What is the Next Bitcoin-like Investment?
Have you checked the Bitcoin price lately? Bitcoin price has ultimately shattered the US$20,000-resistance and is on the cusp of seeing an explosive rally. Bitcoin price against the US Dollar (BTC/USD) has ultimately broken above the US$20K resistance after unsuccessfully trying two more times in the last one month (first on November 30, 2020, at US$US$19,850.11 and second on December 1, 2020, at US$19,920.53).
As I write this article, the Bitcoin price is hovering around US$20,691.41 with a yearly return of around 190%. This means that if you had invested US$10,000 in Bitcoin at the beginning of 2020, your year-to-date return would have been around US$1,900,000.
Do you think the momentum is over? No, not yet. It’s only warming up as institutional investors (including insurance companies and pension funds) and high net-worth investors (HNIs) are gearing up to invest heavily in Bitcoin. While some analysts say that US$25,000 is the next logical target, Nexo co-founder Antoni Trenchev has said that the BTC price will be US$50,000 by the end of 2021. An economic model of a respected on-chain analyst has waldo predicted the price to jump to the US$200,000-300,000 region in the coming 12-months. So, there’s more to come for Bitcoin in the new year.
But is there any other prospective cryptocurrency that can become the next Bitcoin-like investment? Yes, there are many cryptos and altcoins that can be the next big thing in the cryptocurrency market. There is particularly one cryptocurrency that is making all the right noises. It is the Chainlink (LINK), which has the potential to become the next Bitcoin-like investment.
ChainLink (LINK) has seen explosive growth in 2020. Its year-to-date (YTD) growth this year is 668% and is currently trading at US$13.49. As per CoinMarketCap, it is the 5th biggest crypto currently with a US$13.44-billion market capitalization. The main reason behind this phenomenal performance is that it wants to use its unique protocols to advance the entire sector.
Many cryptocurrency analysts and experts believe that the Chainlink price against the US Dollar (LINK/USD pair) will reach at least US$200-300 in the current cycle. Some also believe that the LINK price will possibly hit US$1,000 in the near future.
What’s the Secret of Chainlink’s Success ?
The main reason behind Chainlink’s faster adoption by the investors is the fact that it tries to rectify one of the biggest problems of blockchain: how to communicate information to and from the blockchain?
ChainLink is a decentralized oracle system that solves the problem of communicating information to and from the blockchain. It, therefore, bridges the gap between the blockchain world and the outside world.
Let’s first try to understand what the problem is and how Chainlink is attempting to solve it.
What’s the Problem with the Traditional System?
Traditionally, it is the sensors (called oracles) that transfer information to and from the blockchain. Almost anything can be monitored by the oracles including weather, the value of stocks, account balances, sports scores, and many more.
These oracles are useful to the blockchains because they provide a reliable way of initiating smart contracts when outside parameters are satisfied. However, the main problem with these oracles is that they are centralized in nature.
It is this centralized aspect that is the weakest spot in the blockchain. The entire network is subjected to risk if any one of the oracles gets compromised or corrupted.
How does Chainlink Solve the Problem? What are its Benefits?
The success of Chainlink is that it tries to solve the “Oracle Problem” by integrating various next-gen protocols and ultimately creating the first blockchain oracle network of the world.
Chainlink allows companies to leverage the powerful network expansion capability of oracles in a trustless manner. This new system ensures that all the users receive corruption-free, correct, and timely data. Even if there is a single node failure, the Chainlink system automatically replaces it with a higher ranking alternative.
How does Chainlink Work ?
It wants to create the first blockchain oracle network in the world. Chainlink’s ecosystem starts working with the user putting out a request for information, which would be listed as a blockchain event within the network.
A Chainlink SLA (Service Level Agreement) Contract would then be created, which in turn will launch 3 other contracts in the system:
1. Chainlink Reputation Contract
The authenticity of the oracle is verified by the first contract. The history of every oracle (accuracy as well as past contributions) is reviewed by this coding. Chainlink Reputation Contract provides a rank to every oracle at the end of the assessment, thereby helping the system of utilizing the best oracles.
2. Chainlink Order-Matching Contract
The Requesting Contract is delivered to the Chainlink nodes by the second contract. The nodes start bidding on the first contract after the nodes receive this request. The number of nodes as well as the node type is automatically configured by the system for completing the request using preprogrammed prerequisites.
3. Chainlink Aggregation Contract
It is the last contract that reconciles incorrect data. All the data that have been completed during the previous checks and balances are now reviewed by the system. Any data that is not in sync with the other network inputs are disregarded by this aggregating contract. The data is validated and made available to the blockchain once this step is completed.
That’s how Chainlink works within a decentralized oracle system and solves the info-communication problem to-and-from the blockchain, thereby bridging the gap between the blockchain world and the outside world.
What are the Reasons for Investing in ChainLink ?
You should invest in ChainLink because it solves a lot of real-world problems, which makes it more suitable for investment.
1. Bridges Gap between the Smart Contracts and Real-world Off-Chain Applications
The decentralized oracle system of Chainlink verifies the real-world data used within blockchain-based smart contracts and then bridges the yawning gap between the smart contracts and real-world off-chain applications.
Chainlink helps decentralized exchanges (DEXs) to utilize the power of oracles in a trustless manner for determining the price of cryptocurrencies without offering an order book. The best thing is that the users get non-corrupt, correct, and timely data. If there is any node failure, it will be automatically replaced with a higher ranking alternative by the process mentioned in the above mentioned “How it works” section.
2. Gained Major Recognition from Google
In 2019, Google Cloud demonstrated Chainlink technology, which helped it to get major recognition.
3. Major Partnerships
- Chainlink has forged a partnership with a blockchain startup Hdac Technology (which was founded by the CEO of software firm Hyundai BS&C, Dae Sun Chung) in 2020. The two companies are jointly developing a system to deliver off-chain data on the blockchain
- Chainlink has also partnered with Oracle for allowing startups to sell their data.
- Thomson Reuters has started working with the Chainlink team on a PoC (proof of concept) for their own internal services, smart contracts, and collaborations with SWIFT.
- Some of the other partnerships of Chainlink are Zilliqa, Synthetix, Matic, Hedera Hashgraph, and Harmony.
- Chainlink’s CEO Sergey Nazarov has recently said that they will continue working with multifarious enterprises in different ways.
4. Perfect Mix of Technology and Community
Chainlink is the perfect cryptocurrency to invest in because the project has the perfect mix of technology (as well as the means of developing it further) and a community with unrivaled support for the project. For rigorously validating vendor claims, Gartner has awarded it with the status of Gartner Cool Vendor.
5. Easy Availability
Chainlink (LINK) is among the top-10 most popular cryptocurrencies in terms of market cap. It is listed on all major cryptocurrency exchanges including Coinbase and Binance.
Chainlink (LINK) is a good investment for you. Most crypto experts say that in the coming 3-to-5 years, the price will increase to around US$82.101-US$121.78 level. Considering the 660% increase in 2020, some analysts are highly bullish on this crypto. They believe that the LINK price is likely to hit the US$1,000 mark in the future.
How to Buy Chainlink (LINK) ?
You can buy Chainlink (LINK) from all major cryptocurrency exchanges. First of all, you have to register a crypto trading account with a reputed crypto exchange such as Binance, Coinbase, or others for proving your identity. Once you have an account, link a bank account or debit card with it and load your cryptocurrency exchange wallets. After this, it will take a few minutes to get started.
You can’t buy Chainlink (LINK), just like any other altcoin, with your fiat money (US Dollar, Euro, etc.). The first step involves trading your fiat currency over to Bitcoin (BTC) or Ethereum (ETH). Select the LINK trading pair (such as LINK/USD), match your cryptocurrency, and the amount for which you want to trade. Once this step is complete, you’ll receive a LINK in your exchange wallet quickly.
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