Chainlink Explained: Everything You Should Know About LINK
One of the many things crypto brings with it is smart contracts. In all honesty, smart contracts are pretty awesome. In order to work though, smart contracts need to be able to access information on a blockchain. But how can smart contracts access information from the real world – information that is not usually accessible? This is where Chainlink (LINK) and its oracles join the party.
You might be asking, “What are smart contracts,” “What the heck is Chainlink?”, “How does it work?”, “What are oracles?”. Put simply, ChainLink is a truly unique blockchain program that aims to provide sophisticated solutions for traditional businesses. It works by connecting blockchain’s ecosystem to external applications. Read on to learn more about ChainLink and why some refer to it as the ‘internet of blockchains.’
What are Smart Contracts?
Smart contracts are pieces of software or code that execute within a blockchain in a decentralized manner; they are essentially predefined agreements on the blockchain. Smart contracts assess information and automatically execute only if the predetermined conditions are met.
For instance, if a certain amount of a cryptocurrency is deposited into a smart contract by a specific date, the payment will be made to a fundraiser. Once the cryptocurrency is deposited, the payment is automatically made to the fundraiser’s account. If not, the money is sent back to the donors.
Smart contracts exist on the blockchain. For this reason, they are immutable and verifiable. Therefore, parties using them are guaranteed that the smart contracts will not execute unless the set conditions are met.
However, because of how smart contracts are designed, they can only handle data on the blockchain. This means that their ability to provide decentralized and tamper-proof applications cannot be tapped outside the blockchain.
This is where oracles come in handy.
What is An Oracle?
An oracle is a software that acts as an intermediary between the real world and the blockchain by translating real-world data to smart contracts and back again. In layman’s terms, an oracle is simply a bridge connecting the natural world to the blockchain. An oracle acts as an intermediary between the real world and the blockchain by translating real-world data to smart contracts and back again.
But due to the fact that oracles are centralized, they create a weak link causing the same problem that a blockchain-based smart contract aims to solve. There is no way to know if your data is accurate if the oracle is faulty. Moreover, there is no point in using a secure, trustworthy smart contract on a blockchain network if the oracle that feeds it data is compromised.
The solution to this problem is Chainlink.
Chainlink is a decentralized oracle network that uses oracles to provide data from off-chain sources to on-chain smart contracts. When used with secure hardware, Chainlink eradicates any reliability issues that might occur when only one centralized source is used.
Chainlink was officially launched in June 2017. Founded by the company SmartContract, Chainlink seeks to create a secure blockchain for all involved.
Features of Chainlink
· Has no single point of failure
So, Where Do LINK Tokens fit In?
The servers and people who are actively confirming the transactions for ChainLink are called node operators. LINK is a cryptocurrency used to pay these people, which incentivizes them to complete the network tasks. These people are called node operators.
Node operators are also required to stake their LINK in the ChainLink systems as a sign of their commitment to the network. The Chainlink reputation contract considers the size of the node’s stake when matching nodes with requests for data. Nodes with more significant stakes are more likely to be chosen to fulfill requests because they are deemed more committed to the system and, therefore, less likely to cheat.
LINK is an Ethereum based ERC20 token, which also has ERC223’s transfer and call functionalities. This means that LINK can be processed and received by smart contracts in a single transaction.
Where to buy Chainlink?
To buy LINK, you can either earn it as a provider or buy it using other cryptocurrencies or fiat money. In the US, the primary way to buy Chainlink (LINK) is Coinbase and Gemini. Both exchanges introduced LINK in 2020, which has seen LINK prices soar with US investors. Once you buy LINK, you can use any Ethereum compatible wallet such as Ledger Nano S and My Ether Wallet.
For more information on ChainLink, check out the “Crypto News” section to follow updated ChainLink news and ChainLink price updates. You can also sign up for the selection of on-demand courses for investing in cryptocurrencies!