Is It Worth Investing in Chainlink?

Last Updated November 22nd 2022

18 Min Read

After Bitcoin, a myriad of blockchain-based cryptocurrencies cropped up. While a good majority of these new coins are similar to Bitcoin, some decided to do things differently and address the caps that Bitcoin overlooked.

For instance, Ethereum introduced the idea of smart contracts while IOTA came up with a way to make it easier for the internet of things devices to communicate. However, most of these cryptocurrencies are either competing with each other or trying to replace a certain mainstream service.

Chainlink decided to do something different. Instead of trying to outsmart the already established cryptos, Chainlink makes it easier for them to communicate with the outside world.

Why is this important?

You see, while Blockchain offers many benefits, including security and decentralization, it is inherently disengaged from the outside world. In a way, this is good for security and maintaining the integrity of decentralization.

However, this also means that blockchain technologies do not have access to crucial off-chain data that could make them much more efficient. There is, therefore, a need for some sort of a data-sharing channel between Blockchain and the outside world. But in order to maintain the integrity of decentralization, this data cannot come from a single source.

Chainlink solves this problem by creating a decentralized oracle network.

How? Let’s find out below.

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Contents:

What Is Chainlink?
How Does Chainlink Work?
Chainlink (LINK) Price History
Chainlink Price Predictions for 2022
Is Chainlink A Good Investment?
3 Ways to Invest in Chainlink
Why Should I Invest in ChainLink?
Conclusion: So, Should I Buy LINK?
FAQs

What Is Chainlink?

Chainlink is a decentralized oracle network that is created to enable seamless data-sharing from the real world to smart contracts on blockchain-based cryptocurrencies. In other words, Chainlink is trying to make it painless to implement blockchain technologies in the real world.

This is because Blockchain in itself is not designed to take input from off-chain data sources such as credit cards, fiat currencies or even sports scores.

This kind of information could be very crucial to making cryptocurrencies and other blockchain-based protocols more efficient.

But how exactly does chainlink achieve this without comprising decentralization? Let’s quickly look at how this altcoin works.

How Does Chainlink Work?

To understand how Chainlink works, we first need to understand the concept of smart contracts.

What are smart contracts?

These are pre-defined agreements on a blockchain network that assesses information and then execute them automatically when certain conditions are met. The agreements are executed in an IF/THEN framework.

A practical example of a smart contract in use is in crowdfunding on the Ethereum network. For instance, the agreements can be pre-specified so that when a certain amount of ETH is raised by a given date, the tokens are automatically released to the fundraiser; otherwise, they are returned to the donors.

Smart contracts on a blockchain are immutable, which means they can’t be changed and can be seen by anyone. Now, these smart contracts are not created to execute agreements based on off-chain data. To be able to do this, off-chain data would first have to be converted into a format that smart contracts on blockchains can understand. This limitation significantly reduces the use cases of smart contracts and, subsequently, the application of blockchain technologies in the real world.

To offset this limitation, Chainlink uses what is known as an oracle. This is basically a ‘middleware’ software that acts as an intermediary to and from the real world to the smart contracts on the Blockchain. However, using a single centralized oracle would create a central point of weakness that could compromise an entire decentralized network, nullifying the very essence of decentralization.

To avoid this, Chainklink uses a network of oracles to facilitate data sharing while in the process, maintaining decentralization.

As simple as it sounds, Chainlink uses a complex process to accomplish its tasks. The idea of enabling data sharing between blockchain networks and the outside is quite unique and has enabled Chainklink to grow precipitously over the years.

To facilitate the growth of the project, Chainklink uses its own native token known as LINK. This is ideally like BTC or ETH since it can also be mined and its transaction records stored in a blockchain.

The token was launched in 2017, where it traded for lower than $0.2 before rising steadily to reach an all-time high of $53.03, according to price data from CoinDesk.

Let’s look at how LINK’s price has grown over the years.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Chainlink (LINK) Price History

LINK is an ERC-20 that was launched on the Ethereum platform. The token was launched during an ICO in September 2017 and managed to raise up to $32 million. Before the ICO, the token was selling at around $0.09 and afterwards moved to $0.11 during its public sale.

The price growth was relatively slow during most part of 2017 and only started gaining traction at the start of 2018. For instance, in 2018, LINK rose from as low as $0.15 to $0.43. It then went through a series of price hikes that saw it close the year at above $1.

The coin then started 2019 on a fairly bullish note as it continued with its uptrend momentum. In June 2019, there were rumours on Twitter that cooperation between Google Cloud and Chainlink could be in the pipeline.

As a result, the price surged from $1.19 to $1.92 in a matter of days. Later, the coin was listed on the Coinbase exchange, which exposed it to more investors and helped it rise to $2.24.

Before it even started trading actively on Coinbase, the price had doubled to $4.45. However, towards the end of August, LINK faced a correction that brought the price down to $1.61. It stayed there for the rest of the year before spiking again in 2020.

From January to February 2020, Chainlink grew from $1.74 to $4.60, representing about a 164% increase in a month. In March, the price fell back to its previous price of $1.74 before recovering to $3 in April.

Around July 2020, the Blockchain Service Network, which is China’s national blockchain network, was launched and activated with 135 nodes incorporated with Chainlink price oracles. This pushed the price of LINK from $4.87 to around $5.60, which is a 15% increase on a single day.

After that, the price continued rising until around mid-August where it was trading at over $18.

However, in late September 2020, the price began dropping again and went as low as $7. It then played between $7 and $15 until January 2021, where it gained another bullish momentum that drove it to over $20 by the end of January.

The bullish trend picked up, and by mid-February 2021, LINK was trading at more than $30. There was again a slight drop by the end of February, which continued until the end of March where the price began to rise again.

By mid-April, it had gone above $40, then around May 10th, it achieved its current all-time high of $53.03. The price of Chainlink has since dropped to $20 by the end of the year.

In January 2022 LINK price managed to climb above $27, but since then the price dropped, and currently, it's been fluctuating between $5.8 and $9.

Chainlink Price Predictions For 2023

So far, according to most price analysts, Chainlink fundamentals look promising, and the coin might finish 2023 at the projected $10 mark. With the proactive launch of several products and consistent price uptrend, we believe LINK will be hitting new milestones as it comes closer to mainstream adoption.

If the LINK altcoin receives enough media coverage, it will have a great shot at increasing its use cases by the end of the year. Otherwise, if by some bad luck or if the market is not favourable or there insufficient media coverage, we might see a marginal correction lowering the end-year projection to as low as $2.

For instance, Digital Coin Price predicts that Chainlink will end 2023 at a price of $16.

Most of these predictions are generated based on the current price action, and that is why they become significantly lower in case of a correction. Despite the recent downtrend, however, Coinpriceforecast is still hopeful that Chainlink LINK might close the year at $7.63.

Coinpedia is hopeful about the future of LINK. The site predicts the value of Chainlink to reach $10.66.

Generally, we are hopeful that Chainlink will start rising again.

Don't Miss: Chainlink Price Predictions

Is Chainlink A Good Investment?

Chainlink solves one of Blockchain’s biggest nuisance; the interoperability between on-chain and off-chain services. This makes it not only a valuable but also a practical piece of technology. As a result, when Chainlink’s concept finally sees mainstream adoption, most if not all of the blockchain-based cryptocurrencies will be using it to accept data and important information from the outside world.

However, being a cryptocurrency, Chainlink is still highly volatile, as we have gathered from the price history above. While the asset has recorded huge gains since the start of 2020, it is still unstable and, therefore, a risky investment.

This does not mean that Chainlink is a bad investment per se. All cryptocurrency investments are risky but could also lead to potentially massive gains. Chainlink’s underlying oracle technology puts it in a good position to be a valuable investment. As cryptocurrencies keep evolving, Chainklink will record more use cases and advertently boost its price.

Soon, the stability and viability of cryptocurrencies, in general, will be underpinned by Chainlink’s technology. When LINK finally becomes an industry standard, its early investors might enjoy enviable profits.

In terms of long term monetary gains, Chainlink is not badly off. For instance, if you had invested only $1,000 around 25th March 2020 when LINK was selling at $2.33 per coin, you would have gotten around 430 Chainlink tokens. Now, if you sold that in early May 2021 when the price went above $50, you would have made a profit of more than $20,000 in about a year.

This might not be as lucrative as other fast-growing cryptos, but it is still no small gain.

How To Buy Chainlink

Regardless of which exchange you are using, buying Chainlink is as easy as buying any other crypto. Just follow the steps below

Step 1. Choose a suitable exchange

Chainlink is still relatively new, so you might not find it on some of your favourite exchanges. However, you can easily get from a credible exchange if you shop around a little. The right exchange for you will depend on your own preferences. Don’t forget to look at things like security, transaction fees and, of course, whether or not LINK is available.

Some of our favourite exchanges that support Chainlink include Binance, eToro, and Coinbase. Some, like eToro, allows you to trade LINK with other cryptocurrencies, while others like BitPanda allow you to buy using fiat currencies.

Step 2. Create an Account

After choosing your favourite exchange, the next step would be to create an account. This is a simple step that you must complete before you can buy LINK. You will most likely be asked for some personal details, including contact details and perhaps a photo ID.

The requirements will vary depending on the exchange you are using, but it shouldn’t be anything daunting.

Step 3: Fund Your Account

When you are done setting up your account and have completed profile information, you can now go ahead and deposit some funds. This is what you will use to buy LINK. You can either deposit fiat currencies or crypto depending on which is more convenient for your specific exchange.

Also, keep in mind that there might be a minimum amount of funds you can deposit. For instance, Binance accepts a minimum of $50 while eToro accepts a minimum of $200.

Step 4. Purchase LINK

After funding your account, you can now buy your LINK tokens. The process of buying will vary from one exchange to another, but most are user friendly.

First of all, you will need to search for the ticker symbol of the crypto you want to buy. In this case, LINK.

And then, depending on whether you are buying with crypto or fiat money such as USD, you will need to choose the appropriate trading pair. For instance, if you are buying with USD, you will choose the LINK/USD pair, and if you are trading with Bitcoin, you choose the LINK/BTC pair.

Step 5. Get a suitable wallet

This last step is optional depending on whether you will be actively trading your LINK tokens or plan to hold them for the long term. If you will be trading, there is no need to store them off-exchange.

On the other hand, if you plan on HODLING, you will need to transfer your tokens to a more secure wallet. In this case, we recommend swallets such as Ledger Nano S and Bitlox, both of which are well-encrypted hardware wallets.

After setting up your wallet, you can then transfer your LINK tokens from the exchange by following their specific instructions.

After securing the tokens, either on the exchange or your own wallet, you can now choose any of our investment options. If you have the time and resources, you can even do a combination of two, such as trading and hodling.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

3 Ways To Invest In Chainlink

If you decide that Chainlink is a good investment and want to move forward, we are going to show you three of the most common ways to invest in the asset. These are:

Hodling
Trading
Investing in the technology

If you are going to Hodl or trade, you will need to buy some LINK tokens first. In case you don’t know how to do that, we are going to take you through the simple steps.

Method 1: Hodling LINK

This is where you buy LINK and store it in an off-exchange wallet for a long time. The point is to wait until the price is high enough for your investment to be highly profitable. For instance, if you buy Chainlink now for around $25, you can wait until the price hits $100 before selling.

Method 2: Trading LINK

Trading is for the more experienced traders since it can be a bit complex. In this case, you can either make short-term profits when the price goes up or predict price direction and make a profit whether the price goes up or down.

Method 3: Invest in Chainlink Technology

If you believe that the Chainlink technology has a good future, you can alternatively invest in the company without necessarily having to buy some LINK. This way, you will be investing in Chainlink as a company and not as crypto.

Check Out: Should You Buy Chainlink?

Why Should I Invest In ChainLink?

There are several reasons why you might want to invest in Chainlink, but they all boil down to two:

You are after some monetary gains
You believe in its underlying technology.

Whichever your reason is, LINK has its own benefits and limitations as an investment. Keep in mind that this is like a unifying factor for the whole cryptocurrency industry. It is different, so it is not trying to compete for attention.

This makes it not only unique but also disruptive.

Chain significantly expands the capability and use cases of smart contracts by making it easy for Blockchain to access real-world data, payments, events and so on. Without Chainlink, this kind of interoperability would not have been impossible without sacrificing the very thing that underpins Blockchain; security and reliability.

Currently, there are close to 20,000 people who act as Chainlink node operators. This helps to set the project on a trajectory to becoming a fully decentralized oracle network.

So, as Chainlink expands its usability, you as an investor will be among the first people to taste what it really feels like to be a part of truly disruptive technology.

With time, as the LINK token is used to complete more transactions, its price will keep rising and eventually become much more profitable for its investors.

Conclusion: So, Should I Buy Chainlink LINK?

Chainlink is clearly one of the best technologies we have seen in the blockchain industry. As more cryptocurrencies adopt the use of smart contracts in their Blockchain, Chainlink will be key in ensuring the long-term stability, viability and security of these cryptocurrencies.

This alone will make LINK a sound investment.

The team behind Chainlink is currently working to improve its business model, the middleware oracle system will attract more investors and, in the process, become highly valuable. As we mentioned, media coverage and new exciting project launches will help propel LINK to stardom, making it one of the best crypto investments.

Having said that, do not forget that Chainlink is still a highly volatile digital asset, and you might lose all your investments. So, always invest wisely.