Chainlink: The Innovative Technology Taking the Crypto Market by Storm

Chainlink: The Innovative Technology Taking the Crypto Market by Storm

Chainlink has maintained a low profile until recently, but it just might be the best cryptocurrency technology you’ve never heard of.

With projected profits of over 100%, it’s an up-and-coming coin that works differently from the rest – and that makes it a smart portfolio choice for anyone interested in cryptocurrency.

We’ll cover what exactly what Chainlink is, how it works, and why it might be a good fit for you.

Pejman Zwin

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In May of 2017, the YouTuber “High on Coins” reviewed different digital currencies.

He and his community thought it would be a good idea to buy a worthless cryptocurrency called Chainlink, drive up its price, and then “HODL” (Hold On for Dear Life).

The idea was that if a group of buyers purchased Chainlink coins all at once, the price would shoot up once the supply was limited.

Chainlink fans made a dedicated channel that was soon abuzz with a stream of emojis and people shouting “TO THE MOOOON,” “only weak hands sell,” and “build a buy wall!” as they tried to get the price up to $100.

The “bandwagon effect” worked impressively: the price of the coin went from $0.10 in early 2020 to $1.40 in early 2021.

Cryptocurrency is, of course, a volatile game.

However, amidst the frenzy of coins popping up in the cryptocurrency craze, Chainlink has been a solid token to invest in.

If you had put $1,000 into its Initial Coin Offering (ICO) in September 2017, that money would now be worth $178,183.

However, in May 2022, before the big cryptocurrency sell-off, it would have been worth $473,545.

Chainlink, with the trading symbol of LINK, is one of the primary cryptocurrencies mainly famous for its unique technology.

If you’ve never heard of Chainlink, you’re not alone; despite its innovative approach, Chainlink has largely managed to fly under the radar until recently.

It can be difficult to differentiate one cryptocurrency from the next, and many buyers give up on learning the intricacies and simply stick to the most popular coins they’ve read about or heard of through word of mouth.

Others abstain from investing at all because the fluctuations of coin prices make them nervous.

If those concerns sound familiar to you, keep reading.

We’ll walk you through how Chainlink works, step by step, so you’ll have all the necessary information for your buying decisions.

Let’s start with the basics:

What is Chainlink?

What is Chainlink?

Chainlink is a Blockchain abstraction layer that allows all smart contracts to connect to each other.

It is a tool to bring external data (“real world” data) into the Blockchain system.

what-is-chainlink

Let’s put it this way: Assume that you want to buy a soda.

Is there any way to buy it from a machine without the help of a third party?

The answer is, of course, a vending machine.

Smart contracts are just like vending machines.

Now, consider if we needed a report of the number of Cokes produced in a month.

Vending machines can not provide you with that information.

They exist to complete the transaction, but they don’t hold or provide any data.

We can think of smart contracts in the same way.

This is where the “Oracles” come in.

How does an Oracle operate in the Blockchain?

Oracles connect data from the real world to systems that are not centralized.

They are important for Blockchain-based products in a decentralized setting, because they let Blockchains interact with data that is not on the Blockchain.

Ethereum and other decentralized platforms run smart contracts.

Accessing data outside of these systems connects the traditional world with the decentralized world.

Decentralization is important because it adapts the input based on real world data.

That data could be anything from a price feed, to the weather temperature, or even a sports game result.

It could be anything that has to do with the purpose of the given Blockchain.Chainlink interprets a wide range of information sources, meaning it is less susceptible to outside forces that influence the market.

Keep in mind that Oracles are not sources of information on their own.

Rather, they collect, query, verify, and validate data from different sources and send it to smart contracts.

The best examples of decentralized Oracle networks are Chainlink (LINK) and Band Protocol (BAND).

Although Chainlink was launched on Ethereum, its technology is such that it is compatible with other Blockchains as well.

That versatility is what sets Chainlink’s technology apart.

What is the purpose of the Chainlink network?

Chainlink increases the functionality of smart contracts.

It allows off-chain computing and real-world data while offering the security and dependability assurances of Blockchain technology.

Further reading
Who are the founders of Chainlink?

Who are the founders of Chainlink?

who-are-the-founders

Chainlink Labs’ co-founder and CEO is Sergey Nazarov, a graduate of business administration from New York University whose concentrations were in administration and philosophy.

He started his career as a part-time professor at the Stern School of Business at New York University.

In 2009, Nazarov co-founded ExistLocal, a marketplace for genuine local experiences.

Seeing the possible benefits of Blockchain early on, he co-founded CryptaMail in 2014, a Blockchain-based and entirely decentralized email service.

Nazarov worked together with Steve Ellis, now co-founder and CTO of Chainlink, to found Smart Contract in 2014.

Ellis had graduated with a computer science degree from New York University in 2010, and upon graduation was working as a software engineer for Pivotal Labs.

Together he and Nazarov developed a platform which connects smart contracts to external data and widely-used bank payments to make them operational: Smart Contract.

This entrepreneurial endeavor later sparked the idea for Chainlink.

Ellis also co-founded the Secure Asset Market in 2014, an online platform which facilitates easier access to decentralized asset exchanges.

Further reading

Does Chainlink provide us with an investment opportunity?

Does Chainlink provide us with an investment opportunity?

Rather than telling you myself, I’ll let Chainlink users explain why they decided to invest in Chainlink.

chainlink-provide-us

If you check out the users on their website, you may be surprised to see entities like Aave, Synthetix, ARBOL, TraderJoe, SushiSwap, 1inch Network, COTI, and many other users.

Many key market players are starting to see the potential that Chainlink offers.

Stani Kulechov, CEO of Aave, put it this way: “Part of composability is that you don’t have to build everything by yourself. Chainlink’s Oracle is very good, and it’s part of this while composability idea, it’s vital.”

Justin Moses, the CTO of Synthetix, emphasizes the superiority of Chainlink compared to other competitors: “We really did our due diligence and looked around. Chainlink is definitely the most established, and every time we dealt with them, the level of expertise was incredible, so I feel like we are in good hands.”

Siddhartha Jha, the CEO and Founder of Arbol, commented: “This product is built on the foundation of Blockchain technology and utilizes Arbol’s smart contract along with decentralized weather data provided by Chainlink to offer users a product unlike any other on the market.”

Lastly, 0xMurloc, the Co-founder of Trader Joe’s, touches on why Oracles are so integral to Blockchain processes: “Many people overlook the importance of Oracles in their smart contract application. The reality that we see time and time again is that a smart contract application’s security is only as strong as its Oracle. That’s why it was so important for our team to find an Oracle that matched Trader Joe’s’ strong commitment to security.”

These statements show the validity of the Chainlink project.

It assures you that Chainlink is past the scam phase and can be considered a trustworthy investment opportunity.

Further reading

How Does the Chainlink network operate?

How Does the Chainlink network operate?

Now we have the exciting part of this article, the part that we have been waiting for.

Let’s break down how exactly Chainlink works.

Chainlink’s purpose is to make communication easier for Blockchains and outside data sources by using an automated mechanism to connect Oracles with Blockchain users looking for knowledge about the actual world.

Here’s how that is possible:

  • It utilizes a service level agreement (SLA) software, which outlines Blockchain users’ conditions and demands. For instance, a Blockchain engineer would desire daily banking interest rate data to be used in his smart contracts.
  • The Blockchain operator will match Chainlink with Oracles, which can respond to their request with the most precise information.
  • The operator will send the SLA and LINK tokens to be kept in the contract, along with the SLA.
  • These tokens will then be used to compensate the Oracles, who provide reliable data that comply with the contract’s parameters.
  • Oracles will begin working on locating the required data from an outside source once they have been chosen (e.g., a report of banking interest rates).
  • This data will be processed by the Oracles and sent through Chainlink.
  • Chainlink will combine the data, evaluate the findings, select the most reliable solutions, and eliminate outliers. The end user will only receive accurate information as a result of this.
  • The operator’s Blockchain will receive this new data through Chainlink.

The updated and trustworthy information will then be entered into the smart contracts, which will then modify them.

For instance, the Blockchain might alter the price of a digital asset based on information about interest rates if they rise above a specific level.

What is the Blockchain used by Chainlink?

Earlier, I told you that Chainlink is not a Blockchain itself. To protect the Oracle network, Chainlink uses an ERC-20 token based on Ethereum.

But because Chainlink already has a Proof-of-Stake (PoS) consensus mechanism, it is one step ahead of Ethereum.

Depending on how many LINK tokens each node has staked on the network, PoS decides which nodes will validate transactions.

When Ethereum 2.0 is released, the platform intends to switch to PoS.

The fact that PoS uses less energy than Proof-of-Work (PoW) and is easier to scale up to handle more transactions on the network is one of the driving forces behind this.

Further reading

What is the LINK token?

What is the LINK token?

This is another opportunity associated with the Chainlink project. Read on to see how LINK tokens could benefit your portfolio.

link-token

Chainlink’s native token is called LINK.

It is a utility coin that serves many functions on the network, including rewarding nodes for their efforts in validating transactions, encouraging data correctness, and maintaining contract stability.

An ERC-20 token called LINK has an additional ERC-223 function.

This latter function offers a “transfer and call” mechanism that makes it easier to deal with smart contracts.

A node’s influence within the PoS network increases with the number of LINK tokens it has. LINK serves as both a utility token and a tradeable cryptocurrency.

But the important question is:

Where can you buy and sell Chainlink coins?

Chainlink, including the LINK token, is one of the market’s best-known cryptocurrencies.

In light of this, many exchanges have sought to begin providing trading in LINK.

Binance is a popular exchange for purchasing Chainlink.

You can trade LINK on the following exchanges:

It’s important to remember that, like all investments, cryptocurrency investments are risky – but don’t worry.

In the price prediction section later in this article, you will be able to forecast the future profitability of this token.

How can we store the LINK token?

One of the crucial issues for any crypto asset holder is the question of which wallet to keep their tokens.

To store LINK, You can choose a hardware wallet with high security like Ledger Nano S or Trezor wallet, or you can select a software wallet with ease of use like Trust Wallet, MetaMask, Coinomi wallet, and Coinomi wallet. Consider which wallet might be best for your needs.

How many Chainlink coins are there in Circulation?

how-many-chainlink-coins

During the Initial Coin Offering (ICO) for the cryptocurrency in September 2017, Chainlink said there would be a total of no more than 1 billion LINK tokens.

At the end of September 2021, there were around 453,509,553 LINK tokens in circulation or about 45 percent of the entire supply.

ICO offerings sold three hundred fifty million LINK tokens at $0.11 for Chainlink.

From the ICO price to the current price of Chainlink, this amounts to a staggering 200X increase.

Mid-2019 to mid-2020 saw a significant bull run in Chainlink’s price.

The term “LINK Marines” — a slang term for Chainlink bulls— became well-known in cryptocurrency.

On May 9, 2021, the price of Chainlink rose to an all-time high of $52.88 due to a rebound in the crypto market and ongoing changes to the Chainlink ecosystem.

As stated in the ICO paperwork, thirty-five percent of the total token supply will be used to reward the ecosystem and node operators.

A further 35% of LINK tokens were distributed during public sale occasions.

Last, but not least, the remaining 30% of the total token supply went to the company to further the chainlink ecosystem and network growth.

Why do we say that Chainlink is the future?

Three words sum up why cryptocurrencies are the way of the future: Because it’s better.

Chainlink is much better than fiat money.

It’s also more versatile than precious metals, which can’t be sent through the internet.

If central banks keep depreciating the value of fiat currencies, cryptocurrencies will become even more important for the future of money.

Further reading

What is the Price Prediction of Chainlink coin (LINK)?

What is the Price Prediction of Chainlink coin (LINK)?

Let’s predict the value of Chainlink with technical and fundamental analysis help.

Here, we’ve given a thorough technical analysis to forecast Chainlink’s growth and price.

We project the most likely outcomes and display them in the chart.

value-of-chainlink

This chart has been derived from the Binance exchange using a daily time frame.

Considering the Elliott wave theory, a year ago, Chainlink touched its all-time high (ATH) at the price of $53.

The correction started more than a year ago (Double Three Correction).

Chainlink is in the last stage of this Double Three correction.

We expect Chainlink to touch the heavy support zone (where the demand rate is high), move up to the SMA 100 (Simple Moving average 100), and go higher than the important resistance line.

When the price goes that high, we can expect one of two scenarios to play out.

One possibility is that the price might go higher and higher near the resistance zone (over 100% benefit).

On the other hand, the price might touch the Resistance zone and make a ranged trend line.

All these hypotheses depend on the circumstances of the cryptocurrency market, smart money, the whales’ movements, the Chainlink team’s decision-making, and their developments.

The takeaway:

Chainlink is a robust Oracle network which provides real-time data to Blockchains such as Ethereum, Matic Network, Hedera Hashgraph, and the Binance ecosystem.

Chainlink is a promising technology that continues to bring exciting changes to the world of cryptocurrencies and Blockchains by partnering with major corporations such as Google.

It’s an innovative opportunity for cryptocurrency buyers, both experienced and new to the market.

But it doesn’t end here.

We’re going to clear up any further questions you might have about Chainlink in the section below.

Further reading
FREQUENTLY ASKED QUESTIONS ABOUT Chainlink (FAQ)

FREQUENTLY ASKED QUESTIONS ABOUT Chainlink (FAQ)

Is the Chainlink network open-source? 

Chainlink is an open-source project that makes its code available on GitHub under the MIT License.

How does the Chainlink network work?

Chainlink uses the Ethereum network, an entirely decentralized connection of peer-to-peer (P2P) nodes that process transactions and record them on the Blockchain.

By running a node, anyone with an internet connection and a computer can join the Chainlink/Ethereum network.

Any node can turn transactions into blocks, which are then added to the final Blockchain when all nodes agree. Stakes, the number of coins someone owns, show how much power they have to vote.

Can Chainlink coin be mined?

The traditional way to mine cryptocurrency is to use a computer to add new “blocks” (a “block” being a grouping of recent transactions) to the Blockchain.

New blocks using a proof-of-work hash function must be linked to the ones that securely came before them.

Chainlink also has a Blockchain, but there is one important difference: It is a token that uses the Ethereum Blockchain to keep track of all transactions.

You can mine Ethereum, but you can’t mine Chainlink.

Can Chainlink coins be stolen?

The coins can be moved from an address by anyone who knows the private key.

If the private key is not known, it’s not possible to spend the coins at an address.

Chainlink that is kept in the wallets of a centralized exchange runs the risk of theft.

Where to store Chainlink coins?

The data of all Chainlink transactions are recorded in a public Ethereum Blockchain distributed as peer-to-peer (P2P) shared files.

Each node has a complete copy of all transactions ever made – the Blockchain.

This means the transactions are saved in the cloud – not on a centralized server, but numerous independent nodes.

Each user’s Chainlink balance is also tracked within their wallet.

Is Chainlink a wise financial investment?

The Original Bitcoin went from worth pennies to tens of thousands of dollars in less than a decade.

It beat the stock market, gold, other precious metals, and pretty much any other investment by a long shot.

Although Chainlink hasn’t reached Bitcoin’s high point, it has done remarkably well as an investment – going from a fraction of a penny to several dollars at its peak.

Its track record shows it is extremely promising as an investment opportunity for potential buyers.

Further reading