[Editor’s Note: Today Michael is bringing you a story about blockchain technology – this time from the depths of the Pentagon’s immense bureaucracy. But he’s not done yet when it comes to this ground-floor opportunity technology. In fact, he’s looking for more blockchain opportunities right now. He and his team are headed to Blockchain West – one of the nation’s most important crypto-tech conferences. He’ll be there early next week and will report back soon with what he finds. So stay tuned.]
The Pentagon just unveiled a new platform it calls Pathfinder.
No, it’s not a new robotic weapons system… or a new high-tech tank… or even an innovative mapping system.
Instead, this is a program that addresses the Pentagon as a huge bureaucracy, instead of as a fighting force.
Pathfinder is a new program to migrate tons of data, some of it quite sensitive, to the cloud. And the U.S. Department of Defense is contracting with cloud leader Amazon Web Services in a deal that could eventually be worth billions to make it happen.
As you might imagine in this era of cyberattacks, not everyone in Washington is on board with the massive data migration.
They worry that the Pentagon is exposing itself to hackers who may come from China, North Korea, or Russia. After all, black-hat teams tied to those three nations attempt to penetrate our military networks on an almost hourly basis.
Here’s the thing. There’s a relatively new approach out there that offers far more security, not to mention a permanent record of every single transaction involving a military budget totaling more than $750 billion.
It’s a system I call the Milblock.
In a moment, I’ll explain just what I’m talking about.
Nothing Beats Blockchain
Don’t get me wrong. As a longtime champion of investing in cloud-centric firms, I’m in no way turning my back on Amazon.com Inc. (Nasdaq: AMZN).
I believe that its security is probably as good, and maybe even better, than the Pentagon’s.
But when it comes to data encryption, nothing beats what blockchain technology can offer…
A “block” is a record of new transactions (“transaction” could mean the location of cryptocurrency, or medical data, or even voting records). Once each block is completed, it’s added to the chain, creating a chain of blocks: a blockchain.
Blockchain tech serves as a global ledger of transactions. Information held on a blockchain exists as a shared – and continually updated – database. Data on a blockchain isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable.
That also means there is no centralized version of this information, so hackers can’t corrupt it.
The DoD tracks these new kinds of technologies at its own sort of Silicon Valley hub, known as the Defense Advanced Research Projects Agency (DARPA).
Although DARPA doesn’t like to talk about what it’s working on, the agency didn’t mince words about its goals for blockchain. Last summer, the agency said, “The Pentagon has been moving discreetly but aggressively in recent months to develop military-related apps exploiting the capabilities of blockchain.”
DARPA is also said to be testing blockchain as a form of secure messaging technology. The goal of this project is to build a secure platform to send encoded messages to operatives in combat situations.
And this emerging Milblock won’t be just limited to defense. It also could have wide-ranging application throughout the federal government…
The Biggest Agency You’ve Never Heard Of
Take case of the sprawling General Services Administration (GSA). The GSA is little-known but crucial federal agency.
It supplies products and communications for all U.S. government offices, provides transportation and office space to federal employees, and develops government-wide cost controls and other management tasks.
The GSA employs about 12,000 federal workers, has a budget of about $26.3 billion, and oversees $66 billion in procurement each year. And it does so all while managing $500 billion in federal property.
Last June, it began piloting the federal government’s first blockchain project with vendors Sapient and United Solutions. The concept here is to move onto a blockchain the GSA’s IT products and its FAStlane service that keeps new vendors on schedule.
The U.S. Department of Homeland Security granted nearly $750,000 to a blockchain startup to look at identity management and online access issues. Meanwhile, the U.S. Department of Health and Human Services is looking into blockchain solutions for IT and research projects.
In other words, the blockchain is set to have a huge impact on the federal government’s $3.65 trillion budget.
To help advance the goal of lock-tight and secure systems, aided by blockchain, the government is turning to one of their most trusted contractors…
Meet the Milblock
I’m talking about Lockheed Martin Inc. (NYSE: LMT).
The storied firm derives more than $50 billion in sales from four key areas: global aerospace, defense, security, and advanced technologies.
And right now, a key area of focus for that advanced technologies group is a focus on Milblock, where Lockheed Martin has been an early adopter.
In May 2017, the firm said it had become the first U.S. military contractor to build blockchain technology right into its development processes.
And Lockheed aims to deploy the Milblock across its operations. Various teams that oversee supply-chain risk management, systems engineering, and software development are now all installing the Guardtime Federal Core blockchain infrastructure.
And Lockheed’s clients will be able to start building out Milblock through the firm’s Black Lantern cyber-defense appliances.
Of course, Lockheed will likely always be best known for its weaponry.
And it’s set to ramp up sales there as well.
From Fighter Jets to Satellites
Plans call for 90 deliveries of the F-35 fighter jet in 2018. In the next few years, that figure is expected to rise to around 130 planes.
The “fifth generation” fighter combines advanced stealth with fighter speed and agility, fully fused sensor information, and network-enabled operations. It’s a popular choice for the U.S. Air Force, the U.S. Navy, the U.S. Marine Corps, and 10 other militaries around the world.
Lockheed Martin is also a crucial supplier of space-based technologies. The $9.5 billion division helps the U.S. intelligence community to keep close tabs on our global adversaries’ communications.
And the telecom and internet sectors now rely on the more than 100 commercial satellites (and related gear) that Lockheed has placed into orbit. The LM2100 satellite, which will have its maiden voyage in the second quarter of 2018, brings the most advanced technology yet to commercial satellite buyers.
We’re only scratching the surface here. Lockheed Martin operates a range of smaller divisions focused on military and commercial helicopters, naval systems, platform integration, simulation and training. And the firm is playing a growing role in support of the energy sector.
Locked-in Demand… and Rising Profits
Clearly, the stepped-up pace of defense spending in the face of rising global threats means that Lockheed Martin will generate strong sales for years to come.
Just as important, the firm is making a series of moves to boost profits. Look for adjusted earnings to rise 15% this year, to $8.1 billion.
Management has built a strong track record with Wall Street. Fourth-quarter profits of $4.30 per share, for example, were well ahead of the $3.98 consensus forecast.
And 2018 and 2019 profit forecasts have moved sharply higher from forecasts in place before earnings were released in late January.
Here we have a leading defense contractor that captures all of the key defense spending trends, and also ensures a leading-edge tech focus by embracing new innovations such as the Milblock.
Of course, blockchain is just one of the many revolutionary technologies we track here. And this isn’t the first time I’ve helped you get ahead of the curve…
In fact, there’s a new technology that could be used to help power just about every electronic device out there in the future. And a tiny Silicon Valley company recently reported that it has received FCC approval for this revolutionary new device.
According to Allied Market Research, the device’s market could hit $37.3 billion in just the next few years alone. And once this new technology gets incorporated into hotels, restaurants, airports, coffee shops, and even entire cities, it could be a trillion-dollar business.
The window of profit opportunity is closing quickly here, as more and more folks are learning about this. So click here for more information on this breakthrough new technology before it’s too late.
P.S. Don’t forget to check back next week. I’ll be back from Blockchain West with lots more investment ideas in this space. See you then!