Chainlink (LINK)is a decentralized network that was designed with the intention to securely transfer real world data onto smart contracts that exist on the blockchain using a network of nodes. The real world data, stored in what are known as oracles, on the Chainlink infrastructure, act as "blockchain middleware", providing vital information into smart contracts without compromising on the decentralized nature of the blockchain, thereby eliminating a single point of failure and improving security.

While the leading blockchain networks such as Bitcoin, Ethereum, Ripple, and others exist and operate in isolation, Chainlink aims to bring interoperability between these different kinds of blockchain networks and also offer a way to connect real-world data from outside the blockchain into such networks. It supports interaction across blockchain networks and also between blockchains and external data sources, with the help of a secure oracle network.

The Chainlink project is based on Ethereum and provides smart contract users the power to access and integrate off-chain data and resources into a blockchain network. Chainlink's network has several applications - from enabling the digitization of securities and asset management processes, to managing data from price feeds, financial data, data from IoT devices, and even possibly allowing interoperability between blockchains and conventional payment systems like SWIFT, PayPal and more.

Chainlink Breakdown

Chainlink is a decentralized network, consisting of on-chain and off-chain sections, which connects multiple Chainlink nodes that include real-world data feeds, off-chain payments and even APIs that connect directly to smart contracts on the blockchain. Smart contracts function on the blockchain network - or on-chain, but their data collection and verification processes can take place off-chain, after which the data goes back on the blockchain again.

Services on the Chainlink network can be paid for using LINK tokens - the cryptocurrency that runs on the Chainlink blockchain. The LINK token is an ERC-20 token built on the Ethereum platform, and is used to pay node operators within the Chainlink network. It acts as an incentive within the Chainlink ecosystem, and the LINK price fluctuates based on the number of nodes that function off-chain as well as on the number of use cases of the Chainlink platform.

LINK can only be used as a payment method within the Chainlink ecosystem and can also be traded against other cryptocurrencies and fiat currencies on digital exchanges that support this token. The developers behind Chainlink have limited LINK's supply to 1 billion and kept 30% of tokens for supporting future developments and payment for its team, assigned 35% towards its ICO and kept the remaining 35% for incentivizing the Chainlink network in the form of payments for node operators.

Chainlink History

Chainlink was launched in 2017 after a whitepaper was published by Steve Ellis, Ari Juels and Sergey Nazarov, discussing plans for a decentralized oracle network which could potentially solve blockchain's challenge of accepting real-world data. Chainlink was launched during the summer of 2017, with its ICO in September 2017 raising $32 million after creating 1 billion LINK tokens. LINK started trading in November 2017.

A year later, in November 2018, Chainlink acquired Town Crier - a leading harware-based oracle system, improving its security and confidentiality features, allowing its team to expand its capabilities. Following this, in May 2019, Chainlink launched its service on the Ethereum mainnet, giving the world the first functioning, decentralized oracle network.

The next development came in October 2019 when Chainlink announced the creation of an enterprise-grade blockchain product in partnership with Intel and Hyperledger, taking blockchain technology one step closer towards mainstream acceptance. In February 2020, Chainlink announced partnerships with Polkadot, Ethereum Classic and many other DeFi projects and DApps.

In June 2020, the company behind Chainlink - SmartContract, entered into a partnership with China's Blockchain Services Network (BSN) and in the same month, LINK tokens' contract options were offered on the Delta Exchange for trading. Binance - the world's largest cryptocurrency exchange, partnered with Chainlink a month later on managing on-chain and off-chain market data for Binance's DeFi platform.

Chainlink Price Factors

The LINK rate fluctuates based on the number of use cases and applications for Chainlink's technology. Increased adoption of Chainlink by crypto projects around the world causes a rise in the LINK price. In addition, the Chainlink rate also varies depending on the number of nodes that function off-chain as node operators need to use these tokens to stake in the network. The higher the use of its tokens, the higher the Chainlink price, and vice versa.

With the number of LINK tokens limited to 1 billion, there could be some scarcity in the availability of tokens sometime in the future, depending on its demand. When demand rises even as supply remains constant, the LINK rate is expected to increase, which - as discussed above, relates to adoption of Chainlink.

The Chainlink rate also benefits from increased mainstream acceptance of blockchain and crypto projects, as several of them will turn to the Chainlink ecosystem for enforcing smart contracts, be it for digitizing securities, insurance or even for trading purposes.

Media coverage about the overall crypto market and the larger cryptocurrencies can also have a ripple effect in influencing the Chainlink price. Positive news increases the interest in crypto trading and can drive the price up while negative news can scare investors away from this highly volatile market, causing the Chainlink rate to fall as well.

Trading Chainlink

We recommend that you trade Chainlink with extra care as it can experience higher levels of fluctuation than the bigger, more popular cryptocurrencies. Keep an eye on the latest developments surrounding Chainlink, especially reports about increased adoption of its technology as these could drive the Chainlink price higher and boost its appeal. Unlike other leading cryptocurrencies like Bitcoin, trading Chainlink (LINK) requires greater knowledge about the blockchain and crypto market overall, as Chainlink adoption is one of the biggest influences of price action in this cryptocurrency.

To start trading Chainlink, you will first need to create an account with a broker that supports trading of LINK cryptocurrency. Ensure that you sign up for services of a reputed broker who has adequate experience in the volatile world of cryptocurrencies. The next step is to get a cryptocurrency wallet which can store your LINK tokens securely. You can choose from hardware wallets, web wallets and desktop wallets based on the level of security you would like.

Once your wallet is funded by converting your capital into LINK tokens, you can connect it to your cryptocurrency exchange to trade LINK against other leading cryptocurrencies and even fiat currencies.