Crypto -

What is chainlink?

Chainlink (LINK) is a cryptocurrency and as of July 2022, chainlink was among the largest and most popular cryptocurrencies on the market, measured on market value - 22,9 billion DKK according to Coinbase.

In July 2022, one chainlink - also called a chainlink token, or just LINK - was worth 50 DKK. And if you had bought the same chainlink token in November 2017, it would have cost around 1 DKK. That's a 4,900% increase. The numbers are based on data from Coinbase .

See Chainlink’s rate

Table of contents:

  • What’s the idea behind chainlink?
  • Chainlink and ethereum
  • Smart contracts, decentralised apps, crypto games and NFTs
    • Smart contracts
    • Decentralised apps
    • Crypto games
    • NFTs
  • Use cases: Examples of projects made possible by chainlink
    • Crop insurance
    • Flight cancellation insurance
    • Automatic compensation for forest replanting
  • The Chainlink story: Who created chainlink?
  • How to get started trading chainlink

What’s the idea behind chainlink?

What makes chainlink special is its blockchain technology, which is a decentralised oracle blockchain. In short, “oracle” means that chainlink enables data integration from non-blockchain (off-chain) databases into blockchain databases.

For example, this could be the integration of a certain database to chainlink’s blockchain.

Chainlink is built to communicate with ethereum’s blockchain where the purpose is to use ethereum blockchain’s opportunities to create or access smart contracts, decentralised apps, crypto games and NFTs.

By connecting off-chain data with smart contracts and similar features, the door is opened for a lot of technological opportunities. You can read more about that further down in this article. 

On-chain data

On-chain data can be described as all data that’s part of a blockchain’s ecosystem. This is the data that’s a natural part of any blockchain - such as transactions, gas fess and wallets.

Tip: Learn more about blockchain here.

Off-chain data

Off-chain data can be described as all data, which isn’t a natural part of a blockchain’s ecosystem. This could be all kinds of data - from weather reports to financial key numbers from Yahoo Finance.

Chainlink and ethereum

Chainlink is specifically developed to support the current technology existing in ethereum’s blockchain.

As mentioned earlier, the special thing about ethereum’s blockchain is that it supports the use of smart contracts, decentralised apps, crypto games and NFTs.

Chainlink’s token, LINK, is based on ethereum’s blockchain. Technically speaking, chainlink’s token is a so-called ERC-667 token, which again is based on ERC-20 tokens.

ERC stands for “ethereum request for comment” and means that they’re connected to and communicating with ethereum’s blockchain. In practice, chainlink’s tokens are used to pay for facilitating and executing smart contracts, decentralised apps, crypto games and NFTs.

As it’s becoming more and more popular to use smart contracts and other crypto projects, the value of chainlink tokens will continue to rise. In that way, you could potentially make a good deal by buying and selling chainlink. 

How to trade chainlink

Cryptocurrencies can rise and fall

When you trade cryptocurrencies, you need to be aware that it carries a large risk. The value of your cryptocurrency can both rise and fall, and you can risk losing the entire amount you’ve invested in cryptocurrencies.

Cryptocurrency trading is done through Lunar Block. Lunar Block is not regulated by the Danish Financial Supervisory Authority (Finanstilsynet). That means you won’t have the same protection as when trading e.g. stocks or other regulated assets.

Smart contracts, decentralised apps, crypto games and NFTs

Ethereum is increasingly being used to develop and facilitate the use of crypto projects: Smart contracts, decentralised apps, crypto games and NFTs.

Here, chainlink’s role is to improve the value of the crypto projects. That happens through the oracle feature in chainlink, making it possible to use off-chain data in the projects.

But what are these crypto projects about, and how do they work?

Let’s check it out here:

Smart contracts

Smart contracts are decentralised contracts between two parties that want to make a trade with one another. Today, most trades are facilitated by some type of middleman. When you buy a house, there’s the bank, state and lawyer, who all play a part in the transaction - and who also gets a piece of the cake in the form of fees, taxes and so forth.

When you buy a car, there’s the dealer, state and lawyer.

Almost all legally binding contracts today are facilitated by someone - and that’s exactly what makes them binding. Because if the bank, state and lawyer couldn’t vouch for the contract’s contents, who would then ensure that the involved parties kept their end of the bargain?

Example: If you’re about to sell your car to Peter, all centralised middlemen ensure that you actually receive the money you’re supposed to. If Peter tries to trick you, you can turn him into the police. The middlemen have documentation that Peter has breached his contract, and you could persecute him.

Smart contracts: Now imagine that it’s not the bank, state or a lawyer that vouched for the contract’s validity, but instead it was a piece of code on a blockchain.

That’s the whole idea behind smart contracts.

For example, the code for a smart contract between Nate and Peter could look like this:

Car = 100,000 DKK

If Nate receives 100,000 DKK,

Then the car’s registration is automatically released to Peter.

A smart contract is in that way a number of demands that needs to be fulfilled. If the demands are not fulfilled, the contract is void, and the trade won’t be completed.

Where with a centralised contract, you need to trust the middlemen, you would need to trust the code when it comes to smart contracts. And that’s one of the most important points of blockchain technology: You don’t need to trust central authorities, but instead you need to put your trust in technology.

Another derived effect of this is that smart contracts generally cost less to operate than it does to employ a banker, a public servant or a lawyer.

Here, chainlink could be used to link data from DBA or Craigslist directly to ethereum’s blockchain and thus smart contracts. When a certain car model is available at a certain price (Off-chain data from DBA), the smart contract will then automatically be created and the trade between dealer and buyer happens automatically.

In that way, chainlink is the missing link between blockchain and the physical world.

Decentralised apps

Decentralised apps (also known as dApps) are like normal apps. But instead of being connected to a single central computer, the app is spread out across a network of computers via the blockchain.

So, when you use your Twitter app, for example, the technology is centrally stored with Twitter. That’s why Twitter has 100% autonomy over the platform, and if they wish to ban a person from using the platform, like they did with Donald Trump, they can do so.

If Twitter were a decentralised app, it wouldn’t be possible to ban Donald Trump from the platform - unless the majority of the blockchain network agreed upon it. Like that, decentralised apps could be called democratic, since it's the network that has autonomy over the platform.

Crypto games

Games today are also typically connected to a central computer. When you purchase an extra feature in a game - such as a skin - it’s technically still under the game’s ownership. You can’t take your skin out of the game, and typically, you won’t be able to re-sell it.

Meaning that you paid real money for something you don’t actually own, because the game is connected to a single central computer, owned by the manufacturer.

With crypto games, the idea is that the game is distributed to several people on a blockchain. The game isn’t owned in a central place, but is instead a cooperative project that exists on every single computer that participates in the network.

That also means that any add-on features in the game can be owned by the people who actually purchase them.

An example of a popular crypto game is Axie Infinity . The game is similar to Pokémon, where the player needs to catch different characters which can then be trained and used in battles against other players.

The single characters - or “Axies” - make up digital items that the player gains full ownership of. Axies can also be sold on an online marketplace to other players, who are interested in owning that exact character.

NFTs

NFTs are “digital barcodes”, which ensure the ownership of assets. An asset could for example be a digital artwork from the SolPunks collection, which is one of the first NFT collections based on solanas blockchain.

Let’s say you own one of the images from the collection - such as SolPunk_#3435 .

How could we trust that?

The digital barcode ensures that the image file you have on your computer is the original image file. There’s no doubt, because the barcode is embedded in the blockchain, which is controlled and verified by a large number of participants.

That’s why it’s not just you who can prove the ownership of the image. So can everyone else in the network.

With regular artworks, such as the Mona Lisa, it’s practically impossible to prove that the version on display at the Louvre, actually is the real deal. With a digital barcode - or NFT - it would be easy to prove.

Three projects made possible by chainlink’s technology

To explain what chain and the “oracle”-feature can be used for, we’ve gathered three examples from the real world centred around chainlink’s technology.

Insurance of crops

An example of a chainlink project is Arbol . Arbol is an insurance company who offers insurance on crops. If a farmer from a developing country experiences a year of drought, it would affect the year’s crop yield. The farmer would then lose a large amount of their profits, and in the worst case scenario, it could ruin the farmer.

Arbol is connected to databases from the National Oceanic and Atmospheric Administration , which provides information about rainfall. With this, Arbol has data on how much rain will fall in a certain region, and the insurance contract can be drawn up on the basis of that data.

An example of a contract could be:

If 50 mm of rain falls in [region]

Then 1,000,000 DKK will be paid out in insurance

If 75mm of rain falls in [region]

Then 1,250,000 DKK will be paid out in insurance

The examples are very simplified, but they should give a general idea about what chainlink and smart contracts combined are able to do.

Flight cancellation insurance

On a similar theme as Arbol is the insurance company Etherisc . Etherisc offers a lot of different types of insurance, and one of them is flight cancellation insurance. In 2022’s Denmark, that’s a relatively relevant insurance to have.

The idea is to connect live-data from flight departures with smart contracts. With that, the insurance can automatically be executed if data shows that the flight has been cancelled.

Then your insurance amount will be paid out immediately and you won’t have to wait on long processing times, and you won’t have to worry about communicating with the airline, travel insurance and so forth.

Automatic compensation for replanting forests

Green World Campaign is a chainlink project which accelerates the replanting of forests. The project integrates satellite data of forests with smart contracts, and if more trees are added to a certain area of a forest, the caretaker of the area will be financially rewarded for their work.

Like that, sustainable developments are funded economically through chainlink and smart contracts - all without any interference from a central government, who gets to decide who has earned compensation. It’s all bound to factual data.

The chainlink story: Who created chainlink?

Chainlink was conceived in 2017 by Sergey Nazarov and Steve Ellis. The two published a white paper along with professor, Ari Jules from Cornell University, who describes the building blocks of chainlink’s blockchain technology. Two years later in 2019, chainlink was officially rolled out to the public.

In 2021, the former CEO of Google, Eric Schmidt, was hired as a strategic consultant for chainlink. Eric Schmidt is known for taking Google from being a startup, to being the tech-giant we know it as today.

How to get started trading chainlink

With Lunar Block, it’s easy to get started trading chainlink. All you have to do is download the Lunar app and sign up to Lunar Block.

You need to take a test in connection to your sign up, where we will ask about the risks of cryptocurrency, among other things. You can get to know the risks in the Lunar app before you take the quiz. Once you’ve been approved, you can trade chainlink immediately.

Get started with chainlink

  • 1

    Download Lunar for free

    Go to App Store or Google Play and download the Lunar app. Find your photo ID, as you need that to sign up.

  • 2

    Sign up to Lunar Block in the app

    Find Lunar Block under “Products” and sign up. You’ll be asked to take a test about crypto first - among others things, it’s to see if you’re aware of the risks. You can learn more about the risks in the app before you take the test.

  • 3

    Buy chainlink with a single swipe

    When we’ve approved you, you can buy chainlink and other cryptocurrencies immediately. Choose your cryptocurrency in the app and buy with a single swipe.

Cryptocurrencies can rise and fall

When you trade cryptocurrencies, you need to be aware that it carries a large risk. The value of your cryptocurrency can both rise and fall, and you can risk losing the entire amount you’ve invested in cryptocurrencies.

Cryptocurrency trading is done through Lunar Block. Lunar Block is not regulated by the Danish Financial Supervisory Authority (Finanstilsynet). That means you won’t have the same protection as when trading e.g. stocks or other regulated assets.

We do not counsel

We do not advise on currencies and do not make recommendations for either buying or selling. We can provide factual information about the different currencies, but past price developments are not an indication of future developments.

No information from Lunar Block should therefore be considered as recommendations and all decisions are up to you alone.