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chainlink

Chainlink is a blockchain-based cryptocurrency network that provides a link between real world data and smart contracts. It also offers a tradable cryptocurrency token called LINK, which is used to pay for smart contract transactions on the Chainlink network. LINK tokens also hold their own relevant value in comparison to fiat currencies. The platform helps carry out smart contracts, which are blockchain agreements that automatically complete upon the filling of necessary preconditions. Chainlink helps oracles, or outside data sources, to act as liaisons between themselves and the blockchain. Investing in cryptocurrency can be confusing, so consider working with a local financial advisor.

What Is Chainlink?

Chainlink is a decentralized, blockchain network that helps bridge the gap between oracles that send real world data and smart contracts that exist on the blockchain. While using individual oracles to gather this data for smart contracts technically defeats the purpose of a decentralized blockchain, it’s attempting to solve this problem by instead decentralizing the system that uses individual oracles and APIs to gather and verify the data that’s relevant to these contracts.

Chainlink can generate multiple subcontracts, while also taking data from only the most trustworthy nodes and oracles for premium accuracy. Although there isn’t a cap on the number of smart contracts the platform can handle, there is a one billion LINK token limit.

How to Buy Chainlink

Buying LINK tokens is relatively easy. They’re a popular cryptocurrency and are listed on most cryptocurrency exchanges, such as Coinbase, Gemini, Kraken and Binance. You can exchange cryptocurrency you already own for LINK tokens, or you can pay through a brokerage using a fiat currency, like USD. Many exchanges allow you to use a credit or debit card to deposit funds.

While you can store your LINK directly on a cryptocurrency exchange, that may not be the most secure place for storage. It’s highly recommended that you purchase a digital cryptocurrency wallet, which can house all of your cryptocurrency, including LINK.

However, crypto wallets don’t come without their own risks. Since they’re locked with unique passwords or codes, you could lose access to the contents of the wallet if you forget how to access it. Be sure to copy down your access codes somewhere to ensure this doesn’t happen.

Investors can buy fractional shares of LINK tokens, which makes them more attainable. However, the price per token is relatively low at around $30, so it’s not a particularly expensive crypto token.

Chainlink History

chainlink

Chainlink was created in 2014, though it didn’t launch until 2017. Its founder is Sergey Nazarov, a 32-year-old entrepreneur who has a major presence in the crypto market. Originally, the Chainlink network was designed to be a centralized oracle system that can verify incoming information. However, it has since morphed into what it is today: a decentralized oracle network that pairs with smart contracts to provide secure transactions using external data sources and APIs.

The Chainlink network is a fairly open system. In fact, anyone can join it, provide data to the network or complete Chainlink “jobs” by helping operate its affiliated nodes and oracles. These operators are paid in LINK tokens, which is the in-house currency of the Chainlink network.  Operators can also stake LINK tokens when servicing smart contracts as a way of receiving even more payment.

Chainlink Price History

When Chainlink’s LINK tokens first hit the market in 2017, they traded for just above a cent in USD. The cryptocurrency’s market capitalization was also understandably quite low.

Prices stayed this way for a while, trading at less than a dollar per token until mid-2019, when the price per token increased, and it began trading at between $1 and $4 per token. However, for the latter half of 2020, LINK tokens began to increase in price even more to over $14. In February 2021, LINK reached an all-time high price of nearly $37 per token.

While this is certainly a massive jump in price, cryptocurrencies have largely gained popularity over that time. It’s important to remember that while you can hold LINK tokens as an asset, they also function as a way to pay for smart contracts on the Chainlink network.

How to Mine Chainlink’s LINK

You can mine LINK in the same way that you’d mine any other cryptocurrency. A popular method is using an ASIC computer, which is specifically built for mining cryptocurrencies. How much LINK you’ll be able to mine depends on how powerful your computing system is.

Should I Trade or Sell Chainlink’s LINK?

chainlink

Cryptocurrency prices have seen major upward movements in 2020 and 2021, which is typically a good sign for investors. On the contrary, it’s important to be wary of the general volatility of a new market like cryptocurrency platforms.

Investing in Chainlink’s LINK tokens as an asset is a potentially risky strategy, though the potential returns are enticing. However, you can also use them in a more practical sense by taking advantage of the network’s smart contract features. In this sense, if you support the business model of Chainlink, buying and holding or even staking LINK tokens as an investment in the business could be worthwhile.

Bottom Line

Chainlink is an interesting blockchain/oracle platform because it combines two major elements. At first sight, it’s a platform to help link real world data and API information with smart contracts that exist on the blockchain. But it’s also a cryptocurrency through its LINK tokens, which can be used as an investment, like Bitcoin or Ether, or you can pay for Chainlink smart contract services with them.

Tips for Investing

  • Investing is already difficult, and adding cryptocurrency to your portfolio can make things even more complex. A financial advisor in your area can help you with this, though. Finding an advisor doesn’t have to be hard, as SmartAsset’s free tool matches you with financial advisors in just five minutes. Get started now.
  • Whether you’ve been investing for many years or are just starting, it pays to plan ahead. SmartAsset’s free investment calculator can help you determine what kinds of returns you need to reach your goals.

Photo credit: Chainlink, Gemini.com, Genesis Block

Sam Lipscomb, CEPF® Sam Lipscomb is a writer for SmartAsset. His work spans a wide variety of personal finance topics with expertise including retirement, investing and savings. He is particularly well versed in credit cards. Sam has been featured in The Economist and on The Points Guy. He is a Certified Educator in Personal Finance (CEPF®). Sam graduated from Kenyon College with a degree in Economics and enjoys being a go-to resource for family and friends when it comes to personal finance. Originally from Washington, DC, Sam loves all things aviation and is a Cleveland sports fan. He currently lives in New York.
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