Is Chainlink a Good Investment?

Is Chainlink a Good Investment?

Every person who knows about decentralized oracle networks (DON) should be familiar with the cryptocurrency Chainlink. Although it’s only in 12th place when it comes to market cap, it’s the most popular DON at the moment. After all, Chainlink is one of the few networks capable of solving the infamous oracle problem. Not to mention it’s also very affordable at the moment, so if you want to invest in Chainlink, then there’s no better time than now.

However, if you don’t know how oracle networks work, you’ll have a hard time finding Chainlink’s value, so this guide will help you determine if buying Chainlink would be a good investment.

Chainlink is one of the newest players on the crypto market, and it’s already well-known to investors. It’s essentially a technology operating for Ethereum and helps the platform facilitate smart contracts more accurately by providing access to and validating real-time data. Simply put, Chainlink serves as an oracle for a decentralized network. 

What are Decentralized Networks? 

Decentralized networks such as Ethereum or Binance are platforms facilitating smart contracts. As the name implies, smart contracts are just like the traditional contract except they operate automatically when the pre-determined conditions are fulfilled. 

Suppose you want to participate in horse racing. Between three horses, you bet on Horse A for USD$50. Should you win, you’ll earn three times the amount, which is USD$150. However, there’s a chance you’ll get scammed by the operator because they can announce your horse lost, even if it did win. The job of decentralized networks is to ensure there’s no shady scheme going on within a transaction. 

There are different kinds of smart contracts. Some rely on external data, while others don’t. In this case, the smart contract relies on external data, which is the horse race results. 

One of the biggest problems with decentralized networks is they don’t have access to external data. They’re like a black box with no access to the outside world, so the type of smart contracts they can facilitate is pretty limited. Chainlink aims to act as the bridge between decentralized networks and the outside world, allowing platforms like Ethereum to access external data. 

Considering it’s a phenomenal innovation, does it mean Chainlink crypto is a good investment? While Chainlink does have good value as an innovation, it’s not yet as huge as Bitcoin or Ethereum at the moment. On the bright side, it does seem to be growing substantially over the years. 

Due to its unique characteristics, you can use Chainlink to complete pretty much any transaction requiring real-world data like options trading, sports betting, and supply chain management, to name a few. Because of this, more and more developers are becoming interested in Chainlink. As a result, the platform has seen a substantial increase in its developer count over the past few years, making it one of the fastest-growing blockchain projects on the market. 

By the end of 2018, Chainlink’s price was around USD$0.30. It passed the one-dollar mark a few times before, but it’s only in May 2019 when it finally experienced a continuous price increase. Then by the end of 2020, it had finally reached USD$10.00. What’s surprising was experts have only predicted it’ll go from USD$10.00 to USD$20.00 in the next few months, but in April 2021, it already reached USD$38.00. 

In other words, it has exceeded the expectations of many predictions. While it’s not as valuable as other assets, it’s clear to see its growth as much greater than other cryptocurrencies. 

The idea of oracle networks is a relatively new innovation in the crypto space, so it’s not too late to invest in Chainlink. It still has a lot of potentials and the project is relatively young, so there’s a fair chance the platform will continue to improve in the coming years, and as a result, its price will increase to more than what you can expect. 

However, there’s also the chance of a better innovation taking the spotlight in the future. When this happens, Chainlink may see a price decrease. Simply put, there’s still a big chance for Chainlink to increase in price, but the same goes for the reverse. 

Wrapping Up 

Chainlink is an up-and-coming platform, but there are a few more oracle networks out there capable of the same things. Thus, this could mean fluctuation in Chainlink’s price should the competitors grow substantially, further increasing the risks of investing in Chainlink. 

On the bright side, Chainlink is still the go-to solution for decentralized oracle networks, and none of these competitors are as fast-growing as Chainlink.

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