Sirwin
Sirwin

E&S Token Review: ChainLink


Hello everybody and welcome back in this third token review of my new “Easy & Short Cryptocurrencies Made Accessible” area. Today I will introduce ChainLink (LINK) to you.

From its arrival in the cryptocurrency scene, Chainlink has made waves in crypto markets attracting the attention of DeFi companies, crypto investors, blockchains, and big tech and financial players such as Google.

Chainlink’s technology claims to solve one of the biggest challenges for the practical implementation of smart contracts, connecting blockchains to real world data, such as price feeds or delivery confirmations, through so-called oracles blockchain connectivity.

To understand the benefits of this decentralized oracle network and how it works, you need to understand some fundamental, interconnected concepts.

First of all: Smart Contracts.

Smart Contract is nothing more than a tamper-proof, deterministic program written on the Blockchain, executed automatically when all the conditions of the contract are satisfied. They are the future of all digital and many non-digital agreements, they are resistant to tampering, irreversible and unstoppable and in principle almost always very effective.

For smart contracts to craft agreements beyond those that are related to data found on the blockchain, they require off-chain data in an on-chain format. The difficulty in connecting outside information sources to blockchain smart contracts in a language that they both understand is one of the main limitations in how widely smart contracts can be used.

ChainLink

Image source: www.bitpanda.com

For this reason we have oracles.

Oracles are like "agents", links between the blockchain and the real world, which have the only goal of passing information to smart contracts, at the exact moment in which some conditions of the real world occur. These agents are used to transmit data but are in effect centralized "entities" and therefore to be considered possible points of failure (due to tampering and more).

But we will delve deeper into this topic next week, with the second dedicated post on Chainlink.

So be sure to follow me and you will not miss the article!

ChainLink is a network of nodes, which obtain data directly from the APIs (Application Programming Interfaces) of applications. The security of the data provided is guaranteed because Smart Contracts can choose which and how many nodes they can point to. Every node has a reputation, which serves to ensure that they are working properly.

ChainLink

Image source: https://link.smartcontract.com/whitepaper

Then we have the ChainLink token.

The token acts as a guarantee when nodes transmit data. The disincentive to provide fraudulent or misleading data lies in the fact that if the data is wrong, the guarantee (of the token) is lost. This fact, together with the reputation system, ensures that the nodes act correctly and that is why this fact makes ChainLink a decentralized, safe and reliable oracle.

With its rapid growth, DeFi is definitely one of the top priorities for Chainlink at the moment.

I am sure that ChainLink has made you very curious about its potential and more technical characteristics of operation.

For this reason I invite you for another in-depth appointment on Chainlink next Sunday with the second article dedicated to this excellent project!

How do you rate this article?

86


MikeZillo
MikeZillo Verified Member

Daily Trader, Mining Farm Project Manager, Blockchain consultant, Cryptocurrency evangelist. You can find more videos here https://www.youtube.com/channel/UCvyXx6I1C__zmLAYUXNZwQQ? Telegram: @mikezillo


Easy&Short. Cryptocurrencies made accessible
Easy&Short. Cryptocurrencies made accessible

In this section, we are going to create two article per each cryptocurrency/token. The first one will be technical, with a simplification of the Whitepaper and the second one will be about particulars of the coin. For example staking yields, particular functions and so on! I am sure you will like this very much!

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