How To Buy Chainlink (LINK)?
As one of the top twenty cryptocurrencies in market capitalization, Chainlink’s token LINK can be purchased in many places where cryptoassets are sold or traded. Several large crypto exchanges such as Binance, Coinbase, FTX, Kraken, and Bitstamp have listed the LINK token. Also, as LINK is an ERC-667 token running on the Ethereum blockchain, it can be swapped against other cryptocurrencies on DeFi exchanges such as Uniswap, SushiSwap or 1inch.
Why buy chainlink?
Chainlink offers a high-quality decentralized oracle service. With the introduction of smart contracts and the rise of DeFi, there has been a growing interest in reliable oracle services. After all, the majority of DeFi projects use smart contracts in one way or the other, and many need external real-world data to function properly.
An increasing number of well-known DeFi protocols, such as Aave, yearn.finance, 1inch and Polkadot rely on Chainlink as their external data source. This shows the quality and reliability of their service as well as the importance of their offering. To quote the founder of yearn.finance: “Our team can sleep peacefully at night because we have just shifted all of our worries about oracles onto Chainlink. Having that peace of mind and comfort as a builder, I cannot express how vital it is.”
The LINK token is the currency that powers the Chainlink network. The network and the currency derive their value from their ability to ensure the successful execution of smart contracts depending on the Chainlink network for data input. LINK is the cornerstone of the network and the only currency that can be used to interact with it. Smart contracts requesting data from the Chainlink network have to pay the data providers (node operators) in LINK. On the other hand, Node operators wanting to provide data have to stake LINK to become part of the network. A larger stake thereby signals, among other criteria, a higher trustworthiness. Node operators can also lose parts of their stake by providing erroneous or manipulated data, thereby being incentivized to provide the best service possible.
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An investors perspective
The more protocols use Chainlink’s oracle service and the more node operators seek to offer their data to the network, the higher the demand for LINK tokens is. As LINK is a non-inflationary currency with a fixed token supply of 1 billion tokens, a higher demand will lead to price increases. For investors, who a) believe in a strong growth of smart contracts applications and DeFi, resulting in an increased demand for oracle services, and b) have confidence in the superiority of Chainlink’s technology and its ability to continuously provide reliable data, LINK is a promising investment. Further, as Chainlink has a strong use case, a proven track record and actual cash flows, it is possible to calculate a fair value for the LINK token. This stands in stark contrast to other projects where investors have to fully trust in optimistic future projections, which may never come to pass.
But, as an investor, there are two points to keep in mind when buying LINK. Firstly, only approx. 42% of the LINK tokens are already in circulation. The remnant is owned by the founding company SmartContract Chainlink Ltd. and other large investors. Secondly, Chainlink, even though decentralized, represents a possible single point of failure for its users. If too many platforms rely on Chainlinks technology, the network’s failure or bugs in its code could have far-reaching consequences. Platforms wanting to mitigate such risk will have to have alternative back-up oracle services in place. The rise of competent competitors, such as Band Protocol, is therefore to expect in the near future and would be a desirable development for the crypto space at large.
Where to buy Chainlink (Link)?
LINK can be bought on the majority of large crypto exchanges. Prominent examples are Binance, Coinbase, FTX, Kraken, and Bitstamp. To open an account with one of these exchanges, you’ll need to sign-up and identify yourself. The process is straightforward and similar to that of an online brokerage. You will be asked to provide your information such as name, address, an official public document (passport) and a proof of address (utility bill). Usually, this process takes only a couple of minutes.
Once you have the documents submitted, it will take 1-2 business days for your account to be verified and fully operational. Be sure to enable 2-factor authorization and other safety features (such as delayed withdrawals) when opening the account. This ensures that unauthorized access to your account and funds is significantly more difficult.
Alternatively, and if you already have an Ethereum wallet such as MetaMask or TrustWallet, you can also swap LINK for other cryptoassets on decentralized exchanges (DEX). The most popular are Uniswap, SushiSwap or 1inch. As LINK is running on Ethereum, it can be exchanged against many other tokens running on Ethereum. Simply open the webpage of a DEX in your web browser, click ‘connect to wallet’ (top right or left corner) and scan the QR code with your wallet app. No account is needed. Alternatively, you can also use your wallet’s built-in web browser.
Select the LINK token and the token you would like to swap it against. Then, enter the desired amount. The DEX will show you the current exchange rate and the estimated fees. As soon as you hit ‘swap/exchange’, your wallet will show you the exact fees and ask you to confirm the transaction. Once the transaction is confirmed, the swap will take place immediately and the LINK tokens will show up in your wallet a couple of minutes later.
Be aware: the fess on the Ethereum network can be costly, depending on the current network load. You can check the current transaction cost on Ethereum Gas Station. Should they be too high for your taste, wait several hours and try again as they undergo strong fluctuations.
How to safely secure your link
LINK tokens can be stored securely on the crypto exchange they were bought at or in your personal wallet in self custody. Simply leaving them on the exchange is certainly the easiest way, as no extra transaction and no personal wallet is needed. But, as many exchanges are highly unregulated, this exposes any LINK owner to third-party risk. Should an exchange get hacked, go bankrupt or be fraudulent, the LINK tokens can be lost beyond recovery. Therefore, make sure to choose a trustworthy, insured, or regulated exchange when storing the token on an exchange.
Alternatively, the LINK tokens can be stored on a personal wallet. As LINK is an Ethereum token, most Ethereum wallets should do the trick. To transfer tokens from an exchange to your wallet, search the wallet for the LINK token and copy the LINK recipient address. Then, head over to your exchange account, search for ‘withdraw LINK’, paste your recipient address and click send. Soon after, the LINK tokens should be in the safety of your personal wallet.