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What is Chainlink (LINK)

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what is chainlink

Discover the history of Chainlink (LINK) and how the technology that takes information from the Internet into blockchains works. A LINK is the native cryptocurrency of Chainlink, a software platform that connects blockchains with external data, known as “oracles”. In crypto parlance, an oracle is the technology that brings real-world data, sourced from the internet, onto a blockchain. While blockchains are incredibly efficient at storing and recording data, they cannot send or receive data from any external source. A typical blockchain can only read and receive data considered “on-chain” (within the network).

 

A blockchain is like a computer disconnected from the internet. On the one hand, its isolation makes your data more secure and reliable. On the other hand, it is limited in its ability to communicate with anything outside the computer itself. Like the disconnected computer, a blockchain is also an isolated system. If the blockchain is a computer, oracles would be like Wi-Fi or internet access – which facilitate communications between blockchains with “off-chain” systems such as application programming interfaces (APIs), internet of things (IoT) devices ) and data providers. Oracles not only allow a blockchain to listen and receive data from off-chain systems (outside the blockchain), but also to transmit, produce and validate on-chain data to non-blockchain networks.

 

What is ChainLink?

Chainlink is a collection of these off-chain communication systems that can be accessed by other blockchains. In many ways, Chainlink is an internet for blockchains. As it is designed to be independent, it can provide on-chain and real-world external data to smart contracts on any network. Chainlink’s oracle network can be used to obtain any type of data, from the weather to presidential election results.

 

 

When Chainlink launched in 2017, the project’s original white paper envisioned a centralized system of oracles to verify incoming information. In April 2021, however, the project transitioned from a centralized system to a decentralized network. Chainlink is agnostic, meaning that it does not operate its own blockchain or only works within another blockchain. Instead, the protocol runs on several different blockchains simultaneously and has incentives for its participants to provide and use Chainlink data in their smart contracts.

 

The LINK token provides the main incentive mechanism for users to participate in Chainlink’s decentralized network of oracles. It is an ERC-20 standard token built on the Ethereum blockchain. Just like Ethereum , LINK uses the proof-of-stake consensus protocol , but in a model that forces participants to run their own nodes (verifier computers) and provide data to smart contracts to receive LINK tokens as a reward – i.e. , it is not enough to simply deposit tokens and profit, as in Ethereum.

 

The LINK cryptocurrency is used in crypto exchanges for data services and staking of validator nodes and is therefore used as a means of payment and as a work token. In addition, it has a capitalization cap of 1 billion tokens that are distributed as rewards for the validation work of node operators. In September 2017, when the token was launched, a billion tokens were created – of those, around 35% were allocated for a public sale at a price of $0.09 to $0.11, raising $32. millions.

 

LINK’s price never went above $1.30 for nearly two years after launch. Then, in 2019, after a flurry of new partnerships with Google Cloud, Polygon Network and Reserve, the cryptocurrency’s price soared 489% to $5. LINK price rose above the $20 mark for the first time.

 

 

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