This month’s article highlights a niche in the crypto space which has benefitted from a recent hype cycle yet still holds tremendous utility and growth potential for the future. Specifically, one crypto project within this category stands out, if for no other reasons than due to its impressive partnership list and first-mover advantage. This month, we discuss our number 1 pick on our Top Ten Watch List from a few months ago – Chainlink.
Blockchains, by their nature, are closed systems and data sets in which a transparent ledger is used to “keep score”. One of Bitcoin’s most innovative offerings was a solution to the “double-spend problem”, through which duplicative units would not be possible. In other words, one of blockchain technology’s great innovations in the context of the digital age is to give assets a unique and identifiable property, whereby a digital asset cannot be duplicated, copied or denied its autonomy.
However, within this great innovation lied a paradox – if the only data to exist within a given blockchain was the data of the blockchain itself, a blockchain, and its usefulness, would be inherently limited by the value of the data that exists within such blockchain. Ethereum rose to prominence by allowing for smart contracts to provide utility that far surpassed a simple ledger system, by for example providing mechanisms that enabled “if/then” rules and other logic. But even Ethereum’s great contributions to the space were limited to such rules and protocols built into a given smart contract, which were labor intensive for developers and limited by code-writing limitations and other constraints.
So eventually, the need for data external to a given blockchain that could essentially be exported into such blockchain arose. Quite simply, for a blockchain to truly be useful to the real world, real world data would need to be involved. And therein lies the value proposition of one of the fastest-rising cryptocurrencies of the last two years – Chainlink.
Chainlink offers blockchains a solution to the aforementioned problem – a mechanism by which real world data can be imported as a feed and component to other blockchains, thereby releasing them from the shackles of their respective silos and opening them up to integration and interaction with a truly unlimited set of data sets. It doesn’t take a large mental leap to step back and appreciate the possibilities that come along with such utility.
These days, Chainlink is not without competitors in the space with arguably similar offerings, notably Tellor, Band, Augur, ZAP and others. However, Chainlink boasts a partnership/integration list that these and any other crypto projects would dream of, thereby giving it a large leg up within the industry for its value proposition. Additionally, once such partnerships are formed, they logically tend to be “sticky”, such that Chainlink’s partnerships are relatively unlikely to undo the partnership after integrating Chainlink data into their respective blockchains.
Coupled with top-notch leadership and the devout “Link Marines” that relentlessly defend and promote LINK on social media, Chainlink is in the catbird’s seat to continue serving as “the glue” between otherwise closed-off blockchains and the outside world. During the California gold rush of the 1800’s, it is often said that those who gained the most from such events were not the miners, but rather those selling the picks and shovels that all the prospectors would need to mine. Chainlink falls into that category of “pick and shovel sellers” within crypto, and for those who believe that crypto is the modern-day gold rush, it makes sense to have a hefty bag of LINK for the long run.