Chainlink and the Oracle network

Chainlink (LINK) is a decentralised oracle service currently operating on the Ethereum network. Since its ICO launch in September 2017, Chainlink has made tremendous progress resulting in an enterprise value of billions of dollars. The reason for Chainlinks growth lies behind the technology they use, namely their oracles. In this article, we explain what oracles are, how they work and why they have the potential to have a great future in and outside of the crypto world.

Smart contracts

Before we start explaining why Chainlink is a gamechanger in the crypto world, we should first explain what smart contracts are. Smart contracts are one of the greatest inventions in crypto space to date. They were created by the founder of Ethereum, Vitalik Buterin. A smart contract is a computer program or transaction protocol which is meant to execute, control and document events and actions according to the agreed terms of a contract. This basically means that two parties can easily conclude a contract without the involvement of a third party.

However, most smart contracts are isolated on their own blockchain, which means they have no access to external data. This makes it impossible for smart contracts to respond to live events. Take a football match as an example. When a goal is scored, the odds on a betting website change, but because smart contracts cannot access the data of the football match, the odds are not updated on the smart contract.

Chainlinks oracles

Chainlink solves this problem through their data decentralized providers called oracles. These oracles are connected to Ethereum's network and provide external data, such as temperature and weather, which triggers the execution of smart contracts when predefined conditions are met.

This live data comes from multiple sources around the world, ensuring reliability. To be allowed to join Chainlinks network, providers need to stake LINK tokens. Staking is keeping the coin on a wallet for a certain period of time and receiving interest. When providers send accurate information they are rewarded with extra LINK, but when they give wrong information they are punished. Because of this, the providers have to work together for positive and reliable information, what keeps the network safe.

Introducing #Chainlink 2.0: Next Steps in the Evolution of Decentralized Oracle Networks, a 136-page second whitepaper, which describes how Hybrid Smart Contracts in #DeFi and beyond will reach new heights by utilizing Decentralized Oracle Networks. https://t.co/OxVkiY7jq8

— Chainlink - Official Channel (@chainlink) April 15, 2021

Chainlink is thinking beyond crypto

As many crypto companies have gone live with their smart contracts since 2020, Chainlink has grown tremendously in popularity. This has already resulted in more than 100 partnerships with large and small crypto companies, including Litecoin, Ripple and Cardano.

Outside the crypto world, Chainlink also has the ambition to make their mark in the business world. Chainlink maintains good business relationships with companies such as Swift, Google Cloud and Intel. Besides important partners, Chainlink wants to focus in the future on providing data solutions to enterprises and corporates, for example to help protect important data.

Final thoughts

Thanks to Chainlink oracles, many smart contracts are now usable. Because of this, Chainlink is continuously increasing in popularity. Chainlink has also the ambition to become a big player in the corporate world. If Chainlink can achieve their goals, it will be thanks to her oracles that they have achieved these accomplishments.