What is it?

Chainlink is best described as a link between different blockchains and Smart Contracts.
It addresses the problem whereby information not available on a blockchain can be searched and used for the functioning of Smart Contracts.

To understand the function of Chainlink there is the need to understand the principle of Smart Contracts. Smart Contracts can also be called “smart agreements”. Simple algorithms which perform a specific function (like automated buy-in or sell-of of underlying assets based on a variety of parameters established beforehand). Smart Contracts are unchangeable as soon as the blockchain whereupon they are used has been launched. In order to function these Smart Contracts still need information from OUTSIDE the blockchain. Preferably as secured and validated as the information held on the blockchain itself.

Chainlink enables this external information to be attached to the blockchain (through nodes which are called “Oracles”). It enables the Smart Contracts to function properly and give value to the coins making use of said Smart Contracts. What differentiates Chainlink from its competitors (and is the reason of its success) are that the Oracles used are all decentralized. It means that the external information needed for making the Smart Contracts work is being validated and verified by decentralized nodes. The ONLY weak spot here is the source of information (of the information that is going to be verified). In order to make sure the information is correct does Chainlink only make use of verified and trusted sources.

In short: Chainlink is a project which enables to give information available off the blockchain to Smart Contracts who function on the blockchain. It enables Smart Contracts to function properly.

Chainlink is an ERC677 token. This means it makes use of the Ethereum Blockchain.
For understanding what ERC 20, ERC 233 and ERC 677 tokens are you may click here for an article laying down the differences in simplified terms.

Opinion and analysis:

Chainlink is not necessarily a coin tied to specific DeFi-services.

HOWEVER many DeFi-projects make use of Smart Contracts in order to function properly. Due to this given fact takes Chainlink center stage. Its role being of utmost importance for the bringing about of Financial Services to the blockchain.

As DeFi gains more and more traction, as more and more DeFi projects are being started, so does the importance and adaptation of Chainlink occur. The full development of financial services within the Cryptomarkets makes this an EXTREMELY important coin with enormous potential to grow in value. A good article where its importance for DeFi-application stands center can be found here: “Data Quality for DeFi“.

For both developers as well as investors and traders is this token one which MUST make part of the portfolio.

For more information check out the following websites:

Official website: https://chain.link/
Marketcap: https://coinmarketcap.com/currencies/chainlink/
Official Whitepaper: Chainlink Whitepaper (English Version)

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