Fool.com contributors Chris MacDonald and Jon Quast discuss why API3 (CRYPTO: API3) could be a top cryptocurrency to watch this year. This conversation is from the Jan. 12 edition of "The Crypto Show" on Backstage Pass.
Jon Quast: The first one here is one that you mentioned, API3.
Chris MacDonald: API3 is one that I've started diving into. I introduced it a little bit earlier in terms of allowing for APIs which are basically the building blocks of applications to be integrated with the blockchain from off-chain data sources.
One of the ones that we've talked about on a few different shows is Chainlink (LINK 3.80%). They are what's known as the oracle network, which helps to bridge the gap between off-chain data feeds such as price feeds. If you're a decentralized exchange, it's probably a good idea to have real-time price feeds from the outside world, feeding or exchange. Or whether weather-related ops with real-time weather data. Whatever the real-time data source is that's needed for a blockchain-based application they need to use some oracle network right now to solve that problem.
API3, it's a smaller-scale project. Its market cap is $140 million. It's way down there, 360th on the list right now. But this is one of the more speculative ones that I'm looking at because API3 is approaching the problem of integrating off-chain data differently.
They're looking to launch what's called decentralized APIs or dAPIs, I guess. With these, essentially those who first-party API developers or providers can integrate directly and seamlessly with the blockchain. Not only that, it would be blockchain agnostic. If you're doing a project that you would want to span different blockchains, this could help solve that problem.
Right now, it's in the beta stage, so it's early stages of development. This is a high-risk one, but the team behind it seems to know what they're doing. This is a fascinating use case and a fascinating potential market that they could exploit. There are a lot of risks with it. It's one that's definitely like a lot higher risk.
But for digging through the weeds and trying to find interesting ones, is one that really piqued my attention in terms of what could be maybe the highest-risk, highest-return investment that I would be interested in. This one would be probably one of the ones that would pique my interest.
