Beginner’s Guide to ChainLink: What is ChainLink, How it Works and How to Buy LINK Tokens
You must be aware of a few popular blockchain networks in the world like Ethereum network, Bitcoin technology, etc. but in the recent times, the smart contracts technology has advanced a lot and there are several new cryptocurrency networks which make it easier to build decentralized apps and make the transactions both quick and efficient.
Chainlink is one such secure blockchain middleware which was launched by the San Francisco Fintech company SmartContract.
This blockchain middleware ensures that smart contracts can connect with each other all across the blockchain by allowing them to access major off-chain resources like web APIs, bank account payments, and data feeds.
The Chainlink system circles completely around the LINK network and tokens. So, let’s learn more about this latest blockchain network which is utilizing Oracle network to connect its smart contracts.
- What is ChainLink
- Team Behind ChainLink
- What are Link Tokens
- How to Setup ChainLink Wallet
- How to Buy ChainLink
- How to Store ChainLink Tokens
What is Chainlink Network?
As mentioned earlier, Chainlink is a secure blockchain middleware which lets the smart contracts from all over the network to connect along with the essential resources that they need in order to be useful.
Chainlink creates secure oracles for platforms like Bitcoin and Ethereum so that the smart contracts are connected on several networks to crucial external data feeds to trigger the off-chain systems operations.
The LINK Network is known to be the initial decentralized oracle network which allows everyone to securely and safely supply smart contracts with the access to major external data, API capabilities, and several off-chain payment capabilities.
Basically, anyone who possess data feed, or offers beneficial off-chain payment services like local payments, or other types of API capabilities can supply these services directly to the smart contracts in return for LINK tokens.
You can become a Chainlink Node operator to provide your data, payment, and other online services directly to a smart contract.
Chainlink creates a decentralized system for smart contracts to directly access important off-chain data and uses a scalable, auditable, and secure way to add APIs, off-chain payments, and data feeds into a smart contract.
Team Behind Chainlink
Chainlink team consists of only two members: Sergey Nazarov and Steve Ellis. Both of these Chainlink team members founded the network in 2017 and played a major role in its success and improvement of Chainlink network.
Sergey Nazarov is the CEO of the Chainlink organization and has a great background in the blockchain technology. He previously founded Security Asset Exchange which was an exchange network that worked as a decentralized email service.
Steve Ellis is the CTO of the Chainlink organization and has previously worked with Sergey on Security Asset Exchange and also worked in the Pivotal Labs as an experienced software engineer.
Apart from these two founders, Chainlink consists of an advisory team which includes some members from the Ethereum foundation, and professors from Cornell Tech and the University of Illinois.
What are LINK tokens?
The LINK token was introduced to pay the Node operators on the Chainlink network to perform off-chain services. The LINK token can not only be used to pay the Chainlink node operators but is also employed for paying data providers, payment provides, and several other online providers for all the online services performed by them.
So, smart contract users can use the LINK tokens in order to pay the services provided by the data providers and this is important because a huge majority of smart contracts need external data for implementation.
It is really tough to get the data from external sources which is why Chainlink’s token system will help in getting accurate data while ensuring that the Chainlink network grows into a decentralized network.
How to Setup a Chainlink Wallet
If you want to own some Chainlink coins and store them in a safe and secure place then you need to first create a Chainlink Wallet for yourself. This can be done by using any Ethereum wallet as Chainlink coins are used on the Ethereum blockchain.
You can follow this quick guide to create a Chainlink wallet yourself using MyEtherWallet:
- First, you need to open the myetherwallet.com website and then sign up for a new account.
- Enter a strong password and then click ‘Create New Wallet’ to complete the sign-up process.
- You will be displayed with a Keystore file that you would need to download by clicking ‘Download Keystore File’. Be extra cautious with this file and keep it stored in a safe and secure location.
- Once the keystore file is properly backed up, click ‘I understand. Continue’ to continue with the wallet set up.
- Now, you will be provided with a powerful private key for your wallet which will be unencrypted. Take a backup of this private key and store it somewhere safe because this will help you in opening your wallet.
- Once you have hidden your private key, click ‘Save your Address’ to proceed.
- To open your newly created wallet, you need to upload the downloaded keystore file and enter your password.
- Once your wallet is opened, you will see your personal wallet address which will be later used for making transactions. So, copy this wallet address and keep it safe.
How to Buy Chainlink
Buying Ethereum is one of the easiest tasks and can be executed via any popular exchange available in the market. One of the most convenient exchange to use is Coinbase provides easy access to the digital currency users and make it easy for them to handle the transactions.
You can follow this quick guide to create an account on Coinbase and then purchase Ethereum for Chainlink exchange:
- Navigate to the Coinbase website then click on Sign up button. You can also check out Coinbase alternative such as CoinMama.com for Ethereum purchase too.
- Enter your personal details like name, email, password, and location to create your account.
- You will need to verify your Coinbase account in order to use it, so upload your Photo Id, phone number, and choose your payment details.
- Then, you need to verify your payment details in order to proceed.
- Once all the verifications are complete, you can log in to your Coinbase account and go to ‘Buy/Sell’ page from the top menu.
- Select Ethereum wallet and then enter the number of ETH coins that you wish to purchase or the amount of local currency that you are willing to spend.
- Confirm your transaction details and then click on ‘Buy’ button.
- To confirm your transaction again, you will need to click on ‘Confirm Buy’ button.
You now own some ETH coins that you can use to get the Chainlink coins. However, don’t close your Coinbase tab yet, we will need it to transfer the ETH tokens to Binance exchange. You will need to create an account on Binance to do that.
Steps to exchange your ETH coins for Chainlink coins:
- Go to Binance exchange homepage and click ‘Register’ button that can be found on the top right menu.
- Enter your email address, a strong password, and then click ‘Register’ to proceed.
- Confirm your email address by clicking on the link sent to you via email from Binance.
- Log in to your Binance account with your email and password.
- You will be presented with a pop-up to register for Two-Factor Authentication. You can use the Authy app to complete this authentication process.
- Go to the ‘FUNDS’ tab on the top menu and then select ‘Deposits/Withdrawals’ from the drop-down menu.
- Search for Ethereum wallet and then click on ‘Deposit’ button to transfer your ETH coins here.
- You will be provided with an Ethereum deposit wallet address, copy it and save it to complete the transaction.
- Now, head back to your Coinbase account and go to ‘Accounts’ page from the top menu.
- Find your Ethereum wallet and click ‘Send’ to transfer the funds.
- Paste the ‘Ethereum Deposit Wallet Address’ from Binance in the ‘Recipient’ box.
- Enter the number of ETH coins that you wish to transfer and then click ‘Continue’. Confirm the transaction via password or phone.
- Wait for an hour for the ETH coins to appear in your Binance wallet. You will see it under the ‘Available Balance’ section.
Now, you have successfully funded your Binance wallet with ETH coins so you are all set to exchange it for LINK coins.
- Now, go to the exchange market for LINK/ETH crypto pair on Binance.
- You will see a ‘Buy LINK’ box on this exchange page. Click on ‘Market’ tab as it is quicker and easier to use.
- Once you select the Market option, you need to enter the number of LINK coins that you wish to purchase.
- You can also use the percentage boxes to enter the amount automatically by calculating the percentage of ETH that is available.
- Once you are satisfied with the amount, press ‘Buy’ button and your order will be immediately completed.
- Go back to your ‘Deposits/Withdrawals’ page and search for your LINK wallet.
How to Store Chainlink
It is always best to store your LINK coins in your personal wallet because exchanges are quite easy to hack. So, if you want to protect your LINK coins, you need to transfer them in your personal wallet as soon as you get them.
Here’s a quick guide on how you can do that:
- Go to your Binance LINK wallet and click on ‘Withdrawal’ button next to it.
- Fill in the following information:
- Label for your transaction like ‘My Wallet’.
- Address of the Receiving wallet i.e. Wallet address of your MyEtherWallet account.
- Amount of LINK coins you wish to transfer. You can click ‘Max’ to transfer all your LINK coins.
- Once you have entered the information, check it and then click on ‘Submit’.
- You will be asked for a code to enter if 2FA is set up and you will be sent an email to confirm the transaction.
- Once the transaction is confirmed and verified, your LINK tokens will be successfully transferred.
You can now go back to your MyEtherWallet and see the LINK tokens under your Account Balance.