Everything You Need To Know About Blockchain...

Genia Turanova's picture

Friday, September 14, 2018 - 12:00am

by Genia Turanova

How the times have changed!

Remember how many times Microsoft (Nasdaq: MSFT) was thought to be dead and buried?


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The software giant -- which, by the way, is a striking example of how far a true game-changer can go -- is also a testimony to the power of reinvention.

Microsoft was thought of as an outdated company 15 years ago, when it first started to pay dividends to shareholders. The prevailing sentiment among many investors and analysts alike was that paying dividends is the first sign that growth is over.

Guess what? It wasn't.

Then, there was that time when open source -- including open source software for PCs -- was on the verge of replacing Windows, Microsoft's bread and butter. That was more than a decade ago.

Open source -- software written and contributed to by the community of developers -- is alive and quite well, but so is Microsoft.

MSFT has not become what it is now -- one of the largest companies in the world, with a market cap exceeding $840 billion and annual revenue of $110 billion and growing -- by resting on its laurels. It got to this point by responding, timely and effectively, to the many major tech trends of our time.

Today, Microsoft is evolving yet again, this time by getting into the blockchain game.

The company has created a set of tools for its cloud-computing platform Azure that makes creating and managing blockchain simpler. With the Azure Blockchain Workbench from Microsoft, it becomes easier to create, configure and deploy a consortium network. This tool is just one of the recent signs that blockchain, the technology behind bitcoin, is ready to become a part of our everyday lives. (Although it's still very far from becoming a must-have, even for the most innovative companies.)

Indeed, with blockchain still years away from becoming a mainstream technology, now is the time to start looking for opportunities.

But first things first: What exactly is blockchain?

This is how blockchain is defined by Microsoft:

"Blockchain is a transparent and verifiable system that will change the way people think about exchanging value and assets, enforcing contracts, and sharing data. The technology is a shared, secure ledger of transactions distributed among a network of computers, rather than resting with a single provider. Businesses are using blockchain as a common data layer to enable a new class of applications. Now, business processes and data can be shared across multiple organizations, which eliminates waste, reduces the risk of fraud, and creates new revenue streams."
 
(One of the better tutorials I've seen on Blockchain is this five-minute video from CNBC International.)

New Possibilities
This principle of creating a connected set of records -- a chained database -- makes at least two revolutionary things possible.

First, every transaction is accessible from anywhere in the network.

You may already be quite familiar with the concept and the technology behind "the cloud" -- an IT paradigm that has enabled distributed access to shared data. My Game-Changing Stocks subscribers and I have made significant profits from cloud-based companies, and, because I expect this trend to continue, we continue to hold a number of cloud companies in our portfolio.

Similar to how the cloud works, blockchain data isn't stored on a single computer. Also similar to the cloud, every distributed party can have an access to this blockchain database (to add a record or to access data). And just as with a well-managed cloud, data is safe and easy to use.

Second, every party has a unique access code, and no single person or body controls everything on the ledger. Unlike anything used today, there is no central authority responsible for writing the records into the ledger, and, because of the ways these records are coded and "chained," every record is assigned its own unique code. Moreover, unless the users are made aware of the change, no record can be taken out of the database.

Because of this, every record is related to the entire database. If one record in a blockchain database is changed, then this particular change resonates through the entire database. In other words, while it's not impossible to change or delete a blockchain record, it's impossible to do so without altering the entire chain.


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Contrast this with a traditional database where whoever owns the database has access to its records and, generally speaking, can do whatever they want with the database and its records.

And because information is stored in a blockchain form, it can also be accessed almost immediately.

When you start to think about all the applications this can apply to, the possibilities seem endless. This can change the way securities or options are traded and how trades are settled. The process promises to be faster and less error-prone, if based on blockchain technology.

Blockchain can have an even wider potential range of applications. In fact, fans of blockchain will tell you that it can be used almost anywhere, from transaction processing to travel to financial management to manufacturing.

When it comes to logistics, too, the promise of blockchain is all about quality and control. The more information that will need to be accessed, stored and processed, the more useful the technology.

How We're Profiting From Blockchain
One use of blockchain that we are set to capitalize on in our Game-Changing Stocks portfolio is Digimarc (Nasdaq: DMRC).

Digimarc's proprietary barcode -- which the company calls "barcode for everything" -- is specifically applicable for music, books, and other works of intellectual property. Digimarc's barcode can therefore form the missing link between the digital content and the database, which could become quite useful in the emerging field of blockchain-based management of digital rights.

We first added Digimarc to the Game-Changing Stocks portfolio back in late March. And since then, we're up a little over 14% -- which is not bad, but I'm expecting even more gains in the months to come.

Of course, I'm keeping my eyes peeled for new developments in this area, and new interesting game-changers to add to our portfolio as well. My premium subscribers will be the first to hear about them, but you can sign up for a risk-free trial to see if Game-Changing Stocks is right for you. You'll also gain immediate access to my latest research report, which is yours to keep either way.

Genia Turanova does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.