What is Chainlink and What Makes it Unique in 2022?

What is a Smart Contract?

Smart contracts are simply agreements written in code that are typically run on a blockchain. You may be wondering why a blockchain? Well, what happens on a blockchain cannot be changed, so when you and someone else come up with a financial agreement, changing that agreement would require changing millions of computers all over the world.

If I give you $10 today, you must give me $10 every day for the next ten days. They can then become more complicated, such as "if I give you ten dollars of Ethereum, you'll give me ten dollars of doggy coins," where the code can actually check if both people truly have ten dollars of each token that they want to trade and then automate the trading so that if one person doesn't give all ten dollars or changes their mind, the other person will.

Finally, financial smart contracts can be as complicated as this: if you give me ten dollars in USDC, I'll give you eight dollars in ETH, but you must pay me six percent interest every year. Just as addition eventually becomes the foundation for multiplication and even exponents, these simple, smart contracts can quickly and easily become the backbone of an entire nation's financial system.

What is a Chain-Link?

Chain Link is a decentralized network of oracles that transfers data from off-chain to on-chain and vice versa. It enables smart contracts to have secure access to real-world data that exists outside of the blockchain. Chainlink also tackles the reliability difficulties associated with using a centralized data source, but more on that later. Smartcontract.com, a startup co-founded by Sergey Nazarova and Steve Ellis, released Chain Link in June of 2017.

Despite the fact that their breakthrough emerged at a time when the cryptocurrency industry was exploding with new projects, chain link has continually delivered on its promises, with the intention of growing outside the Ethereum network. The chain link network serves as a link between the burgeoning blockchain industry and the existing administrative institutions that drive economies to construct more efficient, secure, and transparent operations.

Chain Link is a decentralized oracle network that is poised to play a key role in the implementation of blockchain technologies in the real world. This network's objective is to provide feedback on a variety of external data sources. "

You must understand that a chain link technically replaces a bunch of intermediaries. Let's consider using the services of a real estate agent. Nowadays, instead of paying an agent to show them eight different houses, many people simply go to a website like Housing.com to pick the house that they want and then go with that method. In the same way, a travel agency is a middleman.

For example, someone who collects money on both sides of a bet while also acting as a referee to determine who wins. All of these humans will be replaced by code as a result of chain link oracles and the use of smart contracts.

What is an Oracle?

An oracle is a piece of software that functions as an intermediary, facilitating two-way data flow between smart contracts and the real world.

What is a LINK?

Chainlink's native token is LINK. Each oracle in the Chainlink network is allocated a reputation score. They are all incentivized to supply correct data. Furthermore, nodes are compensated in Chainlink's cryptocurrency, LINK, when they obey the software's rules and offer relevant data.

The Chainlink token is similar to Bitcoin (BTC) and Ethereum and is intended to assist in financing the project's expansion (ETH). Both of these crypto coins operate on their own blockchains. Users are rewarded for mining with LINK, BTC, and ETH.

How does Chainlink Work?

Users create a service-level agreement (SLA) that outlines a set of data needs. The user is then matched with oracles that can offer the information. The data is subsequently processed by the oracles and transmitted back to the Chainlink blockchain contracts. The final step is to add up the numbers and return them to the aggregation contract. This contract evaluates each response's legitimacy and returns a weighted score based on the total amount of data collected.

Chainlink Architecture

1. Contracts for Aggregation,

2. Contracts for Order Matching

3. Contracts for Reputation

The Chainlink platform is designed to make it easier for smart contracts to interact with oracles that do not operate on the Chainlink chain. The technology matches a smart contract's service level agreement (SLA) with the best bidding oracles and verifies an oracle's integrity.

What makes Chainlink so Unique?

Chainlink established a safe bridge where the blockchain meets the outside world, which was a big risk in decentralized applications (dapps). The points at which data enters the blockchain are also the points at which data can be changed, compromised, or simply falsified—it is at these points of failure that Chainlink generates value.

In their whitepaper, they highlight three concepts to reduce the possibility of oracle failure: "(1) distribution of data sources; (2) distribution of oracles; and (3) use of trustworthy hardware."

For example, a real-world money transfer can be sent onto the blockchain using Chainlink through SWIFT. The evidence of payment might then be sent back to SWIFT via Chainlink. SWIFT's use of Chainlink allows for seamless interaction between the traditional and crypto worlds while reducing potential failure spots.