Dateline: Palm Springs, California

Every year, my wife Carole and I attend “Modernism Week” in Palm Springs, California. I’m ensconced in this storied desert community as I type this. This annual event is devoted to the architecture, furniture and clothing of the midcentury modern style.

Modernism Week is a magnet for wealthy people from around the world. At cocktail parties the last few days, I’ve interacted with Silicon Valley insiders who have more money than they know what to do with.

Pictured is yours truly in Palm Springs this week. (To fit in with this crowd, I needed the right set of wheels.)

From my conversations with California’s technology elite this week, I’ve learned an exciting investment trend.

It’s not getting covered by the mainstream media, which is all the better for investors who like to get in front of game-changing developments. I’ll share this under-the-radar trend with you:

The next generation of social network is emerging. Websites are springing up whereby all data and uploads exist on the blockchain instead of on centralized servers.

The good news is, two of our portfolio holdings are in the vanguard of this breakthrough technology: NVIDIA (NSDQ: NVDA) and Microsoft (NSDQ: MSFT).

By decentralizing and encrypting all data and uploads, this new breed of website aims to eliminate invasion of privacy and hacking. The most advanced of these next-gen social networks will contain their own native cryptocurrency to be used for purchases.

We’re witnessing the birth of a new form of e-commerce.

This proprietary digital money can be used to buy goods and services from other users, purchase ad spaces, donate to crowd funding — you name it. For social media, these capabilities will represent another wave of disruptive technology that shakes the technology status quo to its core.

Technologists are now working on new cryptocurrencies designed for use within secure and private decentralized social networks. These networks feature an integrated marketplace and ad platform.

Four major trends are revolutionizing the tech sector: big data, the cloud, mobile technology, and social media. What I’ve learned this week is how social media is melding with new technologies such as cryptocurrency and blockchains.

Blockchains represent the technology that make cryptocurrency possible. But there’s more to blockchains than Bitcoin (BTC).

Unless you live in a cave, you know that cryptocurrencies are a digital means of monetary exchange that are secured by encryption, with no physical representation of the “money.” The exchanges are recorded in what are known as blockchains, which make up the underlying infrastructure supporting the currencies.

Every cryptocurrency is supposed to be linked to a blockchain, which is a distributed computer-generated database of all transactions that have ever taken place in the currency.

Every time a crypto token is used, a record of the transaction gets added to an existing database that is distributed to all major “miners,” or creators of the database. These miners generally have very large computers that use highly sophisticated algorithms to add transactions to the blockchain. The same miners use even more sophisticated algorithms to create new tokens.

The point is that blockchains have a multitude of uses and likely represent a dynamic growth area within tech. Blockchains have the potential to add to the growth of many established and inherently strong companies.

One key to spotting the beneficiaries is to recognize that blockchains require an incredibly large number of calculations, requiring extremely sophisticated software and either supercomputers or a large network of computers. Currently the Bitcoin network makes more than one billion billion calculations per second, much more than the world’s fastest supercomputer.

Another key is to focus on companies that have already committed to using or are considering using cryptocurrencies or other applications of blockchains, because these companies will be able to leverage the advantages of blockchains for a competitive edge.

We’re now seeing the emergence of social media ecosystems that use blockchains, whereby members of the social network can safely exchange cryptocurrency and engage in other commercial activities.

NVIDIA is the top maker of graphical processing units (GPUs). These chips allow a computer to present graphics. Here’s what’s exciting: blockchains use the company’s chips.

Blockchains have other uses. They let businesses store encrypted data in a ledger. Blockchains are used in finance, supply chains, and data storage. This gives NVIDIA prospects in commerce.

NVIDIA is one of the largest manufacturers producing GPUs that cryptocurrency users leverage to speed up the network. NVIDIA recently released several GPUs dedicated to cryptocurrency mining.

NVIDIA CEO Jen-Hsun Huang this month said that demand from cryptocurrency miners for its chips beat expectations in the most recent quarter. He said there’s “clearly real utility” with blockchain technology and it remains a key strategic direction for his company.

NVDA is a buy up to $250.

Microsoft and Intel (NSDQ INTC) have joined forces to form “Confidential Consortium” or COCO. Microsoft provides the software; Intel the hardware. COCO generates the ultra-fast calculations needed for blockchains to function. COCO makes blockchains accessible to any firm that needs to keep track of a large number of tasks.

COCO is a private blockchain for individual firms. Warehouse inventory, HR files, supply chains — these tasks and more would benefit.

COCO is attached to a public blockchain such as Ethereum. To access COCO, the firm must use Microsoft cloud services and Intel hardware for the central processing units in the blockchain.

COCO is the first attempt to make blockchains accessible to any firm without the costs of creating one on its own. It promises greater security than current storage. It will be able to accommodate more than 1,600 transactions per second.

MSFT already provides the capability whereby users can integrate blockchain applications with the cloud services and tools of their respective organizations, to manage shared business processes. Increasing numbers of enterprises are using blockchain technology for their social media sites, turning them into e-commerce platforms as well. This area will prove a major growth driver for Microsoft.

MSFT is a hold. Buy on dips below $75.

John Persinos is chief investment strategist of Breakthrough Tech Profits.