Should I invest in Chainlink?

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14 Feb 2024

Is Chainlink a good cryptocurrency to add to my portfolio in 2024?

Chainlink, an innovative decentralised oracle network founded in 2017, serves as a transformative bridge connecting blockchains and external systems. Unlike centralised oracles, Chainlink utilises "hybrid smart contracts" to decentralise the flow of data to and from blockchains.

Fueling this network is Chainlink's native token, LINK, which rewards node operators for tasks such as retrieving off-chain data, formatting it, and conducting off-chain computations. Within the Chainlink decentralised oracle network, nodes operate based on predefined protocols, requiring operators and data providers to stake a specific quantity of LINK tokens. These operators autonomously determine the minimum link price based on the demand for their off-chain resources, with node operators holding substantial stakes receiving greater LINK rewards.

Chainlink's innovative approach enables secure and decentralised data exchange between blockchains and off-chain systems, finding applications in various scenarios. Whether it's ensuring the fair distribution of non-fungible tokens (NFTs), gamifying personal savings, or making adjustments to cryptocurrency token supplies, Chainlink's technology offers endless possibilities.

The history of chainlink

The brains behind Chainlink, Sergey Nazarov, Steve Ellis, and Ari Juels, introduced this groundbreaking network in a 2017 white paper, and it officially launched in 2019. Notably, LINK operates as an ERC-20 token, ensuring compatibility with different currencies and smart contracts supported by the Ethereum platform.

Chainlink's meteoric rise in value is worth mentioning, starting from its humble beginnings at $0.29. The difference between its 2018 price and its current value is an astonishing 4790%. If we consider Chainlink's all-time high of $52.88, that percentage increase becomes an almost unimaginable 18134%.

Chainlink has demonstrated its strength and potential for future growth.

Its year-to-date performance has seen a healthy triple-digit increase of 150%, with its thirty-day performance registering an impressive 89% (as of November 16th, 2023). With an astronomical market capitalisation of $8 billion, However, the extent and magnitude of its climb remain uncertain. While a bullish outlook may be appealing, confirmation from technical analysis and indicators is necessary.

Despite its promising prospects, investing in Chainlink's token LINK carries some risks and downsides

Unlike other cryptocurrencies used as a store of wealth or decentralised currency, LINK is primarily used to pay node operators. Additionally, as with any cryptocurrency or blockchain project, general risks are present, requiring careful consideration before making investment decisions. In conclusion, making a Chainlink price prediction poses challenges given the current state of cryptocurrencies and the emergence of numerous competitors. LINK's utility extends beyond being a digital currency, making it harder to analyse and predict its future price.

However, the undeniable reality is that Chainlink offers highly valuable and practical technology. As blockchain technology becomes more widely adopted, the ability to connect on-chain and off-chain data and networks will only increase in importance. At present, Chainlink resembles an exciting startup with proven technology, but its future value is influenced by various factors that will either support or hinder its growth.

In conclusion, predicting Chainlink's future price is challenging due to the ever-evolving cryptocurrency landscape and emerging competitors. Additionally, the multifaceted use of LINK as more than just a digital currency adds complexity to price analysis. However, Chainlink's valuable technology, enabling seamless connection between on-chain and off-chain data, is likely to become increasingly valuable as blockchain technology becomes more widely adopted. While Chainlink currently resembles an exciting startup with proven technology, its future value will be influenced by various factors.