We’ll start our analysis by attempting to understand the market we’re looking to invest in. I call it The Game Being Played.
The Game Being Played
Like any other opportunity, blockchain is an investing universe with its own rules and ideas. There’s things which ‘just make sense’ in the context of blockchain, and there’s other things which ‘just don’t work’.
To help explain some of the larger concepts in this unique an exciting investing universe, I’ve broken the analysis of The Game Being Played into four components, spread across two articles. The four components are:
- Blockchain Technology Basics (This Article)
- Opportunities Promised by Blockchain
- Blockchain Challenges to Overcome
- Future Moves in Blockchain
Quick Note. This information should not be considered investing recommendations or investment advice. It is simply a mental model which I’ve used in my own life and desire to share with others. Consider your own circumstances and do your own research :)
What is blockchain?
If you find yourself asking this question, great work! You’re on the right path, and you’re definitely in the right place.
Defining a ‘Blockchain’
In its simplest form, a blockchain can be considered as a distributed database that stores data in blocks which are linked together via cryptography. New data is stored in a block, which is then chained to the rest of the blockchain in sequential order. Hence the term ‘blockchain’.
However, to understand The Game Being Played, there’s a little more nuance to this definition. We need to understand these things:
- A blockchain must be immutable. I.e. once information is in the blockchain, it cannot be changed or altered in any way. This creates an irreversible record and timeline of events.
- A blockchain should be distributed in some manner. I.e. multiple records of the blockchain should exist in various locations and somehow all be kept up to date…