Decentralized Data Deliveries: What Is Chainlink in Cryptocurrency?  

Cryptocurrency has a reputation for being a self-contained ecosystem. While these virtual assets work well on their protocols, they aren’t as flexible when developers want to branch out to the non-blockchain world. This limitation is partially due to the importance of decentralization in cryptocurrency, which makes sourcing data from external—and often centralized—sources an existential security threat. 

Chainlink is a crypto project that aims to eliminate this restraint by offering external data feeds through a peer-to-peer (P2P) network. Through Chainlink’s innovative blockchain portal, cryptocurrencies have access to real-world data without fear of counterparties compromising their protocols. 

Chainlink’s history

Chainlink dates back to 2014, but it didn’t formally hit the scene until developers Sergey Nazarov and Steve Ellis released the project's whitepaper in 2017. Soon after, Nazarov and Ellis launched an initial coin offering (ICO) for Chainlink’s native LINK token. By 2019, the Chainlink protocol went live on the Ethereum (ETH) blockchain, offering crypto projects decentralized, tamper-proof data feeds from external sources. 

As decentralized finance (DeFi) took center stage during DeFi summer of 2020, Chainlink’s services became increasingly widespread in the cryptocurrency ecosystem as decentralized applications (dApps) demanded secure price feeds. To this day, Chainlink continues integrating with projects on different blockchains, and it has begun scaling its operations to serve enterprise clients.

How does Chainlink work?

Chainlink is a decentralized oracle network, which means it helps transfer data between blockchain and non-blockchain sources without introducing points of centralization. To do this, independent computers (aka nodes) on the Chainlink protocol transmit data flows between relevant sources in exchange for LINK tokens. Each Chainlink node locks (aka stakes) LINK tokens on the network to take part in this data delivery process and receive LINK as compensation. 

Clients using Chainlink’s services pay with LINK to request data and publish their needs on the protocol through an automated command known as a “smart contract.” Chainlink’s algorithm creates a series of service level agreements (SLAs) and scans the reputation of nodes to choose the most qualified operators for each particular task. After node operators route the data to the network through Application Programming Interfaces (APIs), Chainlink aggregates this information to ensure accuracy before delivering it back to the smart contract and completing the data feed with the client. 

Chainlink FAQs

What’s the purpose of Chainlink? 

Chainlink expands the potential of blockchain without sacrificing the technology’s decentralized infrastructure. Because the Chainlink oracle runs on decentralized programming and has multiple algorithmic screening methods to prevent outliers, it’s a trusted source of unbiased information between onchain and offchain sources. This verifiably trustworthy protocol allows crypto developers to introduce features to their dApps from the real world rather than stay within a limited blockchain bubble. 

What are Chainlink’s use cases? 

Chainlink is often associated with aggregating and transferring price feeds for cryptocurrencies throughout the DeFi ecosystem, but the potential applications of this technology are endless. Anywhere blockchain programs need reliable external data—including insurance, supply chain management, or healthcare records—Chainlink can bridge onchain and offchain networks. 

What’s the Chainlink coin price? 

Traders interested in Chainlink’s price are most concerned about the market value per LINK token. Built using Ethereum’s ERC-20 token standard, LINK is a fungible cryptocurrency with a 1:1 value on the crypto market and a real-time Chainlink price chart.

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