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Jul 17, 2020

11 min

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11 min

What Is Chainlink: Complete Guide

Chainlink cover

Understanding cryptocurrency and all the available types is a pretty deep process. One that stands out as being reliable is Chainlink. This cryptocurrency was developed on a platform that connects the world of smart contracts to real-world applications using blockchain technology. A smart contract is a way of facilitating the trade of money for a service or product. It uses “oracles,” a third-party service, to connect the smart contract to the real-word data.

Blockchains use math to encrypt them and keep them safe. Each blockchain is its own unit, separate from other blockchains. Trying to get information into the blockchain from the real world is tricky and makes the vulnerable. Chainlink uses a network of nodes, a type of middleman, between the real world and different blockchains to keep them safe while linking to traditional payment systems with sacrificing security. This article discusses how Chainlink uses smart contracts and cryptocurrency to provide goods and services to users.


A Brief History of Chainlink

Sergey Nazarov, the current CEO, and Steve Ellis, the current CTO, founded Chainlink in 2014. Their initial coin offering in 2017 raised $32 million and created 1 billion LINK tokens. They launched on Ethereum in May of 2019. Both Nazarov and Ellis showed interest in the cryptocurrency world back in 2011.

chainlink 2014

There are two main architectural components to Chainlink. There is the on-chain infrastructure that consists of oracle contracts deployed by Ethereum. Then there is the off-chain infrastructure, which processes the requests from users. These two architectures work in tandem to secure the cryptocurrency and protect the people who have invested in it. It has a three-step verification process for every transaction.


Chainlink Technology and Advantages

Chainlink uses its unique structure to close the vulnerability gap between decentralized applications (DApps) and the outside world. Chainlink protects the data points that can be manipulated, falsified or compromised, keeping hackers from easily getting a hold of user’s information and stealing it as well as their cryptocurrency. It also uses technology to secure hardware and provide “trusted-execution environments” for each transaction.

It is a decentralized oracle network that provides data to people who are willing to pay for it. The user identifies the data they need, and using smart contracts, Chainlink gathers the data from providers and returns it to the user securely. So where does the cryptocurrency part of it come in?

When the user picks the data they need from the system; providers bid on the request so that they are the ones that send the data. The providers have to put up LINK tokens when they bid on the request. If the provider wins the bid, they send the data onto the blockchain for the user to collect. If the provider misbehaves, such as providing incorrect or false data, they lose the LINK tokens they put up. If the oracle reputation system approves the data, the provider gets paid.

LINK tokens can be earned by being a provider or by purchasing them on cryptocurrency sites.


Perspectives and Takeaways

Chainlink continues to grow, and their main objective is to ensure security on the network through the distribution of data and the oracles that check the data. Currently, it is building its network of users and operators in the hopes of becoming more robust with networking that is valuable. They are looking for new partnerships as well as promoting cryptocurrency education, events and relationships.

Up until Chainlink launched, there was no bridge between smart contracts on blockchain systems and the real world. Businesses who refused to use blockchain technology had no access to smart chains. By bridging the gap and providing oracles that decentralize the process used to access the smart contracts, Chainlink provided businesses with a way to utilize them. It is currently the only cryptocurrency that does this.

chainlink provides


Chainlink provides:

  • A highly decentralized and secure infrastructure manned by teams of node operators that have been cleared of security issues and with strong Sybil resistance
  • High-quality data sources that are validated rigorously with multiple accuracy checks before the smart contract is triggered
  • End-to-end security for your smart contract that is easily verifiable and immutable
  • A shared data resource that is well maintained through an open-source community
  • Time-tested and proven oracle networks that provide tamper-resistance
  • Longest running DeFi oracle to secure assets
  • Smart contracts connected to real market prices expected by the users

Chainlink prices are expected to continue climbing as more cryptocurrency users start looking for better ways to obtain data and pay for them. The cryptocurrency community is driving the climb thanks to education efforts on smart contracts and how they are used.


Views On Chainlink

“We really did our due diligence and looked around, and we said well Chainlink is definitely the most established, and every time we dealt with them the level of expertise was incredible, so I feel like we are in good hands.” – Justin Moses, CTO, Synthetix

“Working with Chainlink for v3’s oracle requirements made perfect sense. More than anything, we appreciate the fact that they are equally unwilling as us to compromise on security guarantees – that’s what stands out.” – Daniel Wang, CEO, Loopring

“Ethereum Dapps (i.e. smart contract applications) request data from Chainlink, which in turn retrieves data from a web service built with Google App Engine and Big Query.” – Allen Day, Science Advocate, Google

“In sum, Google’s partnership with Chainlink enables Ethereum app builders using Google software to integrate data from and to sources outside the blockchain.” Avivah Litan, VP Distinguished Analyst, Gartner

“We’re convinced of the importance of middleware solutions, and it has been great to watch the Chainlink project evolve from initial concept to a fully executed and widely needed tool that infinitely expands the usefulness of smart contract blockchain platforms.” – Fran Strajnar, Co-Founder and Chairman, BNC


Chainlink Website

Learn more about the Chainlink cryptocurrency at the official website.


Chainlink Github

Learn how developers work on Chainlink.


Chainlink Reddit

Discuss Chainlink on Reddit with other users.


Сhainlink Twitter

Follow Chainlink on Twitter.


How to store and manage LINK?

store LINK

Even though Chainlink’s native ERC20 tokens are only a little over a year old, they can be purchased in over 10 cryptocurrency exchanges. Most of the exchanges accept Bitcoin and Ether, although a few can also take ETH and Tether. LINK cannot be acquired on an exchange that takes fiat currencies at this time.

Because Chainlink is on the Ethereum blockchain, it can be stored and managed by any wallet that supports Ethereum and ERC20 tokens.

Chainlink is currently supported by Atomic Wallet. This software wallet will let you manage and exchange Chainlink among other 60+ assets anonymously and securely right in the interface. You have total control over your funds, and your private keys are unique being generated by a mnemonic seed. It never leaves your device. Atomic Wallet provides solutions to storing, sending, and exchanging Chainlink. It has its own backend to aggregate data from different sources that provides reliable data for users. However, the team is looking into the addition of LINK oracle as one of our trusted sources.


Conclusion

By utilizing smart contracts, businesses get tamper-proof digital agreements that are highly secure and reliable. They protect both sides of the business deal and provides overall reliability that the input and output of the contract are secure. This is the service Chainlink providers to members of the cryptocurrency community.

Chainlink is the bridge between real-world data and smart contracts. It is the only platform in the cryptocurrency market that offers this service. It provides users the data they need from providers who bid to fulfill that need safely and efficiently. It offers a service for individuals and businesses who wish to use cryptocurrency as payment while remaining secure.

Chainlink is great for settling loans, liquidating collateral, calculating interest payments, converting assets such as gold to tokens, and management assets. Using the Chainlink ecosystem, users are given full visibility to the price fees and the teams that are participating in them, movement on LINK prices, and the reports necessary to make informed decisions before triggering the next smart contract.

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