What is Chainlink?

Chainlink is a decentralized oracle network launched in June 2017, designed to connect smart contracts on various blockchain platforms with real-world data and services outside their native blockchains (off-chain). Developed by SmartContract Chainlink Ltd., with Sergey Nazarov as one of the co-founders, Chainlink aims to solve a fundamental problem in the blockchain ecosystem: the inability of smart contracts to access external data directly. Its native token, LINK, is used to pay for services on the network, including data queries, off-chain computation, and guarantees of data integrity.

How is Chainlink useful?

Chainlink's primary utility is its role as a bridge between on-chain and off-chain environments. It enables smart contracts to securely interact with external data feeds, APIs, and traditional bank payment systems, allowing them to respond to real-world events and execute agreements automatically with high reliability. This functionality is crucial for the development of complex, real-world applications on blockchain, such as those in finance, insurance, and supply chain management. By providing reliable, tamper-proof data sources to smart contracts, Chainlink facilitates the creation of more functional, automated, and useful decentralized applications (DApps).

How does Chainlink work?

Chainlink operates through a network of nodes that provide external data to smart contracts. These nodes are incentivized to perform this work accurately and reliably through LINK tokens. The process involves three main steps:

• Data Request: A smart contract requests data from the Chainlink network.

• Data Provision: Chainlink oracles (nodes) retrieve the required data from external sources and feed it into the smart contract.

• Computation: The data is processed and verified by multiple oracles to ensure its accuracy before being delivered to the smart contract, which then executes based on this data.

The Chainlink network uses a reputation system to assess the reliability of its oracles and ensure that only high-quality data is provided to smart contracts. This system helps to secure the network against tampering and ensure the integrity of the data supplied.

Chainlink milestones

• Widespread Adoption: Chainlink has seen broad adoption across a variety of blockchain projects and DApps, thanks to its ability to provide reliable, real-world data to smart contracts on any blockchain.

• Partnerships and Integrations: Chainlink has formed partnerships with numerous blockchain projects, data providers, and enterprises, including collaborations with Google Cloud and Oracle, to integrate external data into blockchain ecosystems.

• Continued Network Growth: The Chainlink network continues to grow, with an increasing number of oracles and data sources joining the network, expanding the range and type of data available to smart contracts.

• Chainlink 2.0: Introduction of "hybrid smart contracts" to bring off-chain data on-chain more effectively.

• Staking Implementation: New feature to enhance network security and participation.

• Expanded Data Services: Increased variety of real-world data feeds to support broader smart contract functionalities.

Chainlink's development and its role as a key enabler of smart contract functionality highlight its importance in the broader blockchain and DApp ecosystems, offering a vital service that enhances the applicability and effectiveness of blockchain technology in solving real-world problems.

Buy Chainlink (LINK) on BITmarkets.