This week, many investors have asked Google what the heck LINK is. That part is easy. LINK is the ticker for the Chainlink crypto token. This is an Ethereum-based token that helps power Chainlink’s decentralized Oracle network.

To clarify, oracles exist to connect blockchains to external systems. This helps blockchain technology work in real-world applications. They allow smart contracts to be executed based on information from verified applications beyond the blockchain.

To explain this a little further, the Chainlink network allows smart contracts on the Ethereum blockchain to securely connect to external payment systems and application programming interfaces (among other things). Networks like this play an invaluable role in driving the utility of cryptocurrency and blockchain technology. And Chainlink, in particular, has become increasingly popular in the decentralized finance (DeFi) community.

The co-founder of the popular decentralized exchange Trader Joe noted that commitment to security is the reason why he chose Chainlink as his oracle of choice. The DODO decentralized exchange also uses the Chainlink crypto-powered oracle. But these are just a couple of apps that use it.

The Chainlink network has also been used in derivatives trading mechanisms, money markets, and even to streamline the staking process. So obviously Chainlink use cases are plentiful. But does that make Chainlink crypto a good investment? That part is a little more complicated.

Illustration of a Chainlink crypto token.

Should You Buy Chainlink Crypto?

Here at Investment U, we have been fans of Chainlink crypto for some time. We have included it in previous lists of cheap cryptocurrencies to buy. And we have noted it as one of the most popular altcoins last year. But if you missed them, you’re probably here because you’re one of the millions of Robinhood users who received a message like this:

Screenshot of the message that Robinhood sent to its users.

Look familiar? If so, you’re probably wondering if you should pick up some chips. Or maybe you’ve already seized the opportunity and are wondering if you did the right thing. Well, we are here to help.

If you saw that morning message from Robinhood and jumped at the chance to buy Chainlink crypto right away, chances are you saw some quick ups and downs in your investment. But don’t worry, this is quite normal.

When an exchange adds a new crypto token to its offering list, that token often sees a huge spike in interest. That pushed the price higher (naturally). And those who already had it sometimes sell it after the rapid increase in price. This is usually only done by very active traders or those who use crypto bots with their wallets. However, either way, it can be daunting. But keep your chin up. There is more to this story than just some short-term losses.

In fact, if you are interested in this long-term investment, there is an excellent case for including the Chainlink cryptocurrency in your portfolio. But we will also include a couple of caveats.

Isn’t the crypto craze over?

Yes. Once again, cryptocurrencies have fallen out of favor with many retail investors. We are in what is colloquially known as crypto winter. Prices of many major crypto assets are trading at 70% or less of their all-time highs. And Chainlink crypto is no exception. It peaked at $52.88 last year… before losing close to 90% of its value. So the good news is that you are not buying Chainlink cryptocurrencies at a high level at the moment.

But that is only part of the cycle. We veterans who have been keeping an eye on cryptocurrencies for a while can remember when Bitcoin crashed in 2011. It lost 40% of its value in what seemed like the blink of an eye. It fell as low as $0.67 per coin, after recently hitting the $1.06 mark.

Then, of course, there was a crazy bull run in 2017. A single Bitcoin went from being worth $900 all the way up to $20,000… Before it crashed in early 2018. And last year we saw the same thing happen again.

If you could have bought the dip in Bitcoin at any of those times, would you have? Sure we now have the gift of hindsight, but we are in the midst of a similar phenomenon. Crypto is down now. But it is far from out. This is why we believe that now is an excellent time to buy Chainlink cryptocurrencies. It is sold at a discount. And because it helps power one of the most powerful and popular oracles out there, it’s safe to say it’s not going away any time soon.

About those warnings…

However, there are some notable exceptions to whether people should invest in Chainlink cryptocurrencies. For short-term traders, we don’t think it makes much sense. If you’re looking for big price increases in the coming weeks (or even months), this probably isn’t an investment for you.

Also, if you are short on cash at the moment, Chainlink crypto might not be a great store of your capital. We expect to see continued volatility in the crypto markets for a while. And that could lead to some losses. If you can’t afford losses right now, stay away.

The other caveat we’d like to mention is that Robinhood is not the ideal crypto exchange. Investors who use this brokerage do not actually own the cryptocurrencies they buy from it. Robinhood does. Those who invest in cryptocurrencies using Robinhood are simply betting that the price of the coin will rise in hopes of selling it in the future for a profit.

If it’s okay with you, do it. But if you’re really looking to buy and hold a cryptocurrency, there are a number of exchanges better suited for that. Coinbase is an exceptionally easy to navigate crypto exchange. And Binance is one of the most popular exchanges in the world. However, those are only two possibilities. A quick Google search will provide you with dozens of others if these don’t do it for you.

The Chainlink Crypto Bottom Line

If you are new to crypto and wondering if now is a good time to dive into the market, we think you could do a lot worse than Chainlink crypto. The system it helps fuel has become an invaluable resource in DeFi. And it hasn’t been trading as cheap as it is now for quite some time. Is there room for it to go down more? Of course. But in the next few years, we expect Chainlink crypto to recover and eventually hit new all-time highs. And that would equate to a gain of over 700%.

That said, nothing is certain in the world of cryptocurrencies. A new operation could emerge that dethrones Chainlink from its place as a favorite oracle network. But what it does, it does very well. And we think future use cases are more likely to add to the list of things Chainlink does well. So while it is still speculative in nature, the future of Chainlink crypto looks very promising.