ChainLink Price Today

What Is Chainlink?

Chainlink is a decentralized oracle network that allows on-chain smart contracts to interact with off-chain information including APIs, payment systems, event statistics, and other externally hosted data.

Smart contracts are agreements on the blockchain that monitor on-chain data and automatically execute when certain conditions are met. Oracles expand the functionality of these smart contracts by allowing them to reference and execute on conditions coming from external data, such as a basketball game score, the current temperature in a particular region, or a payment that was made off of the blockchain.

Chainlink’s native cryptocurrency, LINK, provides incentives for both third-party data hosts and Chainlink node operators to reach an accurate consensus on the integrity of provided data.

How Does Chainlink Work?

Chainlink oracles are used to monitor situations in the “real world” and translate that information onto the blockchain (and vice versa). This is especially applicable to smart contracts.

For example, if a flight gets canceled, a smart contract can be set up to pay out a certain amount of insurance. However, since the flight cancellation data will likely be held off-chain, the smart contract can use an oracle to put out a request for information (a Requesting Contract), which is registered by the Chainlink protocol.

The system then creates another contract (a Chainlink Service Level Agreement or SLA) to obtain the off-chain data necessary. The SLA then generates three more smart contracts to monitor various aspects of the overall process: a Chainlink Reputation Contract, a Chainlink Order-Matching Contract, and a Chainlink Aggregating Contract.

Through these various smart contracts, Chainlink nodes bridge the gap between the blockchain and the “real world” to provide secure, decentralized verification that both sides of the contract have been fulfilled.

Contract holders use LINK to reimburse the distributed Chainlink oracle node operators for the work that goes into maintaining, verifying, and executing the smart contracts.

Consensus on the Chainlink network is maintained by a proof-of-stake (PoS) mechanism using the LINK token.

History of Chainlink

The Chainlink protocol was launched in 2017 with the publishing of a whitepaper by Sergey Nazarov, Steve Ellis, and Ari Juels. The whitepaper introduced it as an oracle system — a “middleman” between blockchain and non-blockchain technologies — for verifying incoming information with the goal of supporting all blockchain-based smart contract networks.

The native cryptocurrency, LINK, was developed as an ERC-20 token and is compatible with other currencies and smart contracts supported by the Ethereum platform.

How To Buy LINK

The process for buying LINK is the same as it is for buying other cryptocurrencies. First, open an account and verify your identity on a crypto platform, like Binance.US, that offers the LINK token.

Partner with a platform that allows you to:

• Buy, sell, and trade other cryptocurrencies
• Minimize the fees associated with each transaction
• Access tools and information to help you make decisions

Second, fund your account with fiat currency (such as U.S. dollars).

The right crypto ecosystem will provide more than one convenient way to do this, typically including (but not limited to):

• Bank or wire transfer
• Debit or credit card
• Link to an existing bank account
• Other established payment services, such as Apple Pay (not available on all platforms)

Third, specify how much LINK you want to buy and when you want to buy it, and then initiate the transaction.

Fourth, store your newly purchased LINK in a crypto wallet. Options for this include:

• Cold wallet — An offline storage space, like an external hard drive
• Hot wallet — An online storage space provided by the crypto platform

Cold wallets are the most secure but can be difficult to access quickly and are at a higher risk of being lost or corrupted. Hot wallets are also secure, even though they’re online, and are immediately available.

How To Sell LINK

Like buying LINK, selling LINK starts with creating and funding an account on a reputable crypto platform, such as Binance.US.

After that, selling Chainlink is just as easy as buying it: Specify the amount you want to sell and when you want to initiate the transaction.

More advanced platforms let you take advantage of technology such as automated sell orders that give you even more control over when the system initiates your sell order.

Wait for the blockchain to verify the sell order and for the platform to deposit the equivalent funds in your account. From there, you can use the fiat currency to buy other cryptocurrencies or withdraw it for other purposes.

How To Trade LINK

Trading LINK follows much the same process as buying and selling it. Open an account, verify your identity, fund the account, and buy or transfer LINK into that account.

Once you have LINK in your account, use the information and tools the platform provides to initiate your trades.

Keep in mind that the cryptocurrency market changes very quickly, and trading LINK — or any cryptocurrency, for that matter — can be extremely difficult to time and execute correctly.

Before you initiate any trade orders, research and analyze the market to develop a strategy to guide your decision-making process.

Resources

Official Chainlink Website

Chainlink Whitepaper

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