Anyone putting any amount of money into cryptocurrency needs to consider risk vs reward. Is the risk of losing a large percentage of your investment worth the potential reward of massive returns? I will attempt to outline why I believe that buying Bitcoin, Ethereum, and Chainlink is a risk worth taking.
Bitcoin
Whether you like it or not, Bitcoin is here to stay and it is likely to remain the main store of value and transactional currency in the crypto economy. It has enabled a global currency that is not issued or controlled by any centralized authority, allowing you to send value to anyone in any location without any risk of any entity stopping or intercepting the transaction. It is the most secure network in the world due to the robustness of its proof of work consensus mechanism. An attack on the bitcoin network itself is astronomically cost prohibitive and is unlikely to even be attempted in any serious manor.
Layer 2 solutions are being tested on the Bitcoin main net and will soon bring scalability to the network and enable micro transactions. This will make Bitcoin more functional as a currency.
Scarcity is one of the reasons Bitcoin’s price per coin is so high. There will never be more than 21 million coins in existence. If Bitcoin is adopted in any significant capacity as a payment method and/or as a store of value it would not be unreasonable to see it valued in the hundreds of thousands of dollars.
BTC price at the time of writing - $6400 Current
Market Cap - $110 Billion
Ethereum
Ethereum uses the same blockchain technology as bitcoin but takes it one step further. Ethereum is Turing complete which allows for decentralized applications to run on the network using smart contracts. Smart contracts are simple “if, then” computations that occur autonomously on the network in a decentralized, trust-less manor. This has many real world implications, but I’ll use sports betting as a simple example. Let’s say I want to bet my friend that the Warriors will win the NBA finals again next season. We can put our money into a smart contract that is programmed to pay out the winner of the bet as soon as the event has occurred. If the warriors win, the money will be sent to me by the contract. I do not have to trust that my friend will pay me. We do not have to trust a centralized party to hold our money and execute the pay out. We only have to trust math and math doesn’t tend to lie.
Ethereum also allows developers to create their own tokens on top of the network which has created an entire separate economy of ICOs (initial coin offerings) and digital collectibles (crypto kitties are actually very cool).
Ethereum already has alliances with many major companies and is positioned to be the main smart contracts platform in the cryptocurrency economy. Ether (ETH) is used as gas to power the Ethereum network and will continue to increase in value in tandem with the usage of the network.
Also, Ethereum will soon be switching from proof of work to proof of stake. As soon as that switch occurs ETH holders will be able to stake their ETH in nodes and earn more in return for running the network. Not only does this provide passive income for holders, but it will also lead to a rise in the price of ETH due The the fact that many coins will be locked in nodes thus suppressing the supply.
ETH price at the time of writing - $290
Market Cap - $27 Billion
Chainlink
Let’s go back to my sports betting example. The smart contract that my friend and I are using for our bet needs to know who won the NBA finals in order to know whether to pay me or my friend. If that data is not being fed into our smart contract in a decentralized, trust-less manor then our contract itself is no longer decentralized and trust-less. That is where Chainlink comes in. Chainlink is a decentralized oracle network that will allow trust-less data integration onto any blockchain. One of the most valuable aspects of Chainlink is that it is blockchain agnostic and can be used for any public, private, or permissioned blockchain. Currently one of their main focuses is to provide blockchain solutions for interbank telecommunications. They are working with Swift which is the main organization in this field.
Chainlink is not yet functional making it the riskiest endeavor of the 3, but it also has the highest potential for reward. There are currently no competitors in the decentralized oracle space. The reason being that the oracle problem is an incredibly difficult problem to solve and the creator of Chainlink has been working on it for over 4 years which is an eternity in the blockchain world. The main net is nearly complete and should be released within the next few months although there is no specific release date.
Once Chainlink is online, people will be able to run nodes to help feed data into smart contracts. The node operators will be paid for this service. Running a node is not as simple a staking, but there are companies such as Linkpool that will allow anyone to contribute their Link tokens to a node and enjoy some of the profits. This will have a similar effect as ETH in limiting the supply and likely increasing the price.
LINK price at the time of writing - $.26
Market Cap - $95 Million
Many people are currently saying that Bitcoin and other cryptocurrencies will never again reach their all time highs of last year, but let’s take a look at the numbers. The total crypto market cap at the all time high was approximately $800 Billion. This is not a large number to begin with, but it’s also inflated due to the way market cap is calculated in cryptocurrencies. Market cap is determined by coin supply multiplied by the last price per coin. This means that I could create my own coin right now with a supply of 1 million coins, sell 1 coin to 1 person for $1 and my coin would be said to have a market cap of $1 million. This is clearly not actually the case. That being said, even $800 billion is not much when you consider the fact that Apple just hit $1 Trillion by itself and that the dot com bubble didn’t burst until it reached a $2 trillion market cap.
Large financial institutions don’t have easy access to cryptocurrencies yet, but they are interested and they will have access very soon. Most likely in the form of a Bitcoin ETF. The last crypto bull run was fueled by retail investors. The next one will be fueled by institutional investors and it will be magnitudes greater in size.
Putting money into crypto right now is still risky, but the potential reward is massive. Not only for huge returns on your initial investment, but also for streams of passive income from currencies such as ETH and LINK. We may be seeing the beginning of the world’s next great technological innovation and this time you can invest in it directly. Opportunities like this don’t arise often, so I highly recommend giving this one some thought.
Submitted August 17, 2018 at 02:09AM by TG_King https://ift.tt/2KV2prj
