The chainlink network is a project that seeks to solve a fundamental problem in the world of cryptos: the secure and reliable communication between data inside the blockchain with the off-chain data.
Let’s imagine that you have bet, by means of an intelligent contract, that Betis wins against Real Madrid in the Champions League Final.
The smart contract will need to know who has won the match to deliver the rewards and for that you need to connect to data outside the blockchain.
Chainlink is responsible for providing this data in a decentralized and secure manner. This way nobody will be able to alter it and say that Real Madrid won when in fact they have won Betis, in order to modify the rewards.
How did the idea come about?
We have known for years blockchains that have always operated on their own, such as Bitcoin, Ethereum, Litecoin or Ripple. This is not because they are selfish networks, but because there were not yet ways to connect these blockchains to real-world data (off-chain).
This interoperability is what Chainlink brings to the crypto world, and its purpose is to connect the blockchain with external data to improve its operation.
If you have read our article What is a blockchain oracle? you may already have a good idea of what I am talking about. Since these “oracles” are the ones that provide the external information.
Chainlink, in short, is a decentralized oracle network that solves the problem of interoperability by creating a secure and reliable solution.
How does it work?
This decentralized oracle network is made up of buyers and data providers. Buyers demand data and suppliers offer it securely. Just like buying crypto currencies in Bitnovo, but in this case, data is traded instead of crypto currencies.
Thus, buyers select the data they want and suppliers offer to provide such data. Suppliers must commit to a certain share of LINK tokens when they make an offer, which they may lose if they misbehave. When suppliers are finally selected, it is their job to bring the right answers up the chain.
Chainlink uses an oracle services reputation system to aggregate and weight the data provided. If all goes well, suppliers are paid and all parties are satisfied.
Difference between LINK and Chainlink
At this point (it may be late) but it is important to make a clarification: it is not the same Chainlink as LINK. Chainlink is the project created by the fintech company called SmartContract Chainlink Limited SEZC. LINK is the crypto-currency introduced by this same company for economic and transactional purposes.
Who invented Chainlink?
Chainlink was founded by current CEO Sergey Nazarov and current CTO Steve Ellis during 2017. For the launch it raised $32 million! in an Initial Currency Offering (ICO), which resulted in the creation of 1 billion LINK tokens.
In November 2018, Chainlink acquired TownCrier, an authenticated data source for smart contracts (as we have learned oracles are defined).
In May 2019, Chainlink launches on the Ethereum main network and experiences growth that makes it one of the crypts that increased its price the most during that year.
Chainlink is a very interesting project that has demonstrated phenomenal progress and acceptance by the community. If you are still not convinced by the idea of buying LINK, remember that in Bitnovo you can still find dozens of other crypto currencies in which to invest.
From this blog we will continue writing about more interesting projects in the crypt world. If you have any suggestion, we are waiting for your comment in our Telegram group.
Thank you very much for having come this far.
