The Chainlink platform is a digital ecosystem based on the Ethereum blockchain. It serves to establish a connection between smart contracts and external data.
The purpose of the project is to optimize and popularize the use of smart contracts, as well as to eliminate inaccuracies and errors in informing. A decentralized oracle network that operates within Chainlink is a crucial part of the project: it facilitates secure and precise data exchange between smart contracts and the physical world.
In this article, we will explore Chainlink’s basic operating principles, look at its history, talk about wallets and trading of LINK tokens, examine Chainlink’s scope of application and discuss its future.
The Chainlink ecosystem includes the LINK token and the Chainlink network, a decentralized network of Chainlink nodes where data is distributed and sold. It helps more businesses and projects to adopt smart contract usage through the development of APIs and other platforms.
Chainlink network consists of two parts: off-chain and blockchain. Both elements must interact with each other for the service to function correctly. The blockchain filters oracles according to the metrics requested by the smart contract.
The off-chain part consists of oracle nodes connected to the Ethereum network, which independently collects data from external sources. Such a node may belong, for instance, to the New York Stock Exchange, which will supply Chainlink with real-time trading information. Chainlink plans to integrate oversized oracles into a single system for more accurate data.
The LINK token – the native Chainlink cryptocurrency – caters to node operators, development engineers, and data suppliers’ needs. Though LINK acts as the one and only internal payment unit, it’s easy to trade it for other cryptocurrencies or fiat money.
Chainlink is a progeny of two bright Americans – fintech enthusiast Sergey Nazarov and development engineer Steve Ellis. The network branched off SmartContract.com, Sergey’s and Steve’s ground project, which aimed to create a link between real-world data and public blockchains. It relied on centralized oracles and, over time, faced a major problem: it became risky to trust third-party data sources, having little to know cross-verification.
That’s how the decentralized Chainlink ecosystem has been born: in September 2017, it held an ICO and raised $32 million, overtopping the $16 million that co-founders had been hoping for.
They issued 1 billion LINK tokens, selling 350 million to ICO investors right away. The remaining 650 million were shelved for Chainlink node operators and the project’s team.
In June 2019, after multiple security audits and a number of stress tests, Chainlink’s mainnet was released on Ethereum, providing a network of decentralized oracle nods for millions of users.
To date, Chainlink is ready to provide a network compatible with Bitcoin, Ethereum, and Hyperledger. Plans are underway to enable Chainlink to support other blockchains. Another ambitious prospect is to launch one smart contract in several blockchains.
To get reimbursed for providing their services, node operators receive payment in LINK tokens. According to the developers, the cost of a LINK token directly depends on the number of node operators, that is, the more popular a company’s product becomes, the more expensive the token costs.
Some believe that the project does not need its own token and could use other cryptocurrencies to perform the same tasks. In response, the developers object that the LINK token will gain value with the launch of a full-blown network. LINK token complies with ERC677 standard, but runs on the top of ERC20 and features the same functionality. It is compatible with all the digital wallets designed for Ethereum.
People use LINK tokens to pay data and payment providers, node operators and other online service suppliers. Smart contract users are bound to reward data providers they deal with: rewards are generated when the nodes on the network undertake jobs to retrieve and provide data to smart contracts. Upon that, they get paid in LINK tokens.
Since LINK tokens are used as a currency on the project platform, the more people use the Chainlink platform, the more valuable LINK tokens should be.
The vast majority of smart contracts require external data to be executed. Obtaining this data is currently a tough challenge, and that’s one of the reasons the project exists. The token compensation system will guarantee accurate data in addition to increasing decentralization throughout the network.
It is critical to sustain the tendency towards total decentralization because decentralized public blockchain doesn’t make a lot of sense if its data input is centralized. A decent reward for those who keep data sources decentralized, verifiable, and less prone to be tempered with is a must in the Chainlink ecosystem.
There are no specific single-currency wallets for LINK tokens, but it is possible to store them on various crypto platforms on the web. Storing LINK on cryptocurrency exchanges (for example, on Binance or Bithumb) is suitable for users who manage small amounts of tokens.
It’s worth remembering, though: storing on exchanges does not provide a sufficient level of security. It may be a better idea to use multi-currency or Ethereum wallets to keep your LINK tokens safe.
LINK can be stored in wallets that support ERC-20 tokens, including MetaMask, MyCrypto, or MyEtherWallet. Another option for LINK are hardware wallets, such as Trezor and Ledger Nano. In order to help you make the right choice, Changelly prepared a detailed review article on Chainlink wallets.
The best way to trade Chainlink is to use online crypto exchanges. Today, the vast majority of exchanges support buying/selling LINK for both fiat and crypto (though the number of crypto pairs is limited and depends on the platform).
The most popular exchanges that trade LINK tokens are Binance, Coinbase Pro, Huobi, OKEx, LATOKEN, Kraken, and some others. We’ve just launched a secure and user-friendly exchange Changelly Pro, where you can trade any tokens on favorable terms. Check it out!
Smart contracts, and the Chainlink platform, by extension, are already made use of in various fields. Businesses and projects that can possibly benefit from smart contracts implementation deal with:
- Stock exchange
- Damage verification
- Market predictions
- Notary services
- Multi-level marketing
and a number of other activities and industries.
The peculiar thing about Chainlink is that it has no official roadmap. Although, judging by the way things are right now, the Chainlink team is on the right track and doesn’t need specific guidelines or reference points to keep up their work.
Either way, it is clear that the team follows a set of principles or digital values, and the whole crypto community will benefit from how Chainlink developers implement them. Their actions aim to improve the way blockchain communicates with the off-chain and make smart contracts a widespread, trustworthy, and accessible tool.
Chainlink developers believe that smart contracts can transform most existing industries, replacing traditional legal agreements with the fundamental blockchain consensus protocols through smart contracts. Today their ability to receive data from external sources is limited.
Traditionally, this problem is solved with the help of oracles. ChainLink proposes to create a secure and fully decentralized oracle system based on blockchain technology and allowing you to connect smart contracts to external (off-chain) sources of information.
Since oracles are third-party services managed by centralized entities that are not subject to the blockchain consensus mechanism rules, the question arises of the reliability of the data provided by such oracles. If, for example, incorrect information about the stock price is transferred to the blockchain, the smart contract may perform an improper function based on this information.
The developers intend to solve this problem by creating a decentralized network of oracles. With their help, smart contracts can safely interact with external sources. Any owner of a data channel, API, etc. will be able to transmit information to the Chainlink network, receiving a reward for this in the system’s own tokens.
Chainlink’s success depends on many factors, including worldwide smart contracts implementation pace, the ecosystem’s ability to offer a genuinely secure oracle solution, and future demand for such technologies and tools.
For now, this ambitious (and in a way even revolutionary) project seems to be grasping the very essence of crypto progress. With the right management and a favorable environment, the Chainlink ecosystem has a bright future ahead of it.
Chainlink is an up-and-coming decentralized oracle, or data feed platform, based on blockchain and off-chain. It facilitates well-protected and verified data exchange between a public blockchain and real-world information sources.
Combining smart contracts and a system of oracles, Chainlink enables fast and safe data exchange without intermediaries and can be successfully implemented in various business projects. The Chainlink ecosystem uses LINK tokens as payment units. Node operators, development engineers, and data suppliers get rewards in LINKs for their efforts.
Sergey Nazarov and Steve Ellis are the co-founders of the network. Chainlink ICOed in 2017, raising twice as much as they had hoped for – $32 million. In 2019 it started to operate on Ethereum.
LINK tokens comply with ERC677 and ERC20 standards and can be stored in multi-currency or Ethereum wallets, as well as on crypto exchanges. The coin is easily tradable for fiat money or in pairs with other cryptocurrencies.
Chainlink may be an asset for many different businesses and industries, like logistics, weather prediction, auctions, multi-level marketing, etc. The platform doesn’t have an official roadmap, but its team relies on a set of values that serve well for the future of the whole crypto community.
Chainlink developers plan to make it compatible with various blockchains and launch one smart contract in several blockchains. The demand for such technology is steadily going up, and most crypto experts are sure that Chainlink and LINK token will expand and grow in value over the years.