Newbie Quest: Understanding Chainlink (LINK)

Newbie Quest: Understanding Chainlink (LINK)

By Steven_BA | Crypto-Newbie | 21 Jan 2021


Today, I've decided to continue the Top 100 crypto-currencies with a new coin. If you haven't read my previous 3 episodes, just take a quick look here: Newbie Quest: Understanding Stellar Lumens (XLM), Newbie Quest: Understanding Uni(corns) and Newbie Quest: Understanding USD Coin (USDC). So, in today's post I will focus on Chainlink

What is Chainlink?

Chainlink is basically a coin that has been created in 2017. The Chainlink developers had raised approximately $32 million in an Initial Coin Offering (ICO). ICO is pretty much similar with an Initial Public Offering (IPO), but with crypto-currencies and not stocks. 

An initial coin offering (ICO) is a means of crowd-funding, through the creation and sale of a digital coin or token to fund project development.

In order to understand the features of ICOs, it will be more pronounced to compare it with something similar in the financial market, called an Initial Public Offering (IPO).

IPO refers to the public sale of the shares of a company for the first time, with the purpose of collecting funds for business expansion and development.

Let’s look at the differences between a crypto-currency ICO and a stock IPO.

Comparison Between ICO vs IPO

What happened with the Chainlink ICO is that the developers issued LINK tokens for people that believed in this project. So, they bought LINK. Basically, this entire project is financed by people that bought LINK at the time when tokens were issued and this is how $32 million had been raised. Sounds good for an ICO, right? :)

The founders of Chainlink are Sergey Nazarov and Steve Ellis

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Chainlink is a decentralized oracle network. It is a platform that allows communication between smart-contracts and real-life applications. With Chainlink, law, medical, insurance and other type of services can now be interconnected with crypto and blockchain infrastructure. 

But what are Oracles?

Chainlink is a platform that aims to bridge the gap between blockchain technology-based smart contracts (made widespread by Ethereum), and real world applications. Since blockchains cannot access data outside their network, oracles (a defi instrument) are needed to function as data feeds in smart contracts. In Chainlink's case, the oracles are connected to the Ethereum network. Oracles provide external data (e.g. temperature, weather) that trigger smart contract executions upon the fulfillment of predefined conditions. Participants on the Chainlink network are incentivized (through rewards) to provide smart contracts with access to external data feeds like API information. Should users desire access to off-chain data, they can submit a requesting contract to Chainlink’s network. These contracts will match the requesting contract with the appropriate oracles. The contracts include a reputation contract, an order-matching contract and an aggregating contract. The aggregating contract gathers data of the selected oracles to find the most accurate result.

Currently, Chainlink occupies the 9th posisiton of the Market Rank.

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The value right now is $21,11 and the Market Cap of the entire project is approximately $8.5 billion, with a daily Trading Volume of almost $3.5 billions.  

The Circulating Supply is a little over 400 millions tokens which represent almost 40% of the entire Max Supply, which is 1 billion. 

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Now, I will talk about the historical figures of the project. The All Time Low has been registered on the 23rd of September 2017 when Chainlink's value was $0,12 and the All Time High has been recorded just 4 days ago when the price of Chainlink was $23,61. 

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Currently, this token is listed on the most important exchanges, such as Coinbase, Binance, Uniswap, Kraken, Bitstamp, Bitfinex, BitMax and so on. There are about 100 exchanges where LINK can be traded, but the largest volume is recorded on Binance, about 96 million dollars daily.

Currently, over 300 projects use the technology of Chainlink and the growth will be sustained by 2021. For this reason, I consider that LINK is an interesting method of making profit, especially for those who know how to speculate on market corrections. After the crazy growth of Bitcoin in the end of 2020, I think a correction is imminent. Due to this, I consider that those who will invest in LINK after this correction, will do nothing wrong. I mean, it's going to be a good decision. I don't want to comment on future highs and lows, but I consider that LINK is a project that has substance, quality and future.

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Steven_BA
Steven_BA

BA and MSc in International Relations. New to cryptocurrency. One of the best political analysis. Expert in terrorism, post-conflict states and state-building. Up-to-date to everyday political and foreign news.


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