What Is Chainlink (LINK)? How It Works & Where To Buy It?

Chainlink (LINK) is a decentralized oracle network that bridges the gap between blockchain technology and real-world data.

It serves as middleware used to seamlessly link external data to blockchain technology. Smart contracts are at the root of the Chainlink network and are utilized to facilitate data transfers.

Accurate and secure data feeds are critical to the integrity of the Chainlink network – off-chain data is processed using the decentralized oracle networks (DONs).

LINK tokens are the native cryptocurrency used to pay node operators and duly collateralize smart contract agreements.

How Chainlink (LINK) Works

Chainlink has its own blockchain, but it’s hosted on the Ethereum platform – its native token is an ERC20 token.

There is a fundamental need for capturing, transferring, and storage through decentralized data feeds. The entire process of linking off-chain data and blockchain smart contracts is made possible by oracles.

Chainlink is unique because it’s a decentralized oracle that utilizes hybrid smart contracts to achieve its decentralization status.

So, let’s delve into how it works and why decentralized oracles are valuable.

Hybrid smart contracts achieve accurate data and their distribution from off-chain to on-chain. This process is tamper-proof and therefore has multiple use cases.

Simply put, certain inputs have pre-determined outputs: if x input is initiated, then y output is the result. Essentially that is how blockchain works. Every state of smart contracts leads to a different variable.

Before transactions are completed, the blockchain processes various variables, confirming that x inputs have been set into effect and that y outputs need to occur. This involves computation, which in blockchains works something like this:

• Verifying that signatures that have been initiated by a private key (password) match the corresponding public key (address) which originated the specific transaction
• Confirming that public key addresses do, in fact, have sufficient account balances to cover the amount of x being sent as well as the network fees

These are examples of computation in a blockchain. Chainlink’s whitepaper explains that it has a set protocol, and a network of node operators that ensure the data in its entirety is processed similarly to the principles mentioned above.

LINK token holders run the nodes, and they are required to agree to not sell their tokes and must stake LINK tokens for network security.

What Is Chainlink (LINK) Used For?

Chainlink is used to securely and accurately bridge off-chain and on-chain data using decentralized smart contracts.

The oracle serves as the middleware which makes this possible. The danger of centralized oracles is that they can be corrupt and faulty, whereas Chainlink relies on a network of node operators to provide accurate data feeds provably.

The most common use cases for Chainlink are NFTs, blockchain gaming, decentralized price feeds, and cross-chain interoperability protocol.

Through a Verifiable Random Function (VRF), NFTs and on-chain gaming apps receive Random Number Generator (RNG) – this functionality ensures fairness and security for smart contract applications.

Cross-chain interoperability protocol is another innovative open-source standard specifically catering to a multi-chain ecosystem, which enables cross-chain applications seamless message and token transfers with several commands across numerous blockchains. Chainlink streamlines this entire process, perfectly catering to the fundamental needs.

 

Where To Buy Chainlink (LINK) Tokens

Chainlink (LINK) is the 23rd largest cryptocurrency globally by market cap.

LINK tokens are commonly available and frequently traded on most centralized crypto exchanges. Before you’re able to purchase LINK, you’ll need to deposit fiat money onto an exchange, and sequentially LINK tokens will be credited to your LINK digital wallet on the exchange.

The crypto exchanges below are the safest place where you can buy, sell and store LINK tokens.

Five of the most popular crypto exchanges are:

1. Binance
2. Coinbase
3. KuCoin
4. HTX
5. Crypto.com

 

All of the above exchanges allow users to buy, sell, transfer and store LINK tokens in a digital wallet on the exchange. You can use your debit or credit card to purchase LINK tokens on centralized exchanges.

If you intend on transferring your LINK tokens to a wallet off of the exchange – you can choose to send them to a wallet such as Metamask or LinkPool (stake your LINK tokens).

How long has Chainlink (LINK) existed?

The Chainlink network was launched in June 2017 by SmartContract. The co-founders of the company are Steve Ellis and Sergey Nazarov.

Chainlink’s whitepaper was published in September 2017, and the project began to garner attention and investments relatively quickly.

What’s controversial about Chainlink (LINK)?

It’s important to consider controversies surrounding crypto projects. It’s very common for projects not to be as transparent as they promise, especially since the legal framework surrounding cryptocurrencies is still being finalized.

Let’s take a look at the top two controversies surrounding Chainlink (LINK)

• Susceptible To Attacks – Chainlink has been compromised by attackers in the past. In one instance, the nodes were tricked into paying exorbitant gas fees, costing the Chainlink network more than 700 ETH.
• Price Manipulation – There have been suspicions circulating about price manipulation. Credible news sources such as Cointelegraph have published articles with detailed findings which highlight the price manipulation of Chainlink.

How many Chainlink (LINK) tokens are there?

At the time of writing, LINK has a circulating supply of 467,009,549.52 LINK (47% of the total supply).

The total supply of LINK is 1 billion.

Can LINK tokens be mined?

Chainlink is not a mineable cryptocurrency. Although Chainlink is an ERC20 token, it still isn’t possible to mine LINK. It utilizes a Proof of Stake algorithm. Node operators are required to stake tokens to validate transactions.

However, many individuals choose to participate in DeFi applications where they can earn yields from staking LINK tokens and providing liquidity.

Some centralized exchanges also offer minimum APY (Annual Percentage Yield) if individuals stake their LINK tokens for a certain duration.

What is the market cap of Chainlink (LINK)?

The market cap of Chainlink (LINK) is:

Chainlink (LINK) market cap = total amount of coins in circulation x current market price of LINK

Chainlink (LINK) Market Cap = 467,009,549.52 x $14.08 = $6.58 billion (23rd largest market cap)

The market cap fluctuates according to circulating supply and market price.

Biggest Competitors Of Chainlink (LINK)

Chainlink is currently the leading oracle by market cap. The 2nd largest competitor is Bridge Oracle (BRG), which has a market cap of only $458M compared to Chainlink’s market cap of $6.58 billion.

However, several promising projects are slowly building significant attention in the oracle space. Some of the best up-and-coming oracles are:

• UMA
• WIN (WINkLink)

What are the future plans for Chainlink (LINK)

Chainlink 2.0 is the major upgrade scheduled for the project. This will prioritize the upgrades of hybrid smart contracts, scaling, allowing for abstracting away complexity and improving security.

The project has established a large following from both blockchain projects and retail investors. Going forward, Chainlink will look to expand its growth and drive more value to the project.

The Chainlink decentralized oracle network (Chainlink protocol) is the current leader of Oracles in the crypto space.

Pros and Cons of Chainlink (LINK) and Chainlink Network

Pros:

• Decentralized Oracle – What separates Chainlink from other oracles is the leading decentralized oracle – that offers fair and secure data exchange through its innovative hybrid smart contracts.
• Enormous Total Value Secured – Chainlink has grown exponentially since it was launched. In 2021, it recorded an average of 1.4 new partners per day. This was reflected in the annual analytics for total value secured – Chainlink recorded more than $75 billion in total value secured. It also recorded +1000 oracle networks.
• Significant Partnerships – Chainlink’s ecosystem has been continuous growth in recent months. The number of major projects entrusting their data bridging with Chainlink has grown exponentially. Most notably are projects such as Deutsche Telekom’s T-Systems, Swisscom, and the Associated Press.
• Leading Decentralized Oracle – Chainlink is currently the leading oracle in the crypto space. It has a market cap of more than $6 billion, and its native token, LINK, has surged significantly since its launch. The nearest Oracle competitor is a significant way behind, with a market cap of only $458 million – more than $5.5 billion smaller than LINK’s market cap.
• LINK Token Is Available On Most Exchanges – LINK token is commonly available, meaning retail investors can easily access the tokens and trade with them. It’s listed on Coinbase, Kraken, and most of the top cryptocurrency exchanges.

Cons:

• Low Circulating Supply – The circulating supply of chainlink is only 48% of the total supply. As more tokens enter the market, the supply will be diluted, which will negatively impact the token price.
• Network Has Previously Been Hacked – One of the biggest concerns with Chainlink is the network’s susceptibility to malicious attacks. There have been previous attacks on the network that exploited weaknesses, convinced nodes to pay exorbitant gas fees, and tainted the secure image of the Chainlink network.

Chainlink User Reviews

Review Summary

Recent Reviews

Submit a Review