Hi everyone, Today, I’m going cover ChainLinkbecause it has unique features that catch my attention in the current environment. I’m starting to explore new coins to share with you what I learnt and understand in this industry.
My goal is not to make your purchase any of the coins that I will present, but rather give you pieces of information so that you can make your own decisions. In the logic of expanding my cryptocurrency knowledge, I’m trying to understand competitors better by researching new things.
Hello everyone, my name is Jerome I do videos about cryptocurrency investing. My mission is to bring and shares with you the right tools so that you can invest with more confidence. Short terms gains are one thing, but being able to keep in the long is another skills.
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This video will be broken down into three parts: Part 1: What is ChainLink? Part 2: Why should you care? Part 3: Risk levels to watch And like always, watch until the end because we will end off with the french quote of the day. #Part 1, What is ChainLink? ChainkLink: Decentralized oracle network.
In order to understand this, you need to understand what is an Oracle. An oracle is a data feed that connects blockchain to real-life data. In Ancient Greece, an oracle as the term used to describe a female priest, who game people wise but often mysterious advice from a god.
Today people this term more generally to describe someone who knows a lot about a subject and can give good advice. The idea remained the same: give directions, to take actions. In the context of a blockchain, if it requires information about the real world like the Price of apple, Tesla stock or more generic things, like weather locations, sporting events results, it will be speaking to what we call on oracle.
Why would it need information from the outside world? Well, if you think about third-generation blockchains that allow smart contracts, they need these data to function properly. Smart contracts are often conditions-based, and the trigger of their execution can be based on real-world information.
In the past, you’d have a specialized institution dedicated solely to providing truthful information about a particular subject: When you rely on a centralized institution to provide information, you are essentially trusting their expertise.
Blockchain taught us that we don’t need the information to be centralized because it can result in errors, hacks, or manipulation of data. ChainLink had it’s ICOin 2017, and what it was trying to solve is to make the information decentralized. Instead of having one person or entity holding the truth, we will now have people coordinating on verifying outside information.
It works as a regular mining process: participants in the network are essentially helping smart contracts to understand and verify what is happening in real life. In return for their work, they receive ChainLink Token.
One of your questions might be, how do you actually verify that information is true? For example, how can you make sure that people say that Biden was elected when others are pretending the opposite.
Information provided by oracles need to have three characteristics: Veracity, meaning that the information is verifiably truthful Availability, meaning that it is readily accessible. And Completeness, meaning that its ability to be computed.
Chainlink has an incentive mechanism for people to tell the truth: The reputation of verifiers are store into the blockchain, and when they attempt to push false information, it is slashing its reputation.
I like to use analogies and images to remember a thing, so you can try to picture Chainlink and Oraclesas the eyes of smart contracts, this should allow you to not forget what we are talking about Part #2 Why it’s a coin to watch?
People holding ChainLink tokens are called the ChainLink Marines. We had wild moves over the past 2 years. Chainlink has been one of the best-performing assets for two consecutive years.
What I like about it, is that Its performance is somewhat decoupled with the rest of the crypto space. In traditional finance and investing, this is exactly the types of asset you want to see. The ones that are doing their own things, no matter what the market is doing. ChainLink rose in 2019 when the market was still struggling to find momentum.
Since its launch, it more or less has done things on its own. That is why it is the first coin that I’m currently watching to build a position. The 3 months correlation of ChainLinkto Bitcoin is currently standing at around 0.3.
Note that historically has been gravitating more towards 0.5. This correlation is lower than most of the coin in the crypto space, and that’s why it’s catching my attention and instinct of portfolio and risk manager.
Compare this Ethereum’s correlation to bitcoin which is more around 0.7 or 0.8. On the news side, ChainLink has been selected by the Chinese BSN Networkalongside other projects like Tezos, NEO, and EOS. The BSN Network is a Chinese blockchain network that is built for Small Chinese tech enterprises. China has been investing heavily in blockchain technology.
And Some of you might remember the news from the summer of 2019, as it caused a massive pump of bitcoin price after the announcement. My guess is that China wants its developers to work with best in class protocols like ChainLink in order to inspire from their technology, and in a few years, build and integrate their own version.
ChainLink Data feed is being used on larger projects like bancor for market-making, synthetic or price feed, and is intended to be used byCelsius Network to determine their interest rates. We must not disregard the current network of apps using ChainLink, which is quite large.
Another thing is really like about it is that people are trying to short ChainLink: There is a fund called Zeus Capital that has built massive short positions on the name. It was already squeezed once last year around 15$, but the fund keeps on doubling down on its position.
With Gamestop short squeeze going, you understand better than ever how things can get out of control when someone needs to close a large short position. I wouldn’t be surprised if at some point shorts are being attacked and squeezed to the upside.
It’s an eventually that exists and it could be adding some fuel, to an already crazy market. Competition on the Oracle side is also going to come from Cardano for example.
Cardano recently announced in December that it would partner with Wolfram Alpha in order to build oracle services. Wolfram has one of the largest sets of data in the world to operate on. And the company powers both apples Siri and Amazons Alexa assistants and has deals across an entire spectrum of industries IOHK spent most of this year gathering the right people to work on oracles and evaluating the market.
Hoskinson himself said that this was both the right place and the right time to dive into oracles. I am not invested in Oracles solutions yet and don’t own ChainLink, but I’m starting to look at it as a potential evolution of my current stake pool services. If you have knowledge about oracles, please feel free to reach out to me on telegram.
By the way, if you want to stake your Cardano with me and support this channel, you can find the link in the description down below. Part #3 Where does ChainLinkstand in terms of risks? Alright so, using my risk metric: Chainlinkused to be in the Cheaper zone when I first highlighted it January, It as moved upward since and is now slowly moving into the medium risk zone.
Meaning that If I were to buy, I wouldn’t necessarily buy very aggressively. For those of you that want the complete levels for each risk zones: they are as follows: Anything under $28.52 will remain on the Cheap zone Above $28.52, Chainlink will enter a medium zone risk And above $48.11, Chainlink will enter expensive risk zone.
In terms of price target,50$ wouldn’t surprise me, and with the ecosystem of smart contracts expanding so fast, I think Chainlink still has bright days ahead. It could easily reach the $100 mark in my opinion. When? I have no idea. I will let the market decide if and when it wants to get there. I will repeat it again, those are not direct recommendations to buy or sell.
I don’t own the coin yet, and I use this model to gage wherein instrument stands in terms of relative expensiveness or cheapness. At the end of the day, I’m looking at things with a very open-minded approach, and I’m okay with the markets doing whatever it wants, whenever it wants.
Remember that price dynamics are very unpredictable. We’d like to believe that price is a reflection of how good a company is doing, even though it is somewhat true in the long term, there are times where the price is not a reflection of the real value and asset.
You do have periods of euphoria and bubbles, and also periods of capitulation where assets are very undervalued compared to their fundamentals. OK, guys, I hope you learned something. If you like this type of reviews please let me know in the comments, and don’t confirm to subscribe, it helps me so much.
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