Despite a 73% decrease, this digital currency exhibits powerful long-term prospects.
In the past crypto market surge, Chainlink (down 21.07% represented by LINK) became a sudden sensation. Its value climbed significantly from $2 in January 2020 to $52 in May 2021. Investors perceived it as having the potential to revolutionize the conventional financial system due to its advanced blockchain technology.
The situation has changed since then. As of now, Chainlink is priced at $14, often overlooked in discussions about high-risk, high-reward cryptocurrencies for investment portfolios. However, Chainlink could make a strong comeback, and here's why:
The Digital Asset Tokenization Movement
Chainlink is actively involved in the digital asset tokenization trend, which is making headlines in the financial sphere. To put it simply, this process involves converting real-world assets into digital assets on a blockchain. The primary focus is on tokenizing large, intricate, or illiquid real-world assets such as private equity and real estate. Utilizing secure blockchain tokens can offer substantial liquidity and efficiency benefits for these assets.
This concept might not seem groundbreaking to those not investing in such assets, but big players like BlackRock, the world's leading asset manager, are jumping on the bandwagon. According to CEO Larry Fink, the upcoming asset tokenization trend could surpass the launch of new spot Bitcoin ETFs in impact.
Chainlink believes that asset tokenization represents a potential $10 trillion market opportunity by 2030. renowned consulting firms like Boston Consulting Group and McKinsey & Co. also share this view, projecting asset tokenization to become a multitrillion-dollar opportunity. If Chainlink manages to tap even a fraction of this market opportunity, its market value could skyrocket.
Chainlink is committed to partnering with significant financial institution names to facilitate asset tokenization. For instance, Chainlink recently completed an asset tokenization project with UBS Asset Management and the Swift payment network, demonstrating the feasibility of exchanging tokenized assets between the crypto and traditional financial markets.
Artificial Intelligence
Chainlink is a blockchain oracle, delivering real-time external data to blockchains. Typically, this involves financial data, but it can also encompass various external data types like weather data. During the previous crypto bull market rally, Chainlink financial data predominantly powered the smart contracts in the realm of decentralized finance (DeFi).
The new concept now is to integrate Chainlink's blockchain oracle technology with artificial intelligence (AI), to explore new real-world use cases. For example, Chainlink is attempting to tackle the issue of data fragmentation, which results in inaccurate and incomplete data within the financial services sector. This is particularly true for events such as mergers, dividends, and stock splits, which can be costly and time-consuming to verify and disseminate.
By leveraging AI and blockchain technology, Chainlink could address this issue more effectively. Chainlink explains in a new report ("Transforming Asset Servicing With AI, Oracles, and Blockchains") that AI and blockchain technology can streamline the data validation process, substantially improving the efficiency compared to the current methods.
However, this is just the start. Chainlink sees potential applications in other sectors, like medicine, education, and logistics. Chainlink's strategic advisor in its AI and blockchain technology endeavors is Eric Schmidt, former CEO and executive chairman of Google's Alphabet. This partnership undoubtedly brings a wealth of intellectual resources to the table.
Chainlink's Future Prospects
The main question now is how long it will take for both trends – asset tokenization and AI – to unfold. It could take years, if not decades, before we see tangible results. If you're considering investing in Chainlink, a long-term perspective is essential.
That said, I have a favorable outlook on Chainlink in the long term. At the very least, Chainlink has the potential to reclaim its all-time high of $52 within a few years, offering an attractive 270% return on investment. If you missed Chainlink's initial bull market boost, there might still be an opportunity to join in on the subsequent growth.
Investors interested in Chainlink might find its involvement in the digital asset tokenization movement appealing. This trend, which aims to convert real-world assets into digital assets, is gaining traction in the financial sphere and is projected to become a multitrillion-dollar opportunity by 2030. Additionally, Chainlink is leveraging artificial intelligence to address data fragmentation issues in the financial services sector, potentially unlocking new use cases and markets. These developments suggest that investing in Chainlink could offer significant returns in the long term.
