Chainlink aims to bring interoperability to blockchain by facilitating the seamless flow of real-world data to cryptocurrency networks.
As the cryptocurrency market continues to grow and evolve, so too does the number of trading opportunities available to traders. Recently, one of the most talked about opportunities has been Chainlink (LINK), a decentralised oracle network that allows for data exchange between blockchain networks and external sources.
Read on to learn everything traders need to know to get started with trading Chainlink, including how traders can invest in and trade LINK as crypto CFDs.
Chainlink is a protocol that enables smart contracts to interact securely with off-chain data sources through the use of decentralised oracles.
Due to the strong security properties brought about by distributed consensus mechanisms, blockchain networks are unable to natively push or pull data from off-chain or external sources. For smart contracts to reach their full potential, they require off-chain data integration to execute actions once certain ‘conditions’ are met.
A decentralised oracle (or blockchain oracle) is middleware that enables crypto networks to communicate with off-chain systems, such as external data feeds, digital payment methods, and events.
To put it simply, Chainlink acts as a bridge between blockchain networks and external data sources.
Decentralised oracles serve smart contracts by providing them with data from off-chain sources or connecting them with an off-chain system. These oracles work within the confines of a decentralised oracle network to aggregate several data points to form a single trusted data point, which can be used to trigger smart contracts on any blockchain.
Chainlink is composed of several decentralised oracle networks running simultaneously and independently of each other.
Traders can access the Chainlink network by downloading a cryptocurrency wallet compatible with the network’s native digital asset, called LINK. Traders can purchase LINK from a cryptocurrency exchange or buy and sell Chainlink CFDs on a trading platform.
Chainlink’s popularity has grown tremendously since its mainnet launch in May 2019, securing a total of $75 billion in value by the end of 2021. Chainlink integrations now feed into thousands of decentralised finance (DeFi) applications across multiple blockchains, providing an essential service to the global DeFi ecosystem.
The growth in Total Value Secured (TVS) has been spurred by the proven security and reliability of the Chainlink oracle networks, and the diverse data being aggregated and consumed by on-chain applications to secure user funds.
Currently, there are over 700 decentralised oracle networks live in production, pushing data across numerous independent networks.
The Chainlink ecosystem now includes 1,000+ projects that feed into more than a billion individual data points that have been delivered on-chain to date. The Chainlink network powers leading DeFi applications such as Aave, Synthetix, and Yearn.
Chainlink has also attracted several leading enterprises, including AccuWeather, Amazon, and Google Cloud, to integrate into the network as data providers.
Chainlink was founded in 2017 by a company called Chainlink Labs. This was preceded by a company called SmartContract from 2014, which aimed to connect smart contracts to external data and open the way for the development of Chainlink Labs.
In April 2021, the Chainlink Labs team published a whitepaper detailing the evolution of the protocol to Chainlink 2.0.
Chainlink was invented by Sergey Nazarov and Steve Ellis.
Sergey Nazarov co-founded CryptaMail, a blockchain-based email service in 2014. He later teamed up with Steve Ellis in 2014 to begin SmartContract, which would eventually lead to the birth of Chainlink Labs in 2017.
Steve Ellis was previously a software engineer at Pivotal Labs and a co-founder at Secure Asset Exchange, a company providing secure messaging and decentralised data storage.
Chainlink is an open-source project that has numerous contributors to the development of the protocol core client on SmartContract GitHub.
Chainlink is secured by a proof-of-stake (PoS) consensus mechanism. Unlike the proof-of-work (PoW) consensus used by Bitcoin, PoS relies on the amount of staked tokens to select network validators, and validate transactions.
Significantly, LINK is an ERC-20 utility token that has an extra ERC-223 function that facilitates interaction with smart contracts.
Under a PoS system, you can stake your LINK tokens to verify transactions and add them into the Chainlink network. In exchange, for any transaction block you validate, you earn LINK tokens as a reward.
The Chainlink PoS protocol chooses a validator node to validate transactions based on how many LINK tokens are staked in the network.
Since its launch in 2017, the price of LINK has oscillated between several highs and lows.
Let’s take a look at the most important LINK price milestones over the years:
2017: The price of LINK at the September ICO was below $1, with over 300 million LINK tokens being sold.
2018: LINK crossed the $1 mark in January and then hovered around a $0.17 support level for the rest of the year.
2019: The LINK token listed on Coinbase in June and almost quadrupled in price to trade at around $3.53 by the end of June.
2020: The Chainlink token’s price gained steadily during this period, pushed by its growing community as it partnered and released new features. LINK rallied to trade above $8 in July and peaked at above $19 in mid-August.
2021: The price of LINK rallied to peak at above $50 by mid-May as part of the overall crypto bull market. The price retraced to around $13 in July but managed to close the year at around $23.
2022: As of May 3rd 2022, LINK has retraced to the $11 mark. Like much of the crypto market, LINK is suffering in the bear market.
Chainlink has a market capitalisation of $5,277,173,247 as of May 3rd, 2022.
The cryptocurrency has a max supply of 1,000,000,000 LINK tokens and a circulating supply of 467,009,549 LINK.
Traders can view LINK transactions and the comparable wallet addresses using block explorers, such as etherscan.io, bscscan.com, ftmscan.com, blockscout.com, and explorer.solana.com.
All LINK transactions are broadcast on public networks. Traders can view transactional volumes, timestamps, and destination wallet addresses.
Let's look at how traders can buy, trade, and invest in Chainlink.
Trading Chainlink allows traders to speculate on the volatility of the LINK token. Chainlink traders can buy and sell LINK using crypto CFDs on a brokerage like Axi.
To trade Chainlink, follow these steps below:
Learn more about how to trade cryptocurrency CFDs.
Chainlink is now a popular digital asset and investing in it offers traders a chance to diversify their crypto portfolio.
Traders can invest in Chainlink by buying LINK tokens from a cryptocurrency exchange and then securely storing them in an offline cold wallet to ensure utmost security.
To purchase LINK, traders will need a Chainlink-compatible wallet, a trusted cryptocurrency exchange, and fiat currency to convert into LINK tokens.
Proceed to set up a Chainlink wallet and find a cryptocurrency exchange that supports fiat payments and the preferred mode of payment. Follow the steps to buy LINK:
Investors can store LINK tokens in a crypto wallet. A crypto wallet can either be accessed online or stored on a physical device. Wallets can further be classified into hot or cold wallets. A hot wallet enables users to access LINK tokens online while cold wallets store cryptocurrency offline.
To securely store LINK, follow the below steps:
Discover the advantages and disadvantages of Chainlink below:
Security: Chainlink allows seamless and secure interactions between smart contracts and off-chain data sources.
Cross-chain interoperability protocol (CCIP): The CCIP provides a platform for cross-chain communication that enables smart contracts to communicate across public and private blockchains.
Financial incentives: Decentralised oracles, node operators, and other data providers can earn LINK tokens for their contribution to the Chainlink ecosystem
Confidence: Enterprise partnerships and integrations with organisations such as Amazon, AccuWeather, Google Cloud and more build confidence among investors and other project supporters
Potential returns: With strong on-chain metrics, the demand for Chainlink services may push up the price of LINK cryptocurrency and create a windfall for token holders.
Volatility: The price of LINK is subject to market pressure and can rise and fall in price substantially. This can make it a risky investment for novice traders.
Lack of brand awareness: While crypto-savvy investors are largely aware of Chainlink and its essential role in the DeFi landscape, LINK doesn’t benefit from strong brand recognition like Bitcoin or Ethereum do.
Making cryptocurrency price predictions is a tricky affair, given the volatility of the crypto markets.
According to Wallet Investor, an algorithm-based forecasting site, the price of LINK could rally to $33 by mid-November and finally settle at around $30 by the end of 2022. Conversely, a technical price analysis from DigitalCoin suggests LINK could average $21 in 2022.
Chainlink has bright prospects in 2022. With the ongoing developments happening within the LINK ecosystem, as well as the overall crypto market, the price of LINK may rise to new heights and even surpass its all-time high of $52.20.
However, like all altcoins, the performance of LINK will move up and down over time, primarily driven by how Bitcoin and the rest of the crypto markets perform.
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We hope that this guide will help traders on their journey to buying, owning, and trading LINK. To start trading Chainlink CFDs with Axi today, click here.