The Intelligent Blockchain Investor

Welcome to The Future 😃

To all my new readers, Welcome! I’m so glad you chose to come and visit ❤️. To those returning, hello and thank you for being so wonderful in your support! I love the LinkedIn messages and hello’s I get from my followers. Thank you ❤

This article is the concludes the first part of my series on The Intelligent Blockchain Investor and The Game Being Played. Here’s a quick recap.

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 and exciting investing universe, I’ve broken the analysis of The Game Being Played into four components, spread across two articles. The four components are:

  1. Blockchain Technology Basics
  2. Opportunities Promised by Blockchain
  3. Blockchain Challenges to Overcome
  4. Future Moves in Blockchain (This Article)

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 :)

With that out the way, let’s keep going ❤

The Future

No analysis of a market would be complete without looking to the future. It helps us to understand where things are headed and where to next.

To help us contextualise possible futures in The Game Being Played, I’ve outlined three areas:

  1. Macro Developments
  2. Interesting Projects
  3. Things of Interest

Quick Note. This article mentions various blockchain projects as I develop the idea’s being shared. As an active blockchain investor, my positions in various projects are always changing, so depending on when you read this article, I may or may not hold positions in the projects. I cannot guarantee that your participation will or will not benefit me in some way.

Macro Developments

I’ll start by exploring some of the macro scale developments currently taking place in the blockchain universe. In my mind there’s three:

  1. Ethereum Network Upgrade
  2. Widespread NFT Adoption
  3. Conceptual Models of the Blockchain Universe

Ethereum Network Upgrade

The Ethereum Network occupies legendary status in the blockchain universe. And for good reason!

Ethereum has occupied a series of critical achievements:

  1. The first blockchain to conceptualise and implement smart-contracts
  2. The first blockchain to take what Bitcoin did and apply massive advances

The result is significant mindshare in blockchain, serving as a bell-weather for the broader health of the overall market.

So when Ethereum announced their upgrade to Ethereum 2.0 it was a huge deal. The realisation that the second largest network by market cap was embarking on a multi-year journey to increase their TPS from 10 to 100,000 while changing aspects of their decentralisation sparked a fierce change in focus within the entire community.

For us as investors, the impact of the second largest blockchain by market cap successfully completing this transition helps our market in several critical ways:

  1. Builds Credibility. The blockchain universe is demonstrating that it can overcome significant, challenging and technically complex challenges in a relatively coordinated manner.
  2. Demonstrates Adaptability. The blockchain universe will continue to experience incredible growth as new economic models are created. Growth creates a need for change, and this means the underlying infrastructure must adapt.
  3. Focuses on the Customer. For blockchain to succeed, it must have a laser clear focus on serving its various customers (consumers, B2B, each other). A key throttle for innovation has been TPS, so addressing this head on shows responsiveness to customer needs.

Widespread NFT Adoption

Non-fungible tokens (NFTs) represent a step change in establishing proof-of-ownership. As unique and non-interchangeable units of data stored on a blockchain (which we’ve established is immutable), they represent a concrete method of establishing ownership of pretty much anything.

Let’s future cast that for a moment. A digital method of immutably establishing ownership. Combined with the ability to interact with this data to build add-ons, chain it with other NFTs and develop automatic programmatic responses, it’s easy to see how this concept forms the next step in blockchain.

There’s still a list of changes needed to make this a reality (such as legal recognition of ownership and linking to the physical world) however, it certainly holds the potential for a huge change!

For us as investors, it represents a possible inflection moment for blockchain transitioning into being a true global solution.

Conceptual Models of Blockchain

The adoption of any innovation is turbocharged once conceptually understood. As the technology matures, it starts to stratify and specialise. In turn this forms an ecosystem which creates fertile soil for widespread adoption.

Blockchain is no different. As the pace of innovation increases and the ecosystem becomes more robust, conceptual models are starting to emerge. These conceptual models allow innovators and their teams to identify gaps in the overall market and focus their energy on addressing them.

The competition this inevitably creates is healthy for the ecosystem. It brings the creative destruction of capitalism to the blockchain universe and helps everyone create more efficient and effective solutions. In turn, these solutions can be more clearly articulated through the use of the conceptual models being developed above.

Here’s a few of the conceptual models emerging:

  1. Layer 1 and Layer 2 Blockchains
  2. The Trilemma (discussed in an earlier article)
  3. Layered Structure of Blockchain Architecture

For us as investors, these models are excellent. They help us understand our own investments, while also show a market which is developing maturity and depth.

Interesting Projects

There’s always events of interest occurring in any market. I’ll outline a few of the projects I find interesting and the reasons why.

Disclaimer. I’m sure that many people reading this will have alternative interesting projects they would like to share :) That’s ok, just drop your thoughts in the comments or reach out to me on Twitter or LinkedIn :)

Polkadot

Polkadot has the potential to dominate blockchain. I’ve written an article about it previously, and it’s a project I’ve been following for several years. Here’s a quick list of the reasons why I think you should check it out:

  1. Continues to successfully complete its published roadmap, including hitting some of their major milestones
  2. Clear sense of leadership and direction which is clearly communicated
  3. Large developer presence (often thought to be around 10,000)
  4. Identified the challenges for security on blockchain and developed a solution right from the start.
  5. Already has a theoretical speed of 1,000 TPS, with upgrades which may take it to 1 million (yes, with an M)
  6. Has developed a no-fork upgrade mechanism, which makes the blockchain significantly more reliable

Overall, it appears to be a great project which has been developed to be commercially viable right from the start.

ChainLink solves a very specific problem in the Blockchain Ecosystem: How does one trust the incoming data required for Smart Contracts to execute?

It’s a critical issue. Despite the inherent power and opportunity presented by blockchain and smart contracts (which we explored in a previous article), we still need a mechanism to trust the data these contracts are executing.

Chainlink has developed a way to solve this issue. Among other things:

  1. Continues to successfully complete its published roadmap, while also communicating any changes
  2. Clear sense of leadership and direction, which is also clearly communicated
  3. Large presence in the use of Trust Oracles throughout the blockchain network, creating a large moat for competitors to overcome
  4. Large developer presence
  5. In use for several years with very limited down time

Helium Network

The Helium Network is a long-shot project. They’ve developed a pretty interesting project, implemented it effectively, and if they can pull it off will have a huge impact. The downside is that they’re potentially going to be competing with some very big commercial entities, and it’s unknown who will be the winner.

In essence, the Helium Network proposes to create a vast wireless network, which anyone can contribute devices too. In turn, IoT devices and others can use this network to pass data packets. Those who contribute devices get paid for the data they pass through the network.

If it works and gets massive adoption it could be a worldwide game changer in wireless networking and IoT.

Here’s some of the considerations:

  1. They’re consistently delivering on their roadmap
  2. Clear sense of leadership and communication
  3. Already have hardware devices and commercial partners
  4. Network is growing quickly
  5. Marketing strategy looks like it’s lifted straight out of the Innovators Dilemma, which raises their chance of navigating the big wireless carriers around the world

Things of Interest

To complete our picture of The Game Being Played, I’ll finish with some current points of interest in this amazing market.

  1. Institutional Investment. Blockchain continues to see an influx of institutional investment into the market. This creates a natural influx of capital which provides opportunities for innovation and investment.
  2. Development of University Level courses. Many large universities are releasing courses exploring blockchain. As observed in Computer Science, it is likely that over the next 5–10 years, these graduates will continue to deliver incremental innovation in this field.
  3. Centralised Exchanges. While it might seem odd that a decentralised concept requires centralised exchanges, the reality is that these centralised exchanges (such as Binance, Coinbase and Crypto.com) are helping to bridge the gap between traditional areas of finance and blockchain.

Next Stop: The Players In The Game

This article concluded our introduction to The Game Being Played. I hope you liked it, and feel that you’ve got some great insight into the market we’re looking to analyse.

In the next article, we’re going to move to analysing the organisations in the market. It promises to be an interesting and exciting ride!

As always, if you’re enjoying this series, take time to interact. Comments, claps, tweet mentions, LinkedIn mentions and sharing is a great way to interact with a community of people who can add to our exploration. A great way to stay up to date with this series as it comes out is by following me or signing up to our email distribution. A word of caution though — please keep it respectful, fun and polite. We want a safe place to learn and grow ❤

Articles in the Series so Far:

  1. Hello World ❤
  2. The Intelligent Investors Dilemma
  3. Blockchain Technology Basics
  4. Opportunities Promised by Blockchain
  5. Blockchain Challenges to Overcome
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