In this BeInCrypto news episode, host Jessica Walker explains Chainlink. Since blockchains are designed to interact in a closed system, they can be isolated. To facilitate interconnection, Chainlink is an Oracle service that securely connects blockchains and helps decentralized systems.

How does Chainlink work?

Chain link provides blockchains with reliable access to off-chain and cross-chain data. What does this mean? When linking the information, the input cannot come from a single source because it would depend on a centralized data source. This goes against the very nature of the blockchain.

Chainlink uses API (API stands for Application Programming Interface) to connect to anything. Extracting off-chain data to power smart contract platforms. se data sources could include banking systems, payment processors, and even private weather or satellite information.

apps will request information from Chainlink and create an information request. This request is then provided by the oracles. se oracles connect to the Chainlink network and compete to be the most trusted source of information.

Something that makes Chainlink a very powerful tool are these oracle contracts. se provide financial incentives to those who manage them and the responsibility to be accurate and reliable. This is because the reputation of each oracle is stored on a public blockchain. This potentially attracts high-quality node operators to the network and their incentives will motivate them to build a reputation on the Chainlink network.

Chainlink Team

Chainlink was founded by Sergey Nazarov, one of the pioneers of smart contracts and external middleware connectivity. Sergey launched the Chainlink token at an ICO in 2017 and it took another 2 years to launch the mainnet in 2019. During that time, the team managed to stay ahead of the competition. Of the Oracle services available at the moment, Chainlink is 7 times larger than its direct competitor, UMA.

Chain link potential

While blockchain technology is great at providing a secure, decentralized ledger for digital transactions, it’s not that great at taking inputs for things that happen outside of the blockchain. potential of Chainlink is to allow access to data through a smart contract in the most secure, unauthorized and tamper-proof way.

When it comes to creating value for your $ LINK token, the protocol has some cool features. With the total supply of 1 billion tokens, data seekers pay oracles for data retrieval on LINK. Meanwhile, the data oracles we talked about earlier should put LINK as a guarantee to ensure uptime and data reliability.

oracles want to participate and use LINK, while data seekers who want to use Oracle services use LINK, creating a natural demand for the token. This also creates a deflationary effect. Since LINK oracles have to lock LINK tokens, this reduces the available supply for a time. This causes the price to rise as demand increases.

Whats Next?

Chainlink appears to be an important technology as the cryptocurrency industry continues to evolve. Having an oracle like Chainlink in place will be key to the long-term stability and viability of the cryptocurrency in general.

Many popular protocols use or will need the services offered by Chainlink. As the industry grows, anything that has smart contract functionality is an opportunity for Chainlink. Think Polkadot, Solana, Binance Smart Chain, Cardano, and even Ethereum-based protocols.

industries it serves are also extensive. Chainlink has many use cases, such as providing data feed to smart contracts. It also creates a communication standard between protocols and allows them to integrate with each other. Chainlink provides public data sets and pricing sources that any service can connect to, regardless of whether the data is leaving the chain. It can also play an important role in the gaming and betting industry as it can safely randomize and correct data.

Disclaimer

All information on our website is published in good faith and for general information purposes only. Any action taken by the reader on the information found on our website is strictly at your own risk.

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