Chainlink is blockchain middleware that allows smart contracts to access key features outside the chain, such as data feeds, various web APIs, and traditional bank account payments. By providing smart contracts, secure access to these key features, Chainlink lets you mimic real-world agreements that require external proof of performance and need to make payments on widely available payment methods, such as bank payments.

Chainlink - Solving the Oracle Problem $LINK

Chainlink aims to create an off-chain settlement mechanism where traditional institutions such as banks can communicate with blockchains as well as open a protocol between chains.

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Smart contracts are poised to revolutionize many industries, replacing the need for traditional legal agreements and centrally automated digital agreements. Performance verification and execution depend on manual actions by one of the contracting parties or an automated system that programmatically retrieves and updates the relevant changes. Unfortunately, because of their underlying consensus protocols, block chains on which smart contracts are executed cannot support native communication with external systems.

Today, the solution to this problem is the introduction of a new feature called oracle that provides connectivity to the outside world. Existing oracles are centralized services. Any smart contract that uses these services has a single point of failure, making it no safer than a traditional, centralized digital contract.

In this article, we introduce ChainLink, a network of decentralized oracles. Describing the on-chain components; ChainLink provides contracts for external connectivity and software that powers network nodes. It features a simple chain contract data aggregation system and a more efficient off-chain consensus mechanism. We also describe ChainLink's reputation monitoring and security support services that help users make informed supplier selections and achieve robust service even under harsh conditions.

Finally, the properties of an ideal oracle were characterized as a guideline for the security strategy and possible future improvements were presented, including advanced feature speaker programming, modifications to the data source infrastructure and confidential execution of smart contracts; a decentralized oracle network.

Access the Chainlink Whitepaper here.