The bank called me to give my two cents Chain link (CCC:LINK-USD), the cryptocurrency, not the fence material you use to keep your dogs from leaving your property.
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Chainlink’s current market cap is $ 10.8 billion. This makes it the 14th largest cryptocurrency in the world.
So why should I care about this particular cryptocurrency? But more importantly, why should I spend my hard earned cash on Chainlink?
I will consider both questions.
Why should I be interested in Chainlink?
Since I’ve never written or even heard of Chainlink, I’d better educate myself tout de suite.
InvestorPlace’s Thomas Niel recently discussed seven cryptocurrencies that could derail Ethereums (CCC:ETH-USD) Dominance at DeFi (decentralized finance). Of course, everything about DeFi immediately caught my attention.
Niel’s view is that Chainlink’s role in developing DeFi smart contract technology could provide tailwind for its LINK token. On the other hand, it can’t be either. As with all crypto, there are always two sides to the coin (pun intended).
My next step is to go straight to the source. That’s the Chainlink website. There I can find all sorts of information about what it can do for the future of smart contracts. But unfortunately most of it goes through one ear and the other out again.
They know what they’re saying: “Garbage in, garbage out.” However, I read a section that would actually make sense to a layperson.
Chainlink significantly expands the capabilities of smart contracts by providing access to real data and off-chain computations while maintaining the security and reliability guarantees of blockchain technology.
Celsius Network, one of the largest crypto lenders in the world, worked with Chainlink to help her maintain her decentralized financial services. Celsius services include paying interest on crypto deposits as well as lending crypto and US dollars based on the crypto collateral provided by borrowers.
As Celsius likes to say: “Unbank Yourself”.
So it’s clear that the smart contract audit trail created for Celsius’s lending business will go a long way towards building trust with customers. As the ad says, that’s priceless.
So I should take care of it.
Why should i buy?
That’s the million dollar question.
InvestorPlace Contributor David Moadel discussed Chainlink’s potential Disrupting traditional finance in an article at the end of May. In it, he separates the technology that Chainlink offers from the token itself.
He points out that Chainlink co-founder Sergey Nazarov believes the DeFi ecosystem could be worth $ 1 trillion by the end of 2022, up from estimates of between $ 58 billion and $ 80 billion today.
This is serious growth. Should LINK benefit from this growth, it is easy to see why the current price of $ 21 could appear cheap to its followers. However, it is not certain that it will be. That’s because Chainlink has competition.
In November 2020, API3 (CCC:API3-USD) collected $ 3 million on seed funding so it can develop open source software to reduce the cost of Oracle data and become a major thorn in Chainlink’s side in the process.
Decrypt Contributor Alexander Behrens stated the following in an article dated November 13, 2020:
The financing round shows that, despite the dominance of Chainlink, the oracle problem is far from being solved and there is still a lot of discussion about how real data can best be brought into decentralized applications.
According to CoinMarketCap.com, API3’s token has a current market cap of $ 40.98 million and a fully diluted market cap of $ 295.8 million based on the maximum supply in circulation. That’s still a fraction of Chainlink’s market cap.
So the question becomes a question of evaluation.
Is Chainlink a better buy because it’s the undisputed leader in oracles? Or is API3 worth exploring as it tries to fix what isn’t working with Oracle data.
It’s a subject worth exploring another day.
In the meantime
As far as I can tell, page 1 of the API3 white paper states that the token holders who deploy their tokens will receive a portion of the dAPI (decentralized application programming interface) revenue, inflationary staking rewards, and potential additional benefits in the future.
While I’m still trying to understand cryptocurrencies, I’m assuming that Chainlink’s compensation isn’t all that different from API3. Therefore, I assume that the stakeholders will receive a part of the future revenue from Chainlink.
While I find the missions of both organizations interesting, I still have a hard time assessing future revenue generation opportunities. Not because I believe there is no potential. I do.
I can’t quantify it. Chainlink does not make the cut in 14th place. The same goes for API3.
That could change. If it’s possible. You will be the first to know.
On the day of publication, Will Ashworth had no positions (either directly or indirectly) in the securities referred to in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publishing guidelines.
Will Ashworth has been a full-time investing writer since 2008. Publications he has appeared in include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in the United States and Canada. He is particularly fond of creating sample portfolios that will stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing, Will Ashworth had no position in any of the above securities.