Why is Chainlink useful- analyzing the Chainlink Bull Run

The cryptocurrency sector has had its sheer of Bull Runs over the past decade, with Bitcoin rising from below $1 in 2009 to reach the $20,000 peak towards the end of 2017. As the industry expands, it is expected that more coins will experience such an astonishing phenomenon.

The spotlight currently belongs to Chainlink (LINK), the cryptocurrency that has been turning eyes over the past few months. The astronomical rally of the LINK coin has seen it rise by nearly 1000% over the last couple of months. This rise has led many wondering why Chainlink is so useful and if the cryptocurrency can sustain its current Bull Run. This post looks at Chainlink and addresses its current rally.

What is Chainlink?

Chainlink has been rallying because it is a unique blockchain project, the first to grace the industry. It is a decentralized oracle service that runs on the Ethereum blockchain and provides blockchain services to both enterprises and traditional businesses. According to the developers, the Chainlink network offers reliable tamper-proof inputs and outputs for simple and complex smart contracts on any blockchain.

It is a unique blockchain project because it is solely focused on enabling smart contracts to connect better with other smart contracts and with the outside world. Smart contracts have been around in the crypto space for a while now, but they could only manage data on the blockchain. Thus, making it impossible for real-world businesses to benefit from them. Chainlink helped eliminate that divide and created a decentralized link between blockchains and their real-world applications.

Smart contract users can leverage the Chainlink oracles to retrieve data from data pools, off-chain APIs, and other resources. The data can then be integrated into the blockchain. This means that Chainlink takes data from external sources via APIs and integrates them into the blockchain network.

How does Chainlink work?

Chainlink is a unique technology that works by connecting the blockchain ecosystem to outside applications. It connects to the blockchain on the one hand, and the data is integrated with an API. The base of the solution is built on oracles, which eliminates the need to trust a single party and works smoothly in a decentralized facility.

The major functions of Chainlink depend on on-chain and off-chain processes. Since the smart contracts in Chainlink are aware of their external environment, it means that they carry a component that enables them to integrate with non-blockchain applications also. The on-chain infrastructure of Chainlink helps in selecting oracle and creating their records.

After creating the records and selecting an oracle, the agreement is executed off-chain and then reported back to the on-chain system. The off-chain system contains subtask schemas and external adaptors, in addition to the Chainlink Core. All the components of the system can be updated. The Chainlink solution currently works on the Ethereum blockchain. However, the Chainlink system will be updated in the future to enable cross-chain transactions.

Why is Chainlink’s price going up, and will it crash?

Chainlink (LINK) has experienced a massive surge in price so far this year. At the time of writing this review, LINK is the fifth most valuable cryptocurrency in terms of market cap. This comes after the coin rose by more than 700% since the start of the year, making it the best performing cryptocurrency at the moment.

The key reason for the growth of LINK is the rise of decentralized finance (DeFi), with Chainlink leading the way in this innovation. DeFi tokens are becoming more popular, and more blockchain projects are using Chainlink to connect better to another blockchain. They are using the power of Chainlink to get data, both on-chain and off-chain.

The cryptocurrency project has been making partnerships and integrating more blockchains non-stop so far this year. The success of the oracle project has been key to the growth of LINK despite emerging competition from new market entrants like OKEx and others.

With the DeFi space exploding, over $4.5 billion worth of ETH has been locked in DeFi projects in early August 2020. Virtually all the DeFi applications need some sort of price data feed. This is where Chainlink and oracle come in. Chainlink has provided a robust and decentralized price data feed in a way that is secure for the DeFi apps. Since Chainlink is the most popular player in this sector, it isn’t a surprise that it has been winning most from the growth of the DeFi market.

Another reason for the spike in the price of LINK is the rising Google searches for Chainlink. According to Google Trends, an increasing number of people have been searching for Chainlink on its search engine. This is similar to Bitcoin in late 2017 when it reached its all-time high of $20,000 per coin.

Maintaining its price rally is something that is nearly impossible. The cryptocurrency market is ruled by Bull Runs and Bear trends, which means that prices are volatile and move up and down all the time. Bitcoin was trading at $20,000 in late 2017 but sunk to nearly $3,000 last year. BTC has bounced back and is now trading close to the $12,000 mark. Most cryptocurrencies have lost their value over the past three years, and it is expected that LINK token will undergo some sort of price correction soon. At the moment, some experts believe the cryptocurrency is overbought, and the price might decline over the coming months. However, it might act like Bitcoin, rising, and falling at unsuspecting intervals.

Is Chainlink a scam?

Following the meteoric rise in the price of LINK, most investors are starting to ask whether it is a scan or whether the asset is in a bubble. Most altcoins in the DeFi market have been rallying, and LINK seems to be heading them.

However, Chainlink is not a scam blockchain project. It is a genuine blockchain project that is gaining increasing use within the emerging market. According to some research, several data points support the current price of LINK. For instance, the total active addresses and the number of transactions on the network have been rising, which shows that more people are holding and using the cryptocurrency.

Secondly, the number of companies, investors, and node operators entering the Chainlink community on a deeper level is also rising. After Binance, Huobi exchange also started running a node that allows it to provide price data to the network.

In June, China’s Blockchain Service Network merged with Chainlink, with the network now operating 135 nodes on the Chainlink system. The oracles are crucial as they provide outside information into smart contracts, which enables multiple applications within the DeFi sector. To become an oracle, users need to stake a certain amount of LINK tokens, which can be lost as a penalty when the oracle provides false information. The oracle operators are rewarded with LINK tokens in exchange for their efforts.

Overall, the Chainlink rally is propelled by real-world demand for the services of the oracles, which means that it is not a scam.

Where to buy Chainlink

Check out this article on the subject.

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