Chainlink
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Cryptocurrencies have been making waves across the world in the 21st century, and one such cryptocurrency is the Chainlink coin (LINK). Chainlink is not just the name of a digital currency, but also the name of the decentralized oracle network on which this coin is the native token.
The Chainlink network aims to bridge the gap between smart contracts and real-world data. In this article, we delve into the world of Chainlink, its advantages, potential drawbacks, and its future in the cryptocurrency market.
Understanding Chainlink
Chainlink is a decentralized blockchain oracle network built on Ethereum and relying on open-source technology infrastructure. Chainlink permits other blockchains to connect to off-chain data in a secure way.
When Chainlink was launched by Sergey Nazarov and Steve Ellis in 2017, it got a lot of attention for its innovative approach to providing data to smart contracts. The developers aim was to create a network where information from off-chain data sources could be used within the blockchain, thus enhancing the utility and applicability of smart contracts. The network nodes of Chainlink fetch, validate, and deliver data from multiple sources to execute smart contracts.
To fully understand Chainlink, it’s essential to comprehend the concept of an ‘oracle’ in the blockchain world. Simply put, an oracle provides external data to blockchains that cannot access it independently. Chainlink is a decentralized oracle network which gives it an edge over centralized oracles, as it eliminates a single point of failure.’
One of the main goals of Chainlink is to facilitate the transfer of tamper-proof data from off-chain sources to on-chain smart contracts. In addition to this, Chainlink can also be utlized in combination with various off-chain computation resources.
Chainlink is currently being used together with both verifiable random function (VRF) and data feeds, and has for instance proven to be useful for putting election data on-chain. The VRF can be utilized for random number generation, which in turn is useful for tamper-resilient decentralized gambling.
Short facts about Chainlink
Original authors: Sergey Nazarov, Steve Ellis, Dr. Ari Juels
White paper: Chain.link/whitepaper
Code repository: Github.com/smartcontractkit/chainlink
Written in: Solidity, Go
Operating system: Blockchain-agnostic
Source model: Open source
License: MIT License
Native token: Chainlink (LINK)
Supply limit for native token: 1 billion LINK
Website: Chainlinklabs.com
Advantages of Chainlink
One of the most significant advantages of Chainlink is its ability to extend the functionality of blockchains. By providing real-world data to smart contracts, Chainlink allows these contracts to interact with external systems. For instance, a smart contract could be created to make a payment when a certain real-world event occurs, like the price of a commodity reaching a particular threshold.
Chainlink is decentralized, which reduces the risk of data manipulation and increases reliability. Moreover, Chainlink can work with any blockchain, making it highly versatile and adaptable.
Drawbacks of Chainlink
Like any innovation, Chainlink has its set of potential drawbacks. One of these is the complexity of the system. The integration of off-chain data into a blockchain environment is a complex process, making it challenging for average users to understand and utilize fully.
Additionally, as Chainlink uses LINK tokens to pay for data services, fluctuations in the value of these tokens could impact the cost of operating within the Chainlink ecosystem.
LINK – The Native Token of the Chainlink Network
Chainlink (LINK) is the native token of the Chainlink network, and node operators are given LINK as compensation.
LINK tokens act as data payloads, and will can provide smart contracts with data from off-chain sources. The smart contracts will then act in response to the data.
LINK is an ERC677 token, and extension of ERC-20 (Ethereum Request-for-Comments #20). LINK can be stored in any ERC-20 wallet, as the ERC677 token has the functionalities of an ERC-20 token.
All LINK tokens have been pre-mined, but most of them are still withheld by the issuer and are thus not available on the open market. A small amount of LINK was offered for sale to retail investors in the LINK initial coin offering, which proved controversial.
As with many other cryptocurrencies, LINK is not only used for transactions and to utilize the network, but has attracted the attention of investors and speculative traders, and LINK trading is possible at many different cryptocurrency exchanges. LINK has made a noticeable impact on the cryptocurrency market, and at the time of writing, it is one of the top 20 cryptocurrencies by market capitalization. The network´s innovative approach to integrating external data into blockchains has received considerable attention, which has helped boost market interest in LINK, and so has Chainlink’s partnerships with well-known companies such as Google Cloud.
History
2017: Chainlink was created by Sergey Nazarov, Steve Ellis, and Cornell University professor Ari Juels.
2018: Town Crier was integrated into Chainlink. Town Crier is a trusted execution environment-based blockchain oracle. It connects the Ethereum blockchain to web sources that use HTTPS.
2019: The Chainlink trademark was registered in the Cayman Islands. The corporation Smartcontract Chainlin Sezc, Ltd was established. The Chainlink network was launched.
2020: The DECO protocol was integrated into Chainlink. The protocol uses zero-knowledge proofs where users prove that information given to a blockchain oracle is true without revealing sensitive information. DECO is a Cornell University project for which Jules is one of the co-creators.
2021: Chainlink published a second whitepaper: Chainlink 2.0 – Next Steps in the Evolution of Decentralized Oracle Networks.
Future of Chainlink
Looking to the future, Chainlink holds great potential. Its capability to strengthen and widen the applicability of smart contracts could revolutionize various industries, from finance to supply chain management. The growing interest in decentralized finance (DeFi) also bodes well for Chainlink as it can provide the necessary off-chain data to power DeFi applications.
In conclusion, Chainlink represents an innovative step forward in the realm of blockchain technology. While it does come with challenges, its potential to bridge the gap between blockchain and real-world data is undeniably game-changing. As we continue to move towards a more digital-centric world, technologies like Chainlink will likely play a pivotal role in shaping the future of finance, and indeed, our everyday lives.