How to Buy Chainlink’s LINK Crypto

What is Chainlink?

Chainlink is inextricably tied to its network of Oracles. Oracles are data feeds from external systems that feed vital information into blockchains that smart contracts may need to execute under specific conditions. Oracles are third party services with a centralized, single point of control, and which are not part of the blockchain consensus mechanism, so the issues that arise in relation to smart contracts is whether data received from an oracle is trustworthy. Because smart contracts operate automatically it is essential that the data they receive is accurate and trustworthy in order to ensure proper smart contract function.

Chainlink aims to create a network of decentralized oracles for smart contracts to securely interact with. By receiving data from multiple Oracles before triggering an outcome, it eliminates any single point of failure and maintains the overall value of smart contracts that rely on external data.

How to Buy Chainlink

You can buy Chainlink at many cryptocurrency exchanges, including:

• Coinbase
• Binance
• Crypto.com
• Kraken
• KuCoin
• Huobi

History of Chainlink

Chainlink experienced some drama both during and after their Initial Coin Offering (ICO) in 2017, where they raised Ethereum in order to fund the project. During the time they offered the ICO, Ethereum’s value rose significantly, but because Chainlink decided to use a hard cap of $32 million worth of Ethereum rather than a hard cap on the amount of Ethereum itself, they ended up handing out 30% more tokens to investors rather than take on another 30% worth of Ethereum. Essentially, a bunch of interested parties were shut out, despite the fact that they had bought into the ICO. In conjunction with this, the company exhibited poor marketing and communication skills, and were unreachable once the ICO closed, leading many people to think that it was a scam. The price quickly dropped to its all-time low before rebounding to stable levels once it was clear that the project was not a scam and partnerships were announced.

Since this time, consistent development and activity has taken place and ChainLink has risen to become one of the most popular altcoins on the market, taking its place among the top 20 cryptocurrencies by overall market capitalization. ChainLink is seen as one of the more promising projects on the Ethereum network, as it aims to solve a fundamental problem in the blockchain ecosystem. How do we Oracalize external data, into something that can be trusted by a blockchain environment? While many have tried to solve this problem, ChainLink is the project that has put forth real solutions to tackle this issue head on.

How Does Chainlink Work?

The Chainlink Network is a decentralized network of nodes, which all sell access to data feeds. The network consists of two separate parts, the on-chain systems and the off-chain systems, which interact to deliver the overall service. The on-chain component of Chainlink consists of smart contracts deployed on Ethereum’s blockchain.

These contracts process the data requests of users looking to take advantage of the network’s oracle capabilities. The contracts are then matched with their appropriate oracles (i.e. data from a financial institution). Each of these contracts contains three sub-contracts, the first of these, the reputation contract, is exactly as it sounds: it checks an oracle provider’s track record to verify its integrity. In turn, the order-matching contract logs the user contract’s service level agreement on the network and collects bids from responsible oracle providers. Finally, the aggregating contract accumulates the collective data of the chosen oracles and balances them to find the most accurate result.

Chainlink then uses these contracts to select oracles based upon parameters set by the user, reports the requested data back to the blockchain once found by the off-chain oracles, and then aggregates the data submitted by all the oracles in order to provide an accurate, weighted answer.

The off-chain portion of the network are oracle nodes that are connected to Ethereum’s network, or any blockchain network that utilizes smart contracts. They are responsible for collecting all the data requested by the on-chain contracts. The data is processed through Chainlink Core, the node software that allows their off-chain infrastructure to interact with the blockchain and transmitted to the on-chain oracle for the aforementioned data aggregation and fulfillment of the contract. The data collected off-chain is done by oracle operators, who are paid in LINK for harvesting and sending the data.

The Advantages

There are two main advantages to Chainlink which separate it from its counterparts also working with oracles, and they are its distributed sources and distributed oracles. Most oracles are centralized, whereas Chainlink is a network of decentralized oracles. Traditionally oracles are third-party services offered by centralized entities, that are not subject to blockchain consensus mechanisms, and therefore the reliability of the data is questionable. Incorrect data being transmitted to the blockchain could result in smart contracts performing the incorrect functions, and with just one oracle as the source that data could also be tampered with by people with malicious intent.

In order to counter this security issue Chainlink uses a system of distributed oracles and sources. If the oracle wants to be considered trustworthy it can draw data from multiple sources, increasing its reliability as a source. In addition, when a user puts in a contract request with the Chainlink network the request is contracted out to multiple oracles, which may draw their information from various sources.

For example, a user puts in a contract request, that request is sent out to multiple oracles rather than just one centralized source. Those oracles then each find the data from various sources, sometimes with overlaps in the sources of the data, but this ensures that the contract receives a balanced aggregation of information and is therefore assumed to be accurate.

This two-part system ensures that oracles are honest because the data is aggregated and measured against the rest that has been collected, and therefore Chainlink helps ensure that smart contracts are carried out accurately and with no malicious intent.

In addition to this system, Chainlink has partnerships with notable groups such as SWIFT and Google Cloud, meaning it has legitimacy and utility for centralized entities while remaining decentralized.

The Disadvantages

There are not any obvious disadvantages to Chainlink, but more subtle disadvantages to those who are looking to invest in Chainlink. The first of these subtleties is that the LINK token is considered by many to be somewhat unnecessary to the network, as they are only used to pay oracle operators. Many believe that this could have been done with some other cryptocurrency that is less tied to the project, meaning that the value of LINK is directly correlated to network usage, so operators are unlikely to be motivated to run oracles without a ton of usage to ensure they get compensated fairly.

The second subtlety is the lack of promotion and communication by Chainlink. As stated earlier, after the Initial Coin Offering, and even leading up to it, there was a lack of promotion and communication by Chainlink. This led many to believe they were scammed. Thankfully nowadays they are much more active on many social media platforms. They also have a fervent fanbase that are somestimes referred to jokingly as the “Link Marines”.