 Hey guys, it's MJ and in this video. We're looking at blockchain and foreign markets So what we're gonna be doing is discussing diversification Cryptocurrencies role in investment portfolios problems with traditional foreign assets and why crypto should be considered as a new asset class. I Want to give a shout out to smart cash who are sponsoring these videos. There's gonna be $25 for the top comment That's right. I'm gonna be giving all of it this week to one person So when it takes it all now smart cash has jumped about three times since I've started making these videos So make sure you investigate the coin further because it could be a really awesome investment But let's look at diversification. I mean the mathematical benefits to portfolio theory were only proven in the last couple of years And I've made a video a while back that discusses this in detail But it's something that we can see as far back as in the Bible I mean here we have a verse from Ecclesiastes that it says invest in seven ventures. Yes in eight You do not know what disaster may come upon the land So diversification is kind of like a risk management technique and it's often explained simply as don't put all your eggs in the same basket Now diversification can be achieved by investing across asset classes This is when you invest a little bit in property a little bit in equity and a little bit in bonds And then you can also get more diversification by investing within asset classes So you can get industrial property and commercial property. You can get Resources shares you can get financial shares. You can get government bonds You can get corporate bonds but the problem with all of these assets is that they don't give perfect Diversification because they don't have independence and this means they're not gonna be uncorrelated Because they all depend on something known as country risk Now for a South African like me country risk is huge I mean, we've got corruption crime and Julius Malema and this tends to scare off Investments and the majority of South African assets are held by foreigners and if they get scared We could have an economic disaster and end up like the Zimbabwe so to manage these risks We need to diversify our investment portfolios offshore But if you've ever tried to do this, you'll see that it actually is very tricky Okay, first of all the government puts limits on the amount of money you can take out of a country Then there is the language barrier, which makes it hard to obtain information Admin is an absolute nightmare. Okay, you also have currency volatility. There's potential double taxation. There's time delays There's different regulations just to confuse you some more You need to understand the politics in the country that you're going to be investing in For instance, some countries like China have restrictions on foreign investments and there's even the big worry of repatriation So there's a lot of problems with foreign investment, but let's just look at admin Let's just take one little one and expand it in this video I mean not only is admin expensive, but it's also confusing. I mean to purchase an offshore asset You first need to get permission from your home country You then need to get permission from the foreign country You then need to find a broker who's then going to help you find an asset manager He's then going to buy the the asset and this is going to be held by a custodian and There is a lot of documentation in this whole process And you're going to be dependent in some sense on the police now each person here requires a fee for the system to work and Intense regulation is also needed to prevent fraud Now first world countries tend to have these structures in place But other nations still have a long way to go For example, this is a beautiful beach in Africa and it's selling for only $5,000 But this land isn't registered on any title deed system and it's part of selling known as customary land Which means it belongs to a chief Now there's been stories that have reached even the likes of Vodafone Where they want to put up base stations to you know provide internet and telecommunication networks But they've ended up paying four different chiefs rent for the same piece of land just to put their infrastructure Now this can be a massive problem as this prevents infrastructure investment which prevents Africa from growing Now you're probably thinking oh, I know where this video is going This guy is going to suggest we'd register land and other foreign investments on the blockchain Boring I've heard this all before well the thing is you're wrong and That's a pretty dumb idea Because do you really think government is going to give up its power to administer land ownership to a decentralized system? And what could possibly be the incentive for someone to contribute computer power to this net to this network? I mean nobody wants another worthless token look I may be wrong And there are projects out there that are trying to do exactly this But I don't think they will work You know unless you get the judiciary system on your side your blockchain register of assets is worthless and It's worthless because it doesn't stop someone from taking your assets I mean The law needs to be behind this in theory and the police need to uphold it in practice And that is a big ask of any country and I mean this kind of stuff happens We look at Johannesburg where I used to live people hijack buildings Okay, fortunately yes, but we do have a good court system and they were able to send the police and you know clear the people out But there are countless of stories of land being sold multiple times to different people in Africa and this just causes unnecessary fights So the solution to Africa's land problem isn't a blockchain. It's better government although There are other projects that seem to think otherwise But anyway, let's return back to the focus of this video and that is you know How can this blockchain revolutionize the foreign investment space? And I'm gonna go up and say that it already has okay What crypto has done is created a new asset class that is foreign for everyone Bitcoin like coin and even Ethereum these behave like foreign investments Okay, they're not correlated to the South African rent and other currencies and They can provide people in my country and in even yours diversification benefits and they do this by reducing portfolio risk and increasing portfolio return Remember we need we're talking about a portfolio investment where you put it up with a whole bunch of other assets I think maybe the best way to think of it is you know not putting all your eggs into Bitcoin But you put your eggs and equity bonds and all those other things But now crypto can be another basket for you to put your other eggs and just give you more of that diversification And I think the benefits are nice and clear. I mean you don't require permission You don't need a broker. You don't need an asset manager. You don't need a custodian because you know You're holding the coins yourself You don't need the documentation and fortunately you don't need the police But now some of you guys might say ah crypto isn't an investment because it doesn't provide a yield Well, some of them actually do Smart cash gives out a yield to the masternotes and It also gives the holders of smart cash a reward So if you just hold more than a thousand smart cash You're gonna get a little bit of extra coins every single month and I think this is important And in time we're gonna see more crypto based assets that derive their value from the internet economy Rather than just being used as a registry system for old assets Yes, Bitcoin was a bubble in December and and it popped. I mean if we look at my my old videos I was kind of thinking along these lines in in November I thought ICOs and tether were a systemic risk to the whole economy But as you can see by December my mood had changed. I got swallowed up by the hype. I was buying crypto kittens I was like black coins gonna hit a thousand dollars. You know, I was I was very wrong But if we had to compare Bitcoin and this whole bubble to the dot-com bubble You know that happened back in 2001 we can see that or we can get a little bit of hope seeing that there was an amazing recovery I mean today seven of the eight largest companies in the world are based around computers and the internet and Crypto might very well be following this path and that's why I'm still holding Anyway, thanks so much for watching check out my other videos on blockchain Leave a comment and always remember to subscribe. Thanks guys. Cheers