Chainlink Powers Asset Tokenization

As someone who lived through Web 1.0 I witnessed most .com’s fail one after another and was quick to write off the entire space as merely a technological fad; a “flavor” of the moment. I fell victim to drawing quick conclusions and not revisiting the industry after the initial “hype” phase had come quickly and gone and wrote of the entire industry and all the players. Little did I, or most investors for that matter, that the technological innovation that was started with the internet would become the very foundation and form the fabric of everything that powers and connects the world today. It isn’t easy (or we would all be the Oracle of Omaha) to see past through the hype and especially after a dramatic price collapse of most companies in an industry to stop, think, evaluate, and take the time to revisit the space and see through the noise to determine, from a long-term, fundamental perspective if it truly is “just” hype or if it is the beginning of something truly transformative and world changing. I, like most others, didn’t do my homework and went back to first principles and take a second look. Even if that second look had resulted in the same conclusions, it would have been well worth it. One company that I wrote off was Amazon.com, quickly dismissing it as an unnecessary and superfluous platform to buy books. Who would ever want to do that online and replace the tried-and-true way of purchasing books in a brick-and-mortar store? Of course, history has proven me and all the naysayers of Web 1.0 painfully wrong. While it is true, that basic laws of economics, supply, and demand, and general first mover advantage (amongst many other factors) can’t result in thousands of companies becoming Amazon.com’s, it is also the case, that a “very” few select companies can. And it’s not just Amazon.com. There are numerous examples where companies that had the right mix of ingredients and were early in a nascent industry, grew to be dominant world players and “winner take all” if not “winner take most” winners. Having lived through Web 1.0, and made this mistake, I have learned to follow my own advice and revisit industries that at first glance appear to be going through a hype cycle like what occurred during the .com boom.

When Web 3.0 exploded, I began to look at the industry and made sure that this time around, I would try to not make the same mistake. Thankfully, after the initial hype cycle, and in Web 3.0, there have been a few, I stayed the course and revisited the industry one more time; this time, from a fundamental and careful perspective. The question I asked myself, is Web 3.0 any different than Web 1.0? While there are of course many differences, there are many more similarities that investors might miss again if they don’t pay attention. I asked if there might be an Amazon.com of Web 3.0 that will emerge in the long run? I’m glad I did. One of the companies that I identified early in 2017 was Chainlink ($LINK). While not a guarantee and certainly there is a long way to go, I firmly believe that Chainlink will be the Amazon.com of Web 3.0. And, because of the dramatic pace at which technology has advanced and is now growing in a highly non-linear way, it will take far less time for Chainlink to potentially become the Amazon.com of Web 3.0.

One of my favorite places to invest is in core infrastructure technology. I like “pick-and-shovel” plays. Most people that made money during the gold rush were not gold prospectors. Most of them came up empty. The only people that made money were those that sold picks and shovels to gold prospectors since they couldn’t look for gold without those tools. Chainlink is the classic, pick-and-shovel company of Web 3.0. It started as an Oracle service connecting off-chain data to on-chain applications that are needed to settle any transaction. It is true middle ware. While these types of investments might seem boring or aren’t ripe for “quick” appreciation in price, they might return many times over the investment return for those that take a long-term view. That is exactly what Chainlink did. It also had and continues to exhibit a critical feature of a winning company which is that it continues to grow its technology platform and capabilities and not just blindly so but rather with a keen eye towards foreseeing how the markets in the Web 3.0 space are evolving and building products that will be critical to making technology platforms work in a Web 3.0 future. Chainlink has also refused to take any outside capital beyond its initial ICO to grow the company. This is a testament to how serious it is about building a real technology company and to not falling victim to many others that are tempted (and it’s easy) to follow paths to try and get quick price appreciation. Here are just “some” of the reasons why I believe Chainlink is the Amazon.com of Web 3.0.

The world of finance is undergoing a transformative phase with the tokenization of real-world assets. Tokenization involves creating a digital representation of tangible assets (whether financial or physical), such as bonds, ETF’s, commodities, real estate, collectibles, and of course, money itself which is going digital. Chainlink's has emerged as a critical player in this evolving landscape. The potential size of assets that might be tokenized is in the hundreds of trillions. While the current value of tokenized assets only stands at a few billion today, it is a sign that we are very early in this cycle and megatrend. Tokenization brings many benefits such as efficiency in payment and settlements, reduced latency of money transfer (whether within a country or cross-border). Chainlink’s partnership with Swift, the global interbank messaging system, is one such example. Chainlink recently completed several successful tests of the transfer of tokenized value across multiple blockchains. This experiment involved several major financial institutions, including BNP Paribas, BNY Mellon, and Lloyds Banking Group. Not only were these tests successful, but they showed that any tokenized asset could be transferred, not just digital money. Global economies function based on the transfer of money in exchange for goods and services. The future of money transfer is digital. Chainlink stands at the precipice of potentially being the middleware that facilitates most (if not all) of this future transfer of tokenized value.

Swift utilized Chainlink's Cross-Chain Interoperability Protocol (CCIP) for these tests, highlighting the protocol's capability to connect various blockchains securely. CCIP is revolutionary since it too facilitates communications between any blockchains. And in a world where Web 3.0 is likely to have multiple blockchains and ecosystems that will be relevant and have scale based on their own use-cases, connecting them seamlessly will be critical to unite information flow, not just money flow. CCIP does just that. Chainlink's CCIP is quickly becoming the de facto cross-chain standard, enabling different blockchains to transfer value safely. CCIP replaces risky cross-chain bridges which are only capable of transferring tokens from one blockchain protocol to another. CCIP allows for arbitrary communication to take place at the base level, aka what TCP/IP did for Web 1.0 in transferring atomic level data between any two websites. This aspect of CCIP’s power cannot be overstated. In a fragmented and likely increasingly fragmented evolution of blockchains, one thing will be a common denominator and that is they all at the core level will have to talk to each other.

Tokenization offers many benefits in an increasingly financialized and interconnected world, especially one where money itself will be digital. Tokenization provides for increased transparency, reduced operational costs, broader accessibility, faster transfer (especially cross-border). Chainlink's strategic partnership with SWIFT as well as many others in its ecosystem that are joining its BUILD program allows it to become the central hub, the core infrastructure, the pipes-and-wires that connect the future world of the transfer of “everything” as the world tokenizes every asset.

One thing for investors to look when evaluating a crypto currency is sentiment as a potential predictor of not just price but also a differentiated sentiment indicator developed from the Smart Money which are the equivalent of the Warren Buffets of today’s modern era of social sentiment. Market Prophit is unique in that it tracks “both” sentiment signals which can be predictive of both short as well as long-term price action. The first sentiment indicator on the platform is one called CROWD (that is the sentiment gathered equally from all crypto prognosticators on X). The second sentiment indicator is called the Market Prophit sentiment indicator and that is a highly unique sentiment signal sourced from only “those” CryptoX accounts that have verifiable and measurable objective scores applied to their crypto price predictions. The unique aspect of using both indicators in conjunction is that they serve individually and more importantly, when viewed together, as either double confirmation of conviction (this occurs when they both agree and are positive or both agree and are negative). However, an interesting case is when they disagree, and one is positive and the other is negative and vice versa. It is typically more often than not, that when their sentiment disagrees from these two distinct groups, that the “Smart Money” is more often right than not. Currently, as you can see from the two sentiment gauges below, the CROWD is currently negative on Chainlink while the Market Prophit sentiment (Smart Money) is positive on Chainlink. Who is right? Only time will tell but something to watch for as the Web 3.0 industry continues to evolve.