Chainlink (LINK): A Bridge Between Crypto and the “Real” World

Chainlink (LINK) is by far the largest project that enables communication and data exchange between crypto platforms and external sources. It does so via the use of so-called oracles, an exciting technology that serves as a critical bridge between the world of crypto and other sources of financial or other information.

What is Chainlink (LINK)?

Blockchain networks and the variety of crypto platforms residing on them are largely self-contained environments, with very little external data allowed in. Transactions are initiated on the network, verified within the network, and recorded permanently in the permanent ledger of the chain. This is largely intentional in order to preserve the blockchains’ rigorously designed security architectures.

However, this creates a problem of the lack of external data on the chain. For example, a blockchain-based finance app that needs to get up-to-date fiat currency rates from internet sources cannot obtain such data natively.

Chainlink (LINK) is an Ethereum-based app that aims to solve the communication issue between blockchains and external data sources. In order to draw external data into a blockchain environment, Chainlink uses a decentralized network of so-called oracles, software that processes data from various off-chain sources and delivers it in a standardized format to on-chain apps.

Oracles are capable of accessing and delivering a variety of off-chain data, such as:

· Rates from financial markets for cryptocurrency or fiat currencies, commodities, indices, stocks, and so on

· Betting coefficients from sports betting and gambling websites

· Election results, often used for setting betting coefficients for future elections

· Sports and e-sports results

· Weather data

· Retail data

· Data from other blockchains

· In general, any kind of published external data that a blockchain or blockchain-based app might use to set, update, or adjust their rates, such as on-platform crypto exchange rates, annual percentage rates on crypto deposits, and betting coefficients.

Chainlink uses a decentralized network of verifier nodes on Ethereum, whose main task is to validate the external data. The nodes are rewarded with the platform’s native cryptocurrency, LINK, for successful verification. Conversely, the nodes are punished with losing their staked LINK if their data verification quality is poor.
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Chainlink’s cryptocurrency

Chainlink’s native token, LINK, is primarily used to reward nodes for maintaining an acceptable quality of data verification.

While most Ethereum apps have native tokens in the ERC-20 standard, the default token standard of the Ethereum blockchain, LINK is based on the ERC-677 standard. This standard is optimal for Chainlink’s frequent interaction with external environments, particularly with other blockchains.

LINK is a supply-capped token, with a maximum supply of 1 billion. All of this supply has already been minted, i.e., the token’s total supply is also 1 billion. Out of this amount, 491 million LINK (49%) are in circulation.

As of today, LINK is the 23rd highest cap crypto and by far the largest crypto dedicated to the important task of maintaining the exchange of robust data between crypto platforms and external sources.

Chainlink’s history and key people

Chainlink was founded in 2017 by technology entrepreneurs Sergey Nazarov and Steve Ellis as a Cayman Islands company. The project’s whitepaper was published the same year. Chainlink has been fully operational since May 2019.

Nazarov is the company’s CEO, while Ellis acts in the CTO capacity. The project also has a pedigreed team of business advisors, which includes some prominent names in the technology industry, such as former Google CEO Eric Schmidt and former LinkedIn CEO Jeff Weiner.

Should you invest in LINK?

LINK is among the best cryptocurrencies from a long-term perspective. Chainlink is a critical part of the entire architecture linking blockchain and crypto platforms with other sources, including financial data and trading sources. It has established absolute dominance in this highly technical and specialized niche. It is unlikely that other projects will rise quickly to challenge Chainlink as the main messenger between crypto and non-crypto environments.

As such, Chainlink is a great long-term investment. It has much less volatility and hype than trendy cryptos and memecoins. LINK will never be the fastest gainer in the world of crypto, but it will also not fade into obscurity as countless hyped-up cryptos do every year.

While much less volatile than most other cryptos, LINK is a relatively high-risk/high-reward asset from the perspective of a stock market investor – all cryptocurrencies are! If you want to make crypto part of your investment portfolio but you are risk-averse, you cannot go wrong with LINK.