The crypto currency Chainlink

Logo Chainlink
Logo of the crypto currency Chainlink

Chainlink got published in 2017 and was created by Sergey Nazarov, Steve Ellis and Dr. Ari Juels. The cryptocurrency is based on Ethereum and is actually more of a blockchain project than a cryptocurrency. Chainlink is, strictly speaking, a cryptocurrency, but it does not want to be a means of payment. By the way, the currency is called LINK and there is a maximum of 1,000,000,000 of them. There is no mining or staking, the total number of coins was created directly when the currency was created. However, with Chainlink, the cryptocurrency is only the means to an end. Chainlink has only one goal. It wants to be the connection between other cryptocurrencies and the real world. To be exact, it wants to be the connection between smart contracts and the real world.

What exactly is a smart contract?

A smart contract is a smart contract built on the blockchain. Imagine buying something, for example a Playstation 5, from an online merchant. You pay, he ships the goods. However, the goods are not shipped until you pay for the goods. The whole transaction could easily be on a blockchain with a smart contract. The problem with this, however, is that the connection to the real world is difficult to establish. How does the information that your Playstation 5 has been shipped get into the blockchain? Chainlink was invented to solve this problem. In our example, the delivery service could confirm that the goods have been sent to the customer, for example. In order to be able to send this information to the blockchain, Chainlink has a cryptocurrency. This serves as payment for the neutral delivery service who confirms the fulfillment of the contract.

Chainlink Explained: What is Chainlink Crypto?

Chainlink as a cryptocurrency

Of course, Chainlink is still used to pay and it is also actively traded on crypto exchanges. The 24-hour trading volume is in the high millions, steadily rising. Since the release of Chainlink, the worth of the cryptocurrency has rapidly moved upwards and the price has now reached about 23 euros (as of October 2021). This proves that demand is high. The problem that Chainlink fixes is viable for many cryptocurrencies, as smart contracts are one of the most practical applications of most currencies.

However, Chainlink is not perfect, of course. The main problem is the data of the neutral person, for example the delivery service. The data they provide could be fake. If we stick to the above example, the sender of the goods could bribe the delivery service to confirm that the goods have been sent. Then he would receive the money and the goods would stay with him. Therefore, the
integrity of the data is enormously important. Chainlink is working on various solutions, but the problem has not been satisfactorily solved yet. Of course, the mechanism behind Chainlink is far more complicated than stated here, but with this example, the situation is easier to understand. The exact technical process is far more complex.

While Chainlink's strong focus on smart contracts is a great advantage, it can also become a disadvantage. If cryptocurrencies find another way or a new technology to fix the problem, things could look very bad for Chainlink very quickly. But so far, there is no other idea in sight, and at least in the next few years, that is not going to change. However, no one can currently predict what it will look like in 10 to 20 years.

Advantages of Chainlink

  • Solves a major problem of smart contracts
  • Enjoys great trust in the crypto scene

Disadvantages of Chainlink

  • The data could be manipulated
  • Another method of confirming smart contracts could be found

Trading of Chainlink is possible on all major platforms. We use Coinbase for this, but most other cryptocurrency exchanges have added Chainlink to their portfolios as well. No wonder, it is currently listed at number 15 on Coingecko (as of October 2021). An investment in Chainlink can be quite worthwhile, however, as with all cryptocurrencies, extreme caution should be exercised. The price of Chainlink fluctuates very strongly and price jumps of more than 10% up or down per week are not uncommon. Please inform yourself very carefully about Chainlink before investing and only invest if you are 100% sure.

Our conclusion about Chainlink

Chainlink has fought its way to the top within a very short time, and quite rightly so. The cryptocurrency does not try to dispute with Bitcoin and the other top dogs, but has a very specific field of application. The specialization on the interaction between smart contract and the real world makes sense and also seems to work well. Certainly, there are still some problems to be solved, but none of them should be impossible to solve. Chainlink also enjoys a very good reputation in the crypto scene and most experts assume that Chainlink is doing the right thing with it’s focus on solving one specific problem. Not only the experts, but also the users of cryptocurrencies share the same opinion, which has been proven by the strong trading volume and the recent price increase. Chainlink is a very interesting project and every fan of digital currencies should keep an eye on it. We are convinced that Chainlink will rise a lot in the next few years and we are curious to see how long the upward trend will continue.

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