unwanted insurance policies as well – again, to charge customers for services that they never requested. This was outright fraud.
It’s for reasons like this that a new type of technology has burst onto the scene. It enables secure, reliable, and transparent transactions… without the potential for manipulation by big financial institutions.
As an investor, this technology needs to be on your radar.
You Can’t Trust the “Trusted” Intermediaries
Recently, I wrote to you to give you an “inside look” at the world of cryptocurrencies. I told you that the crypto market would experience some pullbacks and high volatility. We’re seeing that today. Bitcoin, the world’s first cryptocurrency, dropped about 30% earlier this month.
But despite these pullbacks, I’ve also told you that these new crypto assets still have a long way to run in the years ahead. And the reason why can be summed up in one word: blockchain.
You’ve likely heard the term “blockchain” associated with the popular cryptocurrency Bitcoin. You may even know it as the decentralized ledger technology underpinning cryptocurrencies.
But that’s only part of the story…
Blockchain technology is also known as distributed ledger technology. We can think of a distributed ledger in its simplest form as a distributed database – distributed in the sense that there are complete copies of this database (or ledger) scattered around the world.
Historically, companies, governments, and individuals all keep their records in one centralized database. Imagine a room with racks of computers that store information.
But centralized databases can be manipulated… Records can be changed, hard drives can fail, data can be lost, and the records represent only one party’s view of any given transaction.
In the world of blockchains and distributed ledger technology, the exact opposite is true. The transactions recorded on the ledger represent a transaction that takes place between the parties involved and is confirmed by the blockchain network via a consensus.
Once a transaction is written to the ledger, it is immutable. It cannot be changed.
The image below gives you an idea of the difference between these two network types.
The value and utility that a well-designed blockchain provides is remarkable. Immutability, secure transactions, privacy, transparency, the reduction or elimination of fraud…
That last part is key.
That’s because in a centralized system, we depend on “trusted” intermediaries (banks and other financial institutions) to conduct transactions.
But as we’ve learned time and time again, these “trusted” intermediaries are not at all trustworthy.
It wasn’t long ago when the LIBOR scandal uncovered that many of the most “trusted” financial institutions in the world were manipulating interest rates for their own benefit, and of course at the expense of others.
Banks like Barclays, Deutsche Bank, JPMorgan Chase, UBS, Citigroup, Bank of America, and the Royal Bank of Scotland were found to be right in the middle of these manipulations. And we’ve already discussed Wells Fargo…
The corruption is seemingly endless.
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