Chainlink Review 2021

Chainlink (LINK) is an Ethereum token that powers the Chainlink decentralized oracle network. It is the intermediary between external agents like a bank or PayPal and the blockchain and its cryptocurrencies. It works through decentralized oracles. An oracle on the blockchain is used to retrieve data from external sources (traditional payment platform, banks, apps ...).

What is Chainlink?

Chainlink is a network of oracles, in which each oracle obtains and delivers data from an API and undertakes to deliver such data consistently and continuously over time. 

If an oracle disconnects or provides a response that does not match that of others, that oracle is penalized or is no longer taken into account for future requests for data. 

Through this ChainLink, you can get external data to incorporate directly into the blockchain. It is a link between blockchain and the existing infrastructure on which the blockchain operates.

ChainLink’s job is ultimately to verify real-world occurrences for incorporation into the blockchain and to activate or modify smart contracts when the conditions set in them are reached. 

ChainLink oracles, like everything that happens in the world of blockchain, operate in a decentralized way and must extract the information from various external sources and verify it to avoid fraud and modifications by third parties.

What is the token for in itself? What use does it have?

The LINK token is used to incentivize network participants to act honestly. The network is still under development and some features have not yet seen the light, such as fines and surety contracts. 

When these contracts are implemented, users of smart contracts that request data from oracle networks will be able to demand a deposit from those oracles that respond to their requests. 

In such a way that if any oracle breaks its commitment and disconnects, or if it responds with data that departs from a previously agreed margin, that deposit will become the user who requested the data as compensation. 

Otherwise, if an oracle responds correctly to the data request, it will receive a payment previously agreed in the contract in the form of LINK. This last detail is important since the oracles are programmed to be able to receive payments only in LINK and to deposit the bonds only in LINK.

This makes it possible for there to be quite interesting token mechanics since in the not too distant future, high-value contracts. And therefore, those that will offer a higher payment for correctly delivering the data, such as derivatives contracts, could require a high bond. 

That would encourage competition by the different oracles to “block” LINK in their oracles, thus fostering the shortage of LINK (reduced supply) while increasing its demand due to its usefulness.

Why has it grown so much?

The technology behind ChainLink and its use as we have seen have significant potential to improve smart contracts. ChainLink currently operates with smart contracts issued on the Ethereum network, although they indicate that in the future, they hope to incorporate their technology into more cryptocurrencies. 

But is this the main reason why it has grown so much in the last month? The truth is that there is an extra factor that must be taken into account: Coinbase.

The cryptocurrency and currency exchange service Coinbase has included ChainLink in its service in recent days. Previous rumors have already increased the value of the cryptocurrency in recent weeks, the definitive insertion has triggered it.

Coins that have integrated with Chainlink:

Chainlink has integrated with many coins including Matic, Hedera Hashgraph, IOST, Tezos, Chiliz, and many others. 

Also, this decentralized oracle provider Chainlink has confirmed its new integration with Polkadot and Ethereum Classic along with a rapidly growing number of DeFi projects.

Is the Chainlink network currently operational?

Yes. The Chainlink network launched on the Ethereum network on May 31, 2019. There are currently several DeFi (Decentralized Finance) projects and platforms that use Chainlink’s oracle networks to get the price of different crypto assets. For example, Aave, Synthetix, Loopring, Ampleforth, SetProtocol, OpenLaw, and NexusMutual.

Where can I buy and store LINK?

LINK is an ERC-677, a special type of Ethereum token that has certain unique functions that allow you to transfer LINK and execute contracts in the same transaction. LINK is available at many exchanges but the highest trading volume you find on Binance.

For practical purposes, this type of token is perfectly compatible with any ERC-20 wallet which includes hardware wallets such as Nano and Trezor.

Conclusion:

The ChainLink project is not the easiest to come to grips with but once you do, it is quite easy to see how it can benefit the blockchain ecosystem enormously going forward.

With approximately 400% increase recently, ChainLink (LINK) is one of the most interesting cryptocurrencies to watch out for right now.


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