The Case for Chainlink Has Always Been Strong
Below is a copy of some internal research we did on Chainlink (LINK) in late 2017 prior to taking a long position. Partial profits were taken in 2019 after the news-related spike. Full disclosure, we are still long Chainlink. This is NOT financial advice, as always do your own research and consult your investment professional prior to making investments decisions. Enjoy!
Overview
ChainLink is a decentralized oracle network that connects off-blockchain data resources to smart contracts on a blockchain network. This “middleware” allows the scope of smart contracts to expand unlimitedly connecting them to data feeds such as interest rates, market prices, logistics etc.
The goal of ChainLink is to build a bridge enabling smart contracts to integrate with existing systems. Historically large institutions have been slow to adopt new technology that requires changing data infrastructure. ChainLink allows organizations to reap the benefits of smart contracts while changing little in their backend processes.
Figures
Price: $0.49598
Market Capitalization: $173,59,300
Circulating Supply: 350,000,000 LINK
Total Supply: 1,000,000,000 LINK
Exchanges: Binance | Huobi
The Team
ChainLink is managed and developed by SmartContract a company founded by Sergey Nazarov and Steve Ellis and based in San Francisco, CA. The two founders are both serial entrepreneurs in the blockchain space. Sergey and Steve founded Secure Asset Exchange, an exchange network enabling users to swap cryptocurrencies, prior to SmartContract. Sergey also founded a decentralized email service called CryptoMail.
SmartContract’s advisory team includes professors from the University of Illinois and Cornell Tech, and a key member of the Ethereum Foundation.
Features and Functionalities
The Oracle Problem
The inability for traditional systems to communicate with blockchains is often called the oracle problem and represents a massive hurdle to widespread adoption of blockchain technology. ChainLink is the answer to this problem and with its implementation, blockchain technology will be available to many different industries.
Blockchain Integration
Currently ChainLink can integrate with the two most popular blockchains: Bitcoin and Ethereum. There is also support for Hyperledger though it is not widely used. Having the ability to integrate with the leaders of the market positions ChainLink to become widely accepted
API Integration
Flexibility is a core element of ChainLink’s capabilities and its external integration potential is massive. ChainLink can connect to any and all APIs/External Systems. Examples include market data from the NYSE and Bloomberg, retail payment systems like PayPal and Visa, events data like GPS information, and weather, and bank payment systems like SWIFT and Chase Pay.
SWIFT Partnership
SmartContract has partnered with SWIFT, an international financial communications system, to consult on their own SWIFT Smart Oracle system. This partnership gives SmartContract exposure to the over 11,000 banks in the SWIFT network.
Investment Thesis
The reconciliation of current data systems and blockchain technology is the largest problem facing the industry today. ChainLink provides an excellent solution and expands the potential reach of blockchain technology far wider than it could on its own. The project has a dedicated team and a product that has been validated by both academia and the financial industry. By leveraging this position, ChainLink has the potential to become a major player in the development of the blockchain market.
Longing ChainLink [LINK], a decentralized oracle protocol, which currently trades at $0.49598 per coin, makes sense because it is a project that answers a critical market failure backed up by talent and a partnership that will ensure its success. With the project recently launched, and implementation not yet achieved, there is significant upside to be found as the protocol matures.
The main catalyst to increase the price per coin over the next year is the adoption of smart contracts in traditional industries and the further adoption of ChainLink to provide the off-chain data for these contracts. Short term catalysts include increased marketing and additional blockchain integration. Historically, ChainLink’s founders have not marketed the product, a tactic to quell speculation, but as the technology matures, a solid marketing campaign will have positive effects.
There are two major risks involved in this recommendation. The first is ChainLink’s small team. Undoubtedly as the project grows the working capacity of the two founders will quickly be outstripped by the volume of work required. The second is the SWIFT partnership. While the partnership opens many doors it also creates an opportunity for an acquisition or acquihire in which the ChainLink protocol is shuttered and the technology is extrapolated to another project. Both of these risks are small and manageable yet still demand consideration.
Price Forecast Utilizing Market Cap Based Valuation
Fund Performance to Date
In the interest of transparency with our readers we will post fund performance metrics with every new post (typically at the bottom) along with an allocation chart.
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