What is ChainLink? Back in 2019, ChainLink had its peak racking up a 500% return. It outperformed all cryptocurrencies and even Bitcoin, ranking it as the highest ROI for 2019. ChainLink is a blockchain oracle platform that provides real-world data, applications and API. The platform hopes to create a bridge between payment services such as PayPal and Visa, banks like HSBC and Wells Fargo, and blockchain systems like Bitcoin and Ethereum. The ChainLink platform was created back in 2015, and is currently still The general-purpose of the platform is to serve as a framework for building decentralized oracle networks allowing smart contracts to have access to secure and reliable data outputs and inputs.
ChainLink’s design is to create an access point for multiple inputs and outputs. These inputs and outputs include payment services, banks, and blockchain systems as mentioned before.
Moreover, the technology will be able to put in a variety of data not just limited to payment services and banks. The technology can also incorporate data such as; Last Year’s NBA Champion and etc. It acts as a communication device for data that does not exist in the blockchain.
Smart Contracts are an essential part of decentralized platforms; they are applications that help execute commands on the blockchain. You may have heard Smart Contracts utilized on the widely popular platform, Ethereum. Ethereum is one of the first platforms to utilize Smart Contract technology. With Smart Contracts, users are able to execute highly-trusted, fast, reliable, and cheap agreements.
Now that you know all about Smart Contracts, we can talk a little more in depth about how it all works out together. In order for Smart Contracts to create agreements beyond the data that is found on the blockchain, it requires off-chain data in an on-chain format.
One of the major limitations of the blockchain smart contracts is its connection to outside information sources. However, this platform is able to solve that with their oracles software. This
Traditional oracle services are centralized which has a single point of failure and collides directly with the idea of decentralization as well. Whereas, Chain Link’s oracle is an open network of nodes that will allow anyone to run their own network.
So how the system works is basically purchasers select the data that they want and then providers will then bid to provide the data. In order to ensure that they select data, the providers must stake a portion of LINK tokens when they are making the bid. They can take this bid away if they attempt to hack or do something that violates the system. Once they select providers, their task is to bring on the correct answers onto the chain. Note that Chain Link providers will receive LINK for providing off-chain data to smart contracts, allowing the system to function smoothly.
LINK is ChianLink’s native cryptocurrency. The token is an ERC-20 token that had its ICO back in 2017. The LINK token has the standard ERC20 fundamentals but also has ERC223’s “transfer and call” functionality. This allows tokens to be received and processed by contracts in a single transaction. The ChainLink network uses the LINK token to pay the ChainLink node operators for retrieving data from the off-chains. So they can format the data into blockchain readable versions. LINK tokens are important to node operators as they use it to set the prices for retrieving data. Moreover, LINK is also used to stake in the network which can be helpful to show how committed they are to the network.
Instead of earning LINK tokens as a provider, you can also purchase LINK tokens on crypto exchanges (Binance, FTX, and Huobi) and OTCs like Genesis Block.
ChainLink is definitely a revolutionary technology that well utilizes their cutting-edge technology to better connect existing industries with blockchain technology. It will be interesting to see how the platform plays out in the next few years.
Thanks for reading our article What is ChainLink? If you found this helpful, don’t forget to subscribe to our newsletter and checkout some of our other content below: