Technologies like Bitcoin and Ethereum blockchain are fascinating and hold the key to a future of fully digital secure payments. Even though almost all such platforms use the same underlying concepts of blockchain, they are very isolated from each other.
In essence, they are not inter-operable. Since the beginning of blockchain technology, we have come a long way. But the inability to make these various platforms work together is still one of the pain points for most of us.
ChainLink (Link) is the solution to the problem of lack of interoperability. It allows the developers to make use of features from different blockchains without compromising their integrity.
But What is ChainLink (LINK)? How exactly does it work? Let’s find out!
What is ChainLink (LINK)?
According to chain.link, “The ChainLink network provides reliable tamper-proof inputs and outputs for complex smart contracts on any blockchain.”
For the right users, ChainLink helps in limiting the trust in a single party while enabling untampered and quality smart contracts.
ChainLink is a concept designed to make smart contracts more connected with the outside world. While smart contracts can only manage data on the blockchain, ChainLink wants to decentralize the internet. This helps in creating a link between blockchain and their real-world applications.
Primarily, ChainLink uses various APIs to extract data from the real world and uses it inside the blockchain network. ChainLink’s use means transferring payments from smart contracts directly into bank accounts could become a reality!
How does ChainLink work?
In order to further break down our answer to What is ChainLink, we should take a quick look at how does ChainLink works.
Chainlink uses something known as an oracle reputation system to aggregate and weight the data provided.
The individual blockchains cannot access data outside their network. This means that the oracles are needed to function as data feeds in smart contracts. In the case of ChainLink, the oracles are connected to the Ethereum network.
The Oracles provide external data (e.g., weather updates or temperature) that trigger some smart contract executions when the predefined conditions are fulfilled.
PChainlink network participants are then incentivized (through rewards) to provide smart contracts with access to external data feeds. These feeds are generally API information.
If the users desire access to data outside the chain, they must submit a requesting contract to Chainlink’s network. Contracts will match the requesting contract with any of the appropriate oracles.
The contracts include a reputation contract, an order-matching contract, as well as an aggregating contract. The task of gathering data of selected oracles to find the most accurate result is handled by the aggregating contract.
The ChainLink Network
Chainlink is a decentralized network of ChainLink nodes. Each node sells the use of specific data feeds, APIs, and off-chain payments directly to the smart contract.
The network is divided into two distinctive sections- on-chain and off-chain, which interact to execute contracts.
Any API provider, payments or e-signature provider, or individual developer is free to join the ChainLink network. Users can become ChainLink Node Operators via connecting their API to ChainLink.
Once you have understood What is ChainLink and how it works, it is time to know more about the LINK token.
It is the native token of the ChainLink network. Built on the Ethereum platform, it is an ERC20 token with additional ERC33 functionalities.
The token was designed to help pay the node operators on the ChainLink network. The demand and value for these tokens are dependent on the total number of operators that work on the off-chain architecture of the ChainLink network.
The token also derives its value from the use cases of the network. The more applications the ChainLink platform is used for, the more valuable the LINK token from the ChainLink platform will be.
As of this moment, apart from being used as an asset in some exchanges and as a method of payment to node operators, the LINK token has no use. The value of the token will depend almost entirely on the adoption of the ChainLink network.
Total Supply of LINK tokens
The company behind ChainLink has put a limit of 1 Billion as the total supply of LINK tokens on its platform. This means that creating new LINK tokens would be impossible after a point.
The company has also reserved 30% of the total tokens for itself. This is to make sure continued development isn’t halted, as well as for the payment to the staff.
Apart from being a token that you can buy on various crypto exchanges, the LINK token of the ChainLink platform promises many things.
The ChainLink platform itself tries to act as a bridge between the outside world and different blockchains.
Even though it is not the most trending blockchain platform yet, it is definitely a step in the right direction to make different blockchains inter-operable and to provide an interface between them and the real world.
I hope this article helps you and if you have any queries related to it then do leave your comment below. If you have not joined our community then you can now. We are very active there and have been sharing important information there.
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