What is Chainlink (LINK)?

The headlines that ChainLink seems to be making in recent times is nothing short of impressive. Ever since it got founded in the year 2017, its popularity doesn’t seem to know any bounds. This has made experts claim that it is one of the pillars for which blockchain technology exists. Whether this is true remains to be seen though.

The major aim of this post is to explain ChainLink in the most comprehensive manner. It will reveal lots of details ranging from the meaning of ChainLink, its purpose of creation and whether it is actually worth all the hassles for investors.

What actually is Chainlink?

This is an oracle network that is decentralized with the mission of providing real data to smart contracts which exist on the blockchain. There is a gap existing between real-world data and isolated blockchain. The reason for Chainlink’s existence is to ensure such a gap is closed. It facilitates the process through which off-chain data can be moved into on-chain format.

Smart contracts usually make use of different categories or groups of information. These could be information about weather data, event outcomes, pricing and others. These are external data that need to be fully protected from being compromised. ChainLink aims to ensure such data are facilitated and protected.

In order for the information to be provided for smart contracts, ChainLink makes use of oracle. Smart contracts can be seen as agreements (pre-specified) which evaluate blockchain information. For evaluation and implementation to happen, certain conditions will have to be met.

Here is a simpler explanation:

We will be using crowdfunding via Ether for this illustration. For the money to be released to the fundraiser, an amount of Ether should be reached within a given date. This is the only way that such an amount which has been deposited in a smart contract is going to be released. Anything short of this, the money will return to the donors. A blockchain is where smart contracts tend to exist. Due to this, they can be verified and cannot be changed. This creates a system of transparency and trust between different parties using the system. Execution will only happen automatically when parameters or conditions have been met. 

Smart contracts need to arrange agreements based on data (off-chain). This data will be in a special format (on-chain). There is a problem with smart contracts which has greatly limited their usage over the years. This is the difficulty through which external information sources can be connected to smart contracts existing on a blockchain.

This is where Chainlink can be of help through oracles. Oracles are intermediaries which translate real-world data to smart contracts. It is a back and forth process meaning as data is translated from real world to smart contracts which are existing on the blockchain, that is how such can be translated back again to real-world data.

Having seen all of the above, it is pretty simple to explain what Chainlink is. This is a decentralized network which is aimed at providing information and data that are not within blockchain (off-blockchain sources) for smart contracts (on-blockchain sources) through oracles. Normally, there will be some issues like reliability and security of data being provided for centralized networks. However, all of these are gotten rid of through ChainLink technology given that its network is decentralized.

History of Chainlink

Although Chainlink was launched in 2017, it had been existing under the name of SmartContract.com. However, the company was renamed in 2017 after some changes were implemented by its management. The major reason for such change in brand name was to come up with something that represented the platform’s core network in a much better way.

In the same year, ChainLink held an ICO which it was reported to have raised $32million. Ever since its release, the company has been trying to achieve one feat. This is ensuring that security in oracle, blockchain and other aspects are pushed to new heights. In other words, it was determined to come up with innovations that will improve the blockchain technology with regards to sending and receiving of data.

One of its major partnerships happened in 2019 with Google. This was when the protocol of ChainLink got integrated with Google smart contracts. It was a major success not just for analysts but also investors. It can be said that ChainLink has managed to achieve a feat which most companies can only dream of within such a short timeframe.

What is the purpose of Chainlink?

In order to ensure better understanding of Chainlink purpose, this can be split into 2 sections:

  • The protocol
  • The token

The protocol

This is one of the major reasons why ChainLink exists. It makes it possible for a decentralized network to be available whereby real-world data can become available on the blockchain. The protocol can be said to have 2 components.

The first one is a network containing nodes that are outbound which request for off-chain data. The second is a network which contains inbound nodes. These ensure that inbound data which have been requested for is synchronized back on-chain.

The process of synchronization can be said to have started once Chainlink makes a request for external information through smart contracts. “Request smart contract” is what this is known as.

Through this process, about 3 additional sub-smart contracts will be created. These are known as:

  • Reputation Contract
  • Order-Matching Contract
  • Aggregating Contract

Each of these sub-smart contracts has its roles and responsibility. In other words, they have a role to play with regards to how Chainlink functions. For instance, Chainlink Reputation Contract is responsible for tracking the provider record of Oracle. Its function is to ensure data which has been supplied is authenticated.

Chainlink Order-Matching Contract is responsible for aligning requests which have been made “Request smart contract” based on the pre-specified conditions. In this sub-smart contract, nodes are chosen based on bids made as well as requested.

Chainlink Aggregation Contract will then carry out its function when the request node has been matched. It involves the aggregation of chosen oracles from data received. Before being sent to a smart contract that has made a request for such information, the data will be converted into a single value. 

Generally speaking, it can be said that the entire blockchain is being put at serious risk through centralized oracles. However, the advent of ChainLink has managed to change all of these to a great extent.

Is ChainLink a good investment?

Given the recent developments of blockchain technology, there is every reason to believe that ChainLink is a profitable long term investment. After all, cryptocurrencies are not just expanding but also, new projects are being introduced. Experts are beginning to dream about the end of traditional methods of financing. 

Digital financing is the way forward and many systems as well as industries around the world are beginning to embrace such a fact. One of the major reasons why ChainLink is great for investors is that it has managed to introduce something special which blockchain has been lacking all these years. This is “interoperability”.

Chainlinks’ price history

In order to prove that Chainlink is a good project to invest in, we will be looking at its price history. It decided to launch a private token sale campaign in the year 2017, each token was sold for $0.09. However, in public sale, each token was sold for $0.11.

In 2018, it commanded a much higher price. After doubling up to around $0.43 for each coin, it increased to $1. When it had that partnership deal with Google, the price of a token moved upwards again to around $1.93. After getting listed on Coinbase, it grew again to $2.24. Before its appearance on the exchange, a token was already commanding $4.45. However, it experienced a decrease in that same 2019 when the price reduced by $1.61.  In 2020, there was a major movement of its price to $4.60 from $1.74.

From the above, one thing is certain about ChainLink. This is the fact that it will become a dominant force in a few years from now. A proof of this is that in 2021, it was at around $11.45 in the month of January. After that, it was able to record an all-time high of around $25.65. Experts are predicting that before the year 2021 will come to end, the price can hit $50.

There are even some experts who have predicted that by the end of 2023, Chainlink token should command a price of at least $100. The truth is that given how its price has increased within such a short space of time, there is every reason to believe such predictions. This is one of the reasons why investing in ChainLink is a smart decision since its price keeps on increasing. It can be said that the future really looks bright for blockchain and smart contracts.

With all of these enhanced and upgraded features that Chainlink has introduced, companies, organizations and governments will soon start considering how such systems can be adopted in their activities. This is a clear indication of how activities will be carried out in the future.

If you want to learn more about cryptocurrencies or would like to read some guides about crypto you can have a look at our other articles. Remember to always do your research before investing and don’t let the FOMO kick in when deciding which coin to buy!

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