What is Chainlink? Learn More About LINK Crypto

Brandie E Blackler
9 Min read

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 Admirals, 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 are able to trade the Contract For Difference against USD at Admirals). 

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. There are many different contracts that 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 $36 in February of 2021. It has since dropped though and has not risen higher since.  

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 in 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. 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. It has a market cap about 32 times larger than Chainlink.  

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 are able to 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 Admirals, 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.

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INFORMATION ABOUT ANALYTICAL MATERIALS: 

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets and Admirals trademarks (hereinafter “Admirals”). Before making any investment decisions please pay close attention to the following: 

1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research. 

2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content. 

3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest. 

4. The Analysis is prepared by an independent analyst (hereinafter “Author”) based on Brandie E Blackler, Financial Writer, personal estimations. 

5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis. 

6. Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed. 

7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved

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