Ethereum

Chainlink vs Ethereum: Which Is The Best Cryptocurrency? – SOLBERG INVEST

Let me start with this: I have invested in both chainlink and ethereum. furthermore, I put them both on my list of the top three cryptocurrency investments for the next five years. In this article, I will analyze chainlink vs ethereum in terms of use case and investment and try to find out which is the best cryptocurrency.

chainlink is a decentralized oracle network, while ethereum is a blockchain platform for developers to build applications. in terms of market capitalization, ethereum is 32 times larger. the potential return on investment of investing in chainlink is higher, but the decreased risk makes investing in ethereum favorable.

Reading: Chainlink vs ethereum

both ethereum and chainlink are used in the real world and solve complex problems.

Although it is true that chainlink and ethereum are often mentioned in the same context, they are still worlds apart in terms of features, advantages and disadvantages.

Today, I’ll try to break down the differences between them and help you understand them better.

This will give you a better foundation to stand on when making investment decisions and help you navigate the rough waters of cryptocurrencies.

oh, and if you are interested in learning about my personal investment and trading strategy for ethereum, you should read this article which shows a step by step guide on how to earn higher profits with eth.

pd:

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what is the difference between chainlink and ethereum?

the relationship between chainlink and ethereum is fundamental and deep. you see, chainlink is actually built on ethereum.

This means that chainlinks uses the ethereum blockchain to “do its thing”. at least initially, it is now expanding to various blockchains, diversifying its base of operations.

but here’s the thing: ethereum needs chainlink too!

The reason for this is that ethereum cannot use real-world data on its blockchain, isolating it and limiting the possible use cases it has.

the function of chainlink is to connect the real world with the ethereum blockchain, making it usable for companies and institutions outside of the crypto space.

let’s be more specific about the intricacies of chainlink and ethereum.

chainlink is a decentralized oracle network:

chainlink is what we call a decentralized oracle network, or don for short. it is required to integrate real-world data into ethereum smart contracts.

for example, if you want to develop a program where one of the variables is the population of a country or who is the president of the united states, a blockchain could never handle this data.

does not have the concept of “president of the united states” or “population of nigeria”.

so we need a link between the two: the real world and the world of the blockchain.

That’s where chainlink comes into the conversation:

makes real world data, events and payments understandable to the ethereum blockchain and allows you to use this data in smart contracts:

REAL-WORLD DATA – CHAINLINK ORACLES – ETHEREUM BLOCKCHAIN (source: chain.link)

Chainlink is the leading “link” between these two worlds, by far…

I actually wrote an article about how chainlink is crushing their competition in the oracle space.

just like ethereum, the minds behind chainlink are constantly improving the protocol and also bringing new iterations :

chainlink also contributed to the formation and development of decentralized finance (or defi).

The worldwide demand for decentralized products and services has been growing steadily, which has helped increase the demand for oracles like chainlink.

link, the cryptocurrency associated with chainlink, rewards contributors who participate in the chainlink ecosystem.

Now that you have a basic understanding of chainlink, let’s see what ethereum is:

ethereum is a platform for developers to build applications:

See also: Solana vs Ethereum: An In-depth Comparison of Two Popular New Cryptocurrencies

Basically, ethereum is a platform for developers to build applications. these applications gain the benefits of blockchain technology, such as decentralization and lack of trust.

a good comparison to ethereum is “internet”:

The internet is a platform where people build online stores, social media applications, informational websites, etc.

Similarly, ethereum is a platform where people can build the same kinds of apps, like stores and social media apps, but in a decentralized, trustless way.

chainlink is one of these applications built on ethereum. It started out as an ethereum-based project, but has since moved on, at least partially.

Furthermore, the entire defi sector could not exist without foundational platforms like ethereum.

today, ethereum is seen as the second altcoin giant after bitcoin.

bitcoin is the king of cryptocurrencies, but ethereum is the prince. (and xrp is the jester 😉)

Ethereum has its problems though:

is struggling with scalability issues: it can’t handle all the transactions on its blockchain. basically ethereum is being crushed by its own success.

This leads to extremely high fees and slow transactions.

In the first quarter of 2021, I had to pay $280 for a single transaction. the reason was that a lot of people used ethereum based projects and loaded the blockchain with millions of transactions.

Ethereum’s competitors handle scaling much better.

I have an article about the fees for solana, a competing blockchain platform, where I calculated the fees for solana to be 60,000 times lower than the ethereum blockchain.

however, this issue will eventually be resolved when the much anticipated (and long overdue) ethereum 2.0 is released.

This enhanced version of ethereum will be able to handle up to millions of transactions per second and will have almost zero fees.

ether (eth) is the native currency on the ethereum blockchain. is the currency used to pay transaction fees and reward node operators (miners/participants).

chainlink and ethereum are intertwined, but they differ a lot:

If you read the previous part, you already understood this:

ethereum and chainlink are cryptocurrencies with real-world use cases and fundamentally valuable projects. they are synergistically intertwined, each giving the other more potential to expand. ethereum is the fundamental platform on which chainlink is built, while chainlink simultaneously allows ethereum to communicate with the real world.

another obvious difference is the market capitalization (market cap) of the two projects:

Market capitalization is calculated like this: the number of coins in circulation multiplied by the price per coin.

In other words, market capitalization is a number that indicates the total value of all coins in circulation.

Below you will see a chart showing the difference in market capitalization between ethereum and chainlink:

Chainlink vs Ethereum market cap

(source: Coinmarketcap)

From the image above, you can clearly see the difference in size between Ethereum and Chainlink. Ethereum is WAYhead in terms of market cap.

in fact, ethereum is 32 times bigger.

ethereum vs chainlink: which is the better investment?

As I mentioned in the introduction, I have invested in both cryptocurrencies. but if I had to choose one, it would be ethereum.

the reason is that ethereum is less risky and gives me broader exposure than chainlink.

why i invested in ethereum:

the value of ethereum is based on how much the ethereum blockchain is used.

See also: EtherZero – A Revolutionary Ethereum Hard Fork, Forking on 19th Jan 2018

The use of the etheruem blockchain is mainly done indirectly through the various applications built on top of it.

for example, if you use uniswap or aave, you are indirectly using ethereum.

This means that ethereum becomes more valuable every time applications built on it are adopted.

Therefore, investing in ethereum is like indirectly investing in everything built on top of it!

It’s almost like investing in an index fund, which is generally a great idea.

however, chainlink also has a lot going for it:

why I invested in chainlink:

The main reason I have invested in chainlink is that it is destroying all others in its sector and that this sector is vital to reach the mass adoption of cryptocurrencies.

listen to me:

Oracle networks like chainlink are needed to use blockchain technology in the real world. Now, I really believe that blockchain technology will be used in the real world and therefore oracles will play a very important role in the future.

In other words, I really want one type of currency from the oracle network in my wallet, but which one should I choose?

well, it’s easy: chainlink has 10x more adoption/success than its three biggest competitors combined.

Not a single competitor comes close to what chainlink has done, which makes the investment decision easier on my part.

expected prices for chainlink and ethereum:

I’ll keep it short and link to longer articles where I fully explore the potential these coins have in terms of future price.

I think chainlink could hit $1000 this decade.

This is based on several factors, but primarily historical market share, historical price data, and future expectations for the cryptocurrency market as a whole.

Also, I think Ethereum will hit $100,000 sometime in this decade.

This is largely based on my future expectations of the bitcoin price and future developments in the bitcoin/ethereum relationship.

As of today’s prices, which are $20 per link and $2300 per ethereum, this gives you the following returns:

ethereum: $100,000 / $2,300 = 43.5x

chain link: 50x

In other words, both ethereum and chainlink have the potential to give you roughly a 50x investment from July 2021 prices.

now the risk of investing in chainlink is much higher than the risk of investing in ethereum.

The fact that you get such broad exposure through Ethereum effectively diversifies your investment across the entire ecosystem of apps built on it.

Although the expected ROI of investing in ethereum versus chainlink might be lower, the decreased risk justifies choosing ethereum over chainlink.

conclusion: ethereum is the best investment option

Even though the potential ROI of investing in chainlink versus ethereum is higher, the decreased risk makes ethereum more favorable. however both are good investments, and i currently own chainlink and ethereum.

In terms of usage and rationale, they both work together synergistically, but in different ways:

chainlink is a decentralized oracle network while ethereum is a blockchain platform for developers to build applications. chainlink was built on ethereum, while chainlink “de-isolates” ethereum and makes it capable of using real-world data.

If you want the “full story” of why I think Ethereum is a great long-term investment, please read this article.

See also: Does Mining for Cryptocurrency Damage My GPU?

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