There is so much information about blockchains and cryptocurrencies nowadays that we will never get tired of mentioning this: it is way too hard to keep up with everything.
However, we do our best, and in the process, we love to share what we know so far and how you can decide whether you enter this world or give it a pass (though we recommend the first one).
With this in mind, one of the main questions you probably ask yourself quite often is: how many cryptocurrencies are there?
And the short answer is that dozens or way too many to count them and help you make a decision based on all the alternatives. However, when it comes to the most popular ones, you will find a few that are over others.
Chainlink is one of those that is slowly but surely growing and one you should pay attention to either if you are starting in this world or have been in it for a while.
To help you in the process, we will do our job and meet the goals: share what we know with you, including the basics yet important parts. So, stay with us and rest assured you will get the answer you want.
What Is Chainlink (LINK)? – A Look at the Chain & Currency
By this point, and if you have ever read one of our articles, you should know more than cryptocurrencies; the options in this market are blockchains and have other uses and functions beyond being an option for payments.
However, this requires a bit more explanation.
We have to set something right for starters: Chainlink is one thing, and LINK is another.
Chainlink isn’t the crypto you know about. Instead, it is a decentralized oracle network that plays a very significant role in real-world implementations of blockchain technology.
In specific, this network provides input from a range of external data sources.
While blockchain is excellent at its core function of providing a secure, decentralized ledger for digital transactions, it’s not great at receiving input from other entities.
Thus, many “off-chain” factors can influence markets. This includes fiat currency and credit cards, as well as the weather and scores.
As a decentralized oracle, Chainlink can provide input into smart contracts and help with the regular issue previously mentioned.
These smart contracts allow the system to respond to many inputs.
To give you a better example, take Bitcoin, the first cryptocurrency, as an example since it and its blockchain can only process a limited range of input. In contrast, newer blockchains like Ethereum have a greater range. This includes the support for a smart contract that can be programmed and brings more benefits.
To make it a bit simpler to understand, this chainlink blockchain was designed to facilitate the process of transfer of tamper-proof data from off-chain sources to on-chain ones, smart contracts.
This process also allows the smart contracts to be verified and reviewed to determine if they meet all the parameters established.
But what about LINK, then?
LINK is Chainlink’s native token or decentralized cryptocurrency since something you must learn or remember is that every blockchain or system in this world works with a specific token.
Now, this token will help fund (or it is meant for it) the project’s growth. It is similar to Bitcoin (BTC) and Ethereum (ETH), which operate on their respective blockchains.
What is the similitude in specific? The last two always encourage their users to mine, and LINK does exactly the same.
Overall, there’s not really a need to explain how LINK works since it is meant to pay some articles or be used for specific expenses. However, we will go over this in more detail later.
History Behind the Chain: When Did It Start?
With the definition and important concepts done, we can go over the details of when this blockchain and currency were created.
Many believe it was created in 2017 as a very recent blockchain (which it is). However, it is a bit different than what people believe.
Chainlink was founded in 2014. However, it wasn’t launched until 2017 by its creator, Sergey Nazarov.
He has a significant presence in the crypto market and has been involved with more projects besides Chainlink.
Chainlink was originally designed as a centralized system for verifying incoming information. Still, it has evolved to be what it is today, a decentralized network that can pair with smart contracts for secure transactions via external data sources and APIs.
The creators, over the years, decided to make the network to be accessed by anyone; this means any person can join the chainlink network, provide data to it or perform chainlink “jobs,” such as helping to operate its affiliated oracles and nodes.
These operators receive LINK tokens as their in-house currency. As an additional payment method, operators can stake LINK tokens in smart service contracts.
The main reason behind the confusion of when the blockchain and token were being developed falls to the fact that the first white paper was released in 2017. However, the creation took place years before.
What we want to mention from this is that the chainlink 2.0 white paper was released recently, and it outlines the new capabilities of decentralized oracle networks and describes how the Chainlink Network evolves to deliver secure off-chain data and computation and tamper-proof data.
Chainlink oracle networks allow the creation of highly scalable, privacy-preserving hybrid smart contracts that combine on-chain with off-chain infrastructure, as we mentioned. Still, we considered it essential to be added here since it is quite a new function of the blockchain.
Now, when it comes to the token itself, we actually have more to mention.
Chainlink’s LINK tokens were trading at just over a cent USD when they first appeared on the market in 2017.
For a time, prices remained the same, trading at less than a dollar per token until mid-2019. Then, it started trading between $1 and $4 per token.
LINK tokens started to rise in value to $14 by the second half of 2020 and then reached an all-time high of almost $37 in February 2021.
Although this is a significant price increase, cryptocurrency has largely gained popularity at that time.
You might be interested in knowing that while LINK tokens can be held as an asset, they can also be used to pay for smart contracts on Chainlink as the creators decided it, or handled cryptocurrency transactions in the market cap or like you would usually do.
How Does Chainlink Work?
Well, that’s a lot of information to process, but if you truly want to dive into this world, it is only natural to learn about each currency properly.
That being said, not all of them work in the same way despite having similar purposes, functions, or structures.
Essentially, their uses vary, so do their structures and processes to achieve the desired results and goals.
While we have explained other processes like Polkadot’s blockchain and currency, you will find this one very different.
Chainlink has divided its execution into three steps to facilitate communication between users and other data sources.
- Oracle Selection: before anything else, Chainlink users create a service-level arrangement (SLA), which specifies the data requirements. The SLA is used by the software to match users with oracles who can provide the data. After setting the parameters, the user submits them and deposits their LINK cryptocurrency into an Order-Matching Contract. This contract accepts bids from other oracles.
- Data Reporting: oracles will be able to connect to external sources and get the real-world data required in the SLA. The oracles then process the data and send it back to the Chainlink-running contracts.
- Results Aggregation: this final step is to add the results from the data oracles have collected and return them to an Aggregation Contract. The Aggregation contract collects all responses and evaluates their validity. It then returns the user a weighted score using all data.
We know it can be a bit difficult to keep up with the explanation, but we hope it makes sense since you can get confused with other coins and chains if you decide to follow a general concept.
Most Frequently Asked Question: Are you ready to invest?
We know what you are thinking, “won’t you tell us what to use Chainlink (LINK) for?” Well, we don’t think it is really necessary.
As we mentioned throughout the article, Chainlink is used to make the transfer of data safer and easier while working with smart contracts that run on top of blockchains, verify parameters, and ensure everything is in order while boosting other aspects.
As for LINK, you can use it as every other cryptocurrency: you can buy items, products and use it for general expenses, assets, or investment.
But with this more than clear, we know you are wondering if LINK is worth investing in.
As with any new cryptocurrency, you must take the chance and place a bet on its growth and development over the coming months and years.
We consider cryptocurrency a wager in all possible ways, as you never know what you might lose or if you will earn more money the next day.
After all, this market is full of volatility, and it is hard to say “yes, you should invest in it” on our part. But suppose you are directly asking about LINK. In that case, we don’t consider it the best option even when the circulating supply or total supply is set at 1 billion (which means you have opportunities to get some).
It is prone to increase its price, but other options seem more profitable based on their growth during the last six months, like SOL and DOT, and if you are up for this financial advice, we would recommend the first one the most (Solana).
If you are asking as a way of investment and rely on cryptos overall, we won’t choose them either if it is Chainlink or others.
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