What is Chainlink (LINK) and How Does It Work?

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Ever get annoyed when your smart contracts can’t access real-world data? Well, Chainlink is here to solve that problem. As the leading decentralized oracle network, Chainlink allows smart contracts on any blockchain to securely access data outside their native networks.

In this article, we’ll explore just what Chainlink is, how it works, and why its LINK token plays a crucial role in powering this growing ecosystem. By the end, you’ll understand why many see Chainlink as an important piece of the decentralized future. But first, let’s start with the basics.

What is the purpose of Chainlink (LINK) coin?

Chainlink LINK crypto

The main purpose of the LINK token is to incentivize and pay Chainlink “nodes” – these are the decentralized computers all around the world that retrieve external data for smart contracts. When a smart contract needs data like a weather report, currency exchange rate, or sports score, it calls on Chainlink nodes.

These nodes find and verify the requested data from reliable sources. They then encrypt and deliver it to the smart contract in a tamper-proof manner. For this important work, nodes are compensated in LINK – the higher quality and more frequently used the node, the more LINK they earn over time.

Without LINK, there would be no decentralized way to reward these nodes or pay for the expensive real-world API and data costs they incur to securely serve smart contracts. The token also collateralizes the decentralized oracle network, ensuring nodes provide accurate data.

How does Chainlink (LINK) crypto work?

Chainlink LINK coin

Okay, so we know LINK pays Chainlink nodes. But how exactly does the whole system work? Here’s a quick overview:

  • A smart contract on any blockchain (Ethereum, Polygon, Algorand etc.) needs outside data to execute properly.
  • It issues a request for data using the Chainlink protocol.
  • Chainlink nodes “bid” to fulfill the request, stating their data sources and fees.
  • The nodes are selected, and their response data is aggregated from different sources to avoid manipulation.
  • The data is encrypted and delivered to the requesting smart contract using cryptographic proofs.
  • The nodes are rewarded in LINK tokens taken from the contract budget. Over time, LINK pays for the entire oracle network.

With secure oracles like Chainlink providing crucial outside inputs, smart contracts can take actions based on real-world events instead of just internal blockchain data. This expanded functionality opens the door for countless new smart contract use cases.

Does Chainlink (LINK) token have a future?

Considering Chainlink already powers over $2 trillion in total value secured on the blockchain, the future certainly looks bright for its LINK token. In fact, Chainlink recently became the 22nd largest cryptocurrency by market cap amid growing adoption.

As more industries integrate blockchain tech, demand will only increase for Chainlink’s decentralized and secure oracle solutions between blockchains and external APIs. Major tech brands and financial giants already rely on Chainlink.

Some experts forecast Chainlink facilitating billions of smart contract calls daily within 5 years. With its head start and expanding suite of services, Chainlink aims to remain the industry-standard oracle network for the burgeoning Web3 economy. So in summary – as long as smart contracts require off-chain data, LINK looks positioned to thrive.

When Chainlink (LINK) coin launched?

Chainlink owner sergey nazarov

Chainlink launched its mainnet and genesis block in September 2017 after a successful ICO. The project began in 2014 with the goal of solving blockchain’s “oracle problem” – the inability of smart contracts to securely access off-chain resources.

After publishing their popular whitepaper in 2017, Sergey Nazarov and Steve Ellis raised $32 million selling LINK tokens prior to the mainnet launch. The network spent its early years developing core infrastructure before beginning to sign major partnerships in 2019.

Today, Chainlink has grown into a $3.2 billion market cap project with over 1,000 business integrations. It remains one of the leading crypto networks providing secure off-chain connectivity to other blockchains and traditional applications in highly regulated industries.

Is Chainlink (LINK) crypto a scam?

Considering Chainlink has been around since 2017 without issues, and its nodes securely power some of the biggest projects in DeFi, the idea it’s a “scam” seems highly unlikely. As an open-source project backed by a large team of developers, Chainlink meets few of the classic “red flags” often associated with scams.

Remember, simply being a cryptocurrency or new technology doesn’t automatically make something fraudulent. Chainlink solved a real problem for blockchains and might even be undervalued compared to its partner ecosystem. Always do your own research, but most experts agree Chainlink is building legitimate infrastructure for the future of finance.

Is it safe to invest in Chainlink (LINK) token?

As with any investment, there are risks involved with Chainlink. The cryptocurrency market remains volatile, and past performance is not a guarantee of future results. However, if you understand LINK’s purpose supporting the wider Chainlink network and believe in the long-term potential of blockchain oracles, it can be a reasonably safe investment.

Some key things that indicate LINK may be safer than manycoins: it already has real-world use, a large team and funding behind ongoing development, and provides necessary value instead of being a speculative asset. Diversify and only invest what you can afford to lose. But for a long-term cryptocurrency investment, LINK addresses real needs with an active user base.

Is Chainlink (LINK) coin worth it? LINK Price 2023

Chainlink LINK price 2023

Whether or not LINK is “worth it” depends a lot on your investing goals and timeline. In the short term, cryptocurrency prices including LINK remain unpredictable and exposed to market volatility. However, long term, many analysts believe the growing demand for oracles and utility of the LINK token could see its valuation increase significantly from current levels.

Some LINK price predictions estimate it may reach between $50-$100 within the next few years. Not financial advice, of course – but if Chainlink adoption and transactions continue trending up as expected, LINK has real potential to deliver returns, especially for those who got in early. Thanks to EXEcrypto, it’s never been easier to stay on top of the latest crypto news. Just remember to only invest amounts you’re comfortable potentially losing in this speculative asset class.

Where to buy Chainlink (LINK) crypto?

The most popular centralized exchanges where you can currently purchase LINK include Coinbase, Binance, Kraken, KuCoin and Bybit. Make sure to research fees, available payment methods and verifications required for each exchange. Then transfer your new LINK off the exchange into a secure personal wallet for long-term storage.

Some highly-rated non-custodial wallet options for storing LINK include the official Chainlink wallet, MetaMask, TrustWallet and Ledger Hardware wallets. Be sure to keep your private keys and backup phrases safe from hacking or loss! With your newfound knowledge, you’ll be ready to engage with the Chainlink ecosystem.

How to sell Chainlink (LINK) token?

Selling LINK is just as simple as buying. First, transfer your tokens from your non-custodial wallet back to the exchange of your choice that supports LINK trading. Examples again include Coinbase, Binance, Bybit etc.

Next, navigate to the LINK/USD or LINK/BTC trading pair, and click “Sell LINK” to place your order. Choose between market or limit orders—market sells instantly at current rates, while limit waits for your set price.

Funds from your sale will typically be returned to the same payment method used to original purchase more LINK (like a linked bank account). Some exchanges may also let you exchange LINK directly for other supported cryptocurrencies. And with that, you’ll have liquidated your LINK tokens!

How to stake Chainlink (LINK) coin?

Chainlink Token

At the time of writing, LINK tokens cannot directly be staked to earn rewards. This is because, as we learned earlier, LINK is primarily used to distribute payments on the Chainlink network – it collateralizes node operators and data providers, rather than end users.

However, some exchanges like Binance and OKX do offer “staking pools” where you can lend your LINK for a set period to earn a small amount of interest. These centralized services use your tokens to provide liquidity. Just be aware your coins are not entirely in your control. For now, holding LINK yourself in a secure wallet remains the best option. But staking may become available natively in the future as Chainlink evolves.

How to mine Chainlink (LINK) crypto?

The simple answer is you cannot directly mine LINK tokens like you can mine coins from cryptocurrencies with proof-of-work consensus like Bitcoin. Chainlink currently uses a registration-based model where node operators are selected based on quality of service and stake held to provide data to smart contracts, as we covered earlier in the article.

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