Chainlink hit all-time high when Google explained how it works
Initially, Chainlink (LINK) prices actually dropped when the network went live.
- Chainklink (LINK) prices abruptly rose 75% to hit their all-time high.
- The cause of the rise was a tutorial on using Chainlink with smart contracts in a Google blog post.
- Given the function of Chainlink, it's a significant indicator of how quickly blockchain technology is developing.
Cryptocurrencies are confusing and full of buzzwordy blockchain mumbo jumbo. How's a non-technical person meant to understand what's legitimate and what's not?
Well, you Google it.
In a manner of speaking, that's what happened to Chainlink.
In a new blog post Google walked people through using it and how it works, causing Chainlink prices to spike some 75% in the process, reaching a new all-time high of $1.95.
Reaching a new all-time high is no mean feat for a cryptocurrency that also lived through the hype of late 2017. Chainlink is now one of the extremely few cryptocurrencies – potentially the only one – to have boomed and busted in late 2017, then fully recovered based on its real-world applications – plus some more speculator-driven hype.
It's well worth noting that Chainlink prices actually dropped when Chainlink went live on 30 May as people performed the "buy the rumour sell the news" maneuver.
Other coins given Google shoutouts haven't had similar reactions. The same Google blog used the following image on 6 February 2019, but that had zero impact on Dogecoin prices.
It has also frequently mentioned Ethereum, with no discernible impact on ETH prices. Indeed, the blog post that moved Chainlink so dramatically was also talking about using it as middleware with Ethereum smart contracts.
But this is clearly different.
The first most obvious reason this shoutout moved Chainlink so hard is that it's more obscure than Ethereum, Dogecoin and similar, so this did a lot for awareness.
The second reason is that Chainlink is a bit more technical and tough-to-appreciate than Dogecoin. It's tough to navigate blockchain buzzwords as a retail speculator, so just hearing Google say "yes, Chainlink works and is useful" serves as excellent shorthand for a technical stamp of approval.
The third is because, given Chainlink's objectives and how it all works, a shoutout from Google suggests that Chainlink may have an important role to play in the decentralised future.
What Chainlink's all about
Smart contracts are programs that self-execute under specified conditions. Because they're on the blockchain, these smart contracts can act autonomously based on the data they're fed. The data sources for these smart contracts are known as "oracles".
Smart contracts are typically open source and fully transparent. When you combine them with a decentralised blockchain they're theoretically the perfect agent, able to automate transactions of all kinds and perform various tasks with theoretically zero chance of failure, in a theoretically tamper-proof fashion. This is how blockchain technology lets you automate tasks that you previously couldn't.
The biggest, "theoretically", caveat is the fact that smart contracts are only as good as the oracles. So if someone deliberately gives an oracle bad information, the smart contract might start acting unpredictably and incorrectly, which defeats the purpose of a smart contract.
This is commonly known as "the oracle problem".
Chainlink is designed to solve the oracle problem. It's basically another decentralised blockchain that sits between the oracles (the data sources) and the smart contracts (which are on blockchains like Ethereum).
The nodes of the Chainlink blockchain are like smart contracts in their own right. They're programmed to perform independent, decentralised computations of data to verify the correctness of the data, before feeding it to the other smart contracts. In addition to that, Chainlink as middleware lets you do other exceptionally useful things, such as ensuring the privacy of data being sent between smart contracts and blockchains.
The question, then, is how do you prevent people from tampering with the data being fed to Chainlink smart contracts?
The answer is basically through sheer organisational skills. Chainlink will pull data from a wide range of sources, and will be offering the most useful premade data for smart contracts to read. It will essentially be a repository of high-quality, reliable, appropriately decentralised information for smart contracts to use.
As Google said, "by allowing reference to on-chain data that is out of scope, we improve the operational efficiency of the smart contract platform".
It might just be a simple mention in a tutorial-esque blog post, but it's also an indication that Google sees Chainlink as a valuable and lasting information source going forwards.
Disclosure: The author holds BNB, ZIL at the time of writing.