In my estimation, Chainlink (CCC:LINK-USD) is at least worth understanding for individuals interested in the cryptocurrency space.
Whether it is investment worthy is difficult to say, but I’m leaning toward “yes” at this moment.
That gut feeling is largely a product of a few factors.
Cryptocurrency is fairly difficult to understand from traditional financial perspectives. It is simply too early for there to be any useful financial models with which to attempt to put a dollar value to a given crypto.
We have to rely on price fluctuations in order to make judgment calls. Investors lack discounted cash flow models, balance sheets and other financial statements in judging Chainlink or any other crypto.
I tend to look toward price history (to see how others collectively value a given crypto asset) and utility (to understand what a given crypto asset has use for) when judging cryptos.
Chainlink passes that simple litmus test. That’s why I believe it bears consideration and is investment worthy for some.
Price Suggests an Established Crypto
Chainlink may not be on the radar of the average investor. I write about crypto a fair bit and it wasn’t a project I knew of until I researched it for this article. But the truth is that it is the 15th largest cryptocurrency by market capitalization.
There’s clearly a lot of money behind the company and what it is attempting to do. I’ll get to that in a moment, but first I’d like to note that LINK may be able to provide quick returns on a crypto market rebound.
LINK traded at $52.20 at the absolute peak of its history. I won’t suggest that it can simply rebound to those levels after this latest crypto downturn abates, but I will suggest that it is attempting to build real utility in the crypto space.
Because of that I do think it can move well above its current price range.
I have mentioned again and again that I believe utility is the path forward for all cryptos. So what then is the utility of Chainlink?
In a nutshell, the value of Chainlink over the long term will be in its utility in integrating data from outside of a blockchain into the smart contracts on said blockchain.
So Chainlink will allow given blockchains to integrate data into smart contracts. If Chainlink is successful then it will bring disconnected blockchains together with real world data and events.
Blockchains currently have great utility in value transfer. They allow users to trade in a secure manner. However, they don’t allow data to be gathered from outside their chain or for data to be sent off their chain.
The isolated nature of blockchains is a limiting factor. But Chainlink may have solved that limiting factor by allowing smart contracts to connect to multiple off-chain data sources.
Future Crypto Middleware Standard?
Chainlink may ultimately be successful. Or perhaps it will prove to be a failure. But the important thing to understand here is what it could be: The standard bearer for Cryptocurrency middleware.
Chainlink refers to its service as a ‘blockchain agnostic abstraction layer’. If I hadn’t just explained what Chainlink does I would be very confused by that explanation.
All that it means is that Chainlink works with any blockchain and works to connect disparate blockchains. It is simply a layer in the middle, thus it is middleware. It is an intermediary in connecting data and blockchains in a secure manner.
In my opinion, that is why investors should remain interested in Chainlink. There is little to suggest that LINK is deserving of a price higher or lower than current $18 levels.
Price targets don’t exist that have any meaning right now. But the worst of this most recent crypto downturn looks to be over.
That seems to signal that things are headed up from here. If Chainlink truly establishes itself as the middleware intermediary in the crypto space it will move much higher.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.