THE cryptocurrency Chainlink has been steadily rising in value in the last few days.
But what exactly is Chainlink and will its price go up? We explain what you need to know.
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But it comes after cryptocurrencies across the board plummeted last month.
This volatility highlights the risk of investing in cryptocurrencies, which like stocks and shares, is a very precarious business.
Investing in cryptocurrencies is not a guaranteed way to make money, so make sure you know the risks and can afford to lose the cash.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
If you do invest in cryptocurrencies, your cash can go down as well as up in the blink of an eye – you can lose all the money you put in.
So while Chainlink and other cryptocurrencies have been rising, they can easily tumble again – as we have seen.
Plus, some products and cryptocurrency services are very complex to understand. You should only invest in things you understand.
There’s also no guarantee that you’ll be able to convert cryptoassests back into cash, as it may depend on the demand and supply in the existing market.
Fees and charges may be higher than with regulated investment products as well.
We know that crypto firms may also overstate the returns or understate the risks. Be careful.
What is Chainlink?
Chainlink is a cryptocurrency that was created in 2014 but launched on the market in 2017.
It was founded by Sergey Nazarov, a 32-year-old entrepreneur, who had previously set up tech platform Smartcontract.com.
Chainlink is also a ledger technology – using “blockchain”, like Bitcoin – that companies are using to build new programmes.
A blockchain is where encrypted data can be transferred securely, making it nearly impossible to duplicate or counterfeit.
How to spot crypto scams
CRYPTO scams are popping up all over the internet. We explain how to spot them.
- Promises of a high or guaranteed return – Does the offer look realistic? Scammers often attract money by making fake promises.
- Heavy marketing and promotional offers – If they are using marketing tricks to con customers you should beware.
- Unamed or non-existent team members – Just like any business you should be easily able to find out who is running it.
- Check the whitepaper – Every crypto firm should have a white paper. This should explain how it plans to grow and make money. If this doesn’t make sense, then it could be because the founders are trying to confuse you.
- Do your research – Check reviews online and Reddit threads to see what other people think.
This ledger is the foundation of any cryptocurrency transaction.
The cryptocurrency allows people to trade currency or assets digitally outside of any government or bank.
But Chainlink also aims create a “link” between blockchain and real world applications to open up possibilities for the technology to be used more widely.
Will Chainlink go up in value?
Chainlink is currently trading at $31.77 at the time of writing on Thursday afternoon, according to Coindesk.
That’s up 2% in the last 24 hours and around 32% since Sunday, when it was trading at $23.71.
But while Chainlink has been surging, like other cryptocurrencies it can easily tumble again and it’s difficult to predict when.
Chainlink hit an all time high of $51.24 on May 10, but the cryptocurrency crashed later in the month.
It’s still trading at around 40% less than that record high.
Susannah Streeter, a senior analyst at Hargreaves Lansdown said: “Chainlink’s price has been fuelled by speculation by many traders trying to sniff out short term gains rather than belief in its fundamental long term use case.
She added: “With such volatility, competition in the market and uncertainty surrounding nascent technology, traders should take an extremely cautious approach and only dip their toe into the market with money they can afford to gamble.’’
Matt McKenna, spokesman at Finder also said: “Chainlink’s price has been following the wider crypto market, which saw a huge sell off during May.
“Over the past month it is down roughly 20%, but has been showing signs of recovery in the last few days.
“As with all cryptocurrencies, people should be prepared for extreme volatility, and the very real risk of losing money.”
Brits are being warned they risk losing all of their money if they invest in bitcoin and other cryptocurrencies.
It comes after a ban on some crypto-related investment products.
From Dogecoin and Litecoin to Bitcoin – here are the different cryptocurrencies explained.