What is Chainlink? Learn More About LINK Crypto

If you are interested in cryptocurrencies and trading crypto CFDs, you have likely heard of the Chainlink blockchain and its proprietary currency, LINK. 

But what is Chainlink? It is similar in many ways to Ethereum as it also offers smart contracts as a way to conduct useful financial transactions.  

However, there are many ways that Chainlink may outperform the capabilities of Ethereum. Check out more details through this guide as we dive into what makes Chainlink different and potentially tradeable from a CFD perspective.

At Admiral Markets, we offer the option to trade various cryptocurrency CFDs (however, not the underlying crypto, itself). 

What is Chainlink Cryptocurrency? 

Chainlink cryptocurrency serves the main goal of creating a bridge between on-chain resources and off-chain resources.

The ticker for the Chainlink blockchain cryptocurrency is simply, LINK (which you can trade the Contract For Difference against USD at Admiral Markets). 

There is infrastructure for both in blockchain technology. Both work a little differently, so it’s important to take a look inside the technology before moving forward with investing or trading Chainlink, or LINK.  

On-chain smart contracts are the main part of the architecture that makes up Chainlink. They are used to process data requests made through the platform through the use of oracles. The oracles take the contract and process them.  

It can then be sent to the smart contract where it can be provided with the off-chain data. Many different contracts can be used with Chainlink including a reputation contract that can determine if the oracle provider is reliable or not.  

If the oracle is determined to be trustworthy, it can be passed to the order-matching contract and then eventually to the requesting contract.  

Off-chain functions are connected to the Ethereum network since Chainlink is currently only able to work with smart contracts from Ethereum.  

In addition, off-chain technology collects data and can also receive payments. Off-chain nodes can also integrate with external adaptors which Ethereum smart contracts are not able to do by themselves.  

This allows the interface to do subtasks and makes data collection much quicker.  

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What is LINK Used For? 

Chainlink is used for many different components. One of the main ways it shines is through its ability to provide secure and decentralized ways of making digital transactions. While all cryptocurrencies can make smart contracts, older ones, like Bitcoin are more limited. 

Chainlink can provide many more inputs and further customize and program smart contracts. Although it was released on the Ethereum blockchain, it can still be used on other blockchains as well.  

The token LINK is meant to finance the growth of Chainlink just like other tokens and their respective blockchains. The LINK token has been around since 2017 and was under one dollar until 2019.  

The highest it has been was $52 in May of 2021. Now, in March of 2024, the price sits around $20.

What are the Capabilities of Chainlink and LINK Crypto? 

Chainlink has many different capabilities that make it different from other blockchain platforms. One of the reasons it has become so popular is because of the ways it can accurately and easily connect data and APIs to any smart contract.  

It can retrieve data from any API and integrate it with current and future blockchains. The oracle solutions are better than many other blockchains because they tend to be newer and more reliable.

They have also secured tens of billions in smart contract value. This is why it has quickly become one of the most popular and efficient blockchains to exist. 

People can also use the decentralized network nodes to automate contracts. This allows there to be fewer mistakes and risks because you don’t have to worry about the user and manual input errors. 

What are the Use Cases of Chainlink and LINK Crypto? 

One of the main use cases of LINK is decentralized finance (deFi). This allows people to borrow and lend cryptocurrency. LINK tokens are used as part of Chainlink. LINK tokens can be used to pay node operators for data feeds.  

Some people also use the LINK tokens to bid on off-chain data queries. People can use LINK to pay for smart contracts.  

There are also other uses: 

• Connectivity; Inputs are put together in the smart contracts which can make using contracts and transferring data much easier.  
• Better Security; LINK is an option to invest in crypto and have decentralized banking.  
• Hybrid Smart Contracts; Use LINK to have smart contracts with all your data in one place.  

How is Chainlink Different from Ethereum? 

Since Chainlink is under the head of Ethereum, you might be wondering how they are different. Ethereum is much larger as it’s more well-known and has been around for longer.

The current (March 2024) Chainlink market cap is $12.47B and the Ethereum market cap is $463.49B.

Although they are often mentioned together and associated with one another, they are very different in terms of features. Chainlink is a decentralized oracle network while Ethereum is blockchain technology.

Ethereum is meant for people who want to build applications on the platform.  

Investing in Chainlink is also considered to be riskier than Ethereum because it’s more recent to the market.

The return on investment can be much larger though because there is still plenty of room for growth. People who want to make a less risky investment might choose Ethereum just because it’s better established.  

Ethereum cannot use real-world data on its own, though. This limits the potential it has. When using it with Chainlink, however, people can use it for businesses and even for making contracts that are outside the crypto world.  

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Is it Good to Trade LINK? 

Many people are choosing to invest and trade LINK because they want to support the underlying technology of Chainlink. Some people are choosing not to invest though because LINK still has a high degree of volatility. 

If you are interested in the Chainlink proprietary technology, it’s always something to consider when deciding whether or not to invest or trade in something that you want to see grow and become successful.   

While you have the option to trade the LINK CFD against USD at Admiral Markets, the below TradingView chart will give you some insight into the volatility of LINK. The below chart shows the daily price fluctuations of LINK: 

Please note past performance is not a reliable indicator of future results or future performance. 

Advantages and Disadvantages of Chainlink 

As with any blockchain technology or cryptocurrency, there are advantages and disadvantages to using it. Knowing the advantages and disadvantages can help you determine whether to use it and whether to invest and trade LINK. 

Advantages of Chainlink 

• Makes decentralized smart contracts; This increases the security of information and also ensures that information is accurate.  
• Potential good investment; Investing in LINK is also seen as an advantage because you will be investing in the future and current capabilities of Chainlink which are a game-changer for blockchains.  
• Extremely versatile; Chainlink has the potential to grow because of its efficiency and versatility. Chainlink can also be used with any blockchain.   

Disadvantages of Chainlink

As with anything, Chainlink also has a few disadvantages and problems that people should be aware of: 

• Limited; The oracle network is still somewhat limited because it’s new. It also has the ability to be even more decentralized, but it might take a few more years to get there.  
• Built on Ethereum; This means that any and all problems with Ethereum also spill over onto Chainlink. 

What is Chainlink? Conclusion 

Chainlink is a type of decentralized oracle technology that can take off-chain data and connect it to any blockchain.  

It makes creating smart contracts much easier because it allows for many different inputs. It offers a secure and digital way for businesses to make contracts whether they are using them for cryptocurrency things or not.  

Is it wise to trade LINK? This kind of question is always subjective to the individual trader, of course.

If you’d like to get started trading with Admiral Markets, feel free to click the banner below to get started: 

Other articles you may find interesting:

• Crypto Slang Terms: Your Guide to the Cryptoverse
• How to Start Forex Trading Guide 2024
• How to Hedge Stocks with CFDs

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