Chainlink now stands as one of the most well-known cryptocurrencies in the industry today.
But what exactly is Chainlink?
Is it just a cryptocurrency or something more?
Logo Credit: Bxalber/Wikimedia Commons
The Origins of Chainlink
The story of Chainlink began with Sergey Nazarov and Steve Ellis.
The two also worked together in launching SmartContract, a company similar to Chainlink, in 2014.
In fact, it’s this company that eventually gave way to Chainlink.
Chainlink is a product of the SmartContract company.
Juels, Ellis, and Nazarov proposed a “decentralized oracle connection” within theChainlink whitepaper.
In the same document, the three discussed the problem of smart contract connectivity.
Logo Credit: Bxalber/Wikimedia Commons
Blockchains, by nature, cannot access data outside their web connection on their own.
So, an evident gap sits between on- and off-chain platforms.
Chainlink’s goal is to tackle and overcome this challenge.
So, what does Chainlink do?
How Chainlink Works
As previously mentioned,Chainlink is a decentralized oracle web connection.
It is built on the Ethereum internet, a popular choice for DApp, NFT, and DAO development.
An oracle can connect blockchains to real-world data resources from outside the data pipe.
On top of this, oracles can translate data into a form blockchains and smart contracts can understand.
In a way, oracles are quite evolutionary.
They break the barriers restricting smart contract capability by giving them access to beneficial external data.
These are also known as hybrid smart contracts due to the combination ofon-chain and off-chainresources.
Without oracles, smart contracts would be extremely limited.
Other examples of blockchain oracles include Band Protocol, Orai, and Gravity.
These all exist on theEthereumorSolanablockchains.
Then, the matching contract provides the Chainlink nodes with the data request and chooses which nodes to use.
Chainlink’s developers claim it is unique among oracles as it can also function as a decentralized data pipe.
A decentralized connection works by spreading the connection’s data and power across multiple connection points or nodes.
Keeping things spread out in this manner mitigates the chance of attacks and crashes.
Because Chainlink is a decentralized internet, it is very secure.
Oracles and smart contracts can, together, be hugely useful across a range of different industries.
Today, Chainlink uses over one billion data points and supports over a thousand projects.
Another key element of the Chainlink ecosystem is LINK.
So, let’s get into what this is and why it’s important.
Chainlink’s native token, LINK, was also launched in 2017 along with the web connection itself.
But what is the purpose of LINK?
LINK is used to fuel the growth of Chainlink overall.
As with many crypto projects, Chainlink began with anICO (initial coin offering).
This is a process used to raise funds for a new project through the sale of tokens.
LINK has a total supply of one billion tokens, with almost half a billion already in circulation.
It is unlike many other cryptocurrencies in that it cannot be mined.
LINK can also be used within the Chainlink internet to pay node operators.
It took a while for Chainlink’s native LINK token to experience a significant increase in price.
It took another year for LINK’s price to hit double digits.
As with most cryptocurrencies, LINK has seen its fair share ofdrastic price fluctuationssince it hit the market.
It also has applications in numerous industries, whether gaming, crypto, or otherwise.