Chainlink is the most adopted oracle network in the blockchain and cryptocurrency market. The network has been growing thanks to the expansion of the blockchain market as a whole, mostly powered by Decentralized Finance (DeFi) and Decentralized Applications (dApps).
What is a Blockchain Oracle? #
Before being able to understand what Chainlink is, we need to understand what a blockchain oracle is.
Blockchain oracles are those parties that provide information to blockchain networks and protocols running on top of them. The information gathered by Blockchain Oracles can be provided by sources from outside a blockchain network or it can be found inside the same blockchain.
Let’s keep it simple. Imagine there is a company that is managing a network of speed radars in a city. This company wants to use blockchain technology because it allows keeping track of all the information received without the risk of having modified or false information.
Every single time that a car surpasses the speed limit, the information provided by the radar should be registered in the blockchain network. This is where Blockchain Oracles will be connected to these radars and send the information to the blockchain network.
After the information is registered on the blockchain, by using smart contracts, it is possible to send real-time reports to government institutions regarding the number of cars surpassing the limits speeds, the place where most cars tend to go faster and more.
This is just one of the use cases of blockchain oracles. But it is certainly possible to use them for many other things. For example, the DeFi market requires a lot of price data from different sources. Blockchain oracles are working to provide this accurate and valuable data to DeFi protocols.
Long story short, oracles provide valuable information to smart contracts in order for them to be executed.
What is Chainlink? #
Chainlink is a decentralized oracle network that is providing solutions to blockchain networks all over the world. Developers, companies and projects can start building a wide range of smart contracts and use the information provided and collected by the oracle network.
Chainlink works with a reliable and tamper-proof network that is totally decentralized. Trusted nodes collect premium data to provide highly accurate and available data or APIs to smart contracts in different blockchain networks.
This blockchain project can be connected to any API in just a few simple steps. The team behind Chainlink wanted to make it simple to be implemented and to start providing valuable information to blockchain protocols and smart contracts. Moreover, they implemented a source-code that has been verified and tested. The main goal is to offer the best performance for the oracle network and help individuals and node operators.
Furthermore, Chainlink is also offering “battle-hardened” and “time-tested” oracle solutions that allow the crypto market to secure billions of dollars in value.
After operating for several years, Chainlink is now among the most valuable cryptocurrency projects in the market. In the future, new functionalities and use cases could be added to this project and help the entire crypto industry to continue expanding with innovative solutions.
