What is Chainlink? What are the Benefits and Advantages

Chainlink is one of the projects that has stood out in the world of the cryptocurrency industry since its appearance in 2017. Chainlink is a crypto smart contract product from a company based in San Francisco, United States.

Even though it is quite popular compared to its initial appearance, in fact there are still many people who don’t know what Chainlink is. But, you dont have to worry. In the following article, we will provide information about what is Chainlink, the advantages and benefits it offers.

What is Chainlink?

The company that created Chainlink and its decentralized oracle site acts as a connecting agent between traditional data sources and the blockchain that drives DeFi projects to use and introduce what Chainlink is. This company is associated with national governments such as the Chinese government.

In understanding what Chainlink is, we cannot escape discussing blockchain because it is like a WEB API and a banking system. Chainlinks can be used to connect blockchain and non-blockchain technologies. The main function of Chainlink’s existence is to solve oracle problems.

Smart contract will get data from oracle. The code that appears will be indicated as dangerous because the smart contract system only follows the given code. Even so, the smart contract system will still process the code. Of course this condition will be very helpful for digital asset miners such as crypto.

The existence of Chainlink will counteract the problems that arise by finding ways that are then used to retrieve oracle information without having to worry about the security risks of the blockchain itself. The features in Chainlink make it able to support smart contract activities more effectively.

Scope What is Chainlink?

Even though it is relatively new, Chainlink is already very popular among the world’s IT community. This is certainly not without reason. Chainlink has a feature that makes it known to many people. The Chainlink whitepaper is known to have been published by smart contract co-founders, Steve Ellis and Sergey Nazarov.

What Chainlink’s capabilities allow it to evaluate variables in contracts and use off-chain data. For those who don’t know, a smart contract is actually an agreement that has been programmed in a system. The system will only run when the conditions and requirements have been met.

Smart contracts require additional external data to meet data needs. For example, to access market prices through the API or check the replication of agreements and bonds. Therefore, the existence of what is Chainlink is intended to overcome the problem by providing incentives to data providers known as oracles.

Chainlink has a token called LINK. This token is also a cryptocurrency product from Chainlink which is already available on the Ethereum network like the ERC-677 token. However, the functionality of the token is based on the ERC-20 token standard. Another function of the LINK token is to transact through their own platform.

The LINK provided to the node will follow software rules and must provide external data to smart contract users. When users make transactions in the form of data collection, they must pay with LINK. Later, the paid LINK will be used to reward node operators in Chainlink.

Of the one billion existing supply of LINK tokens, around 35 percent is sold to exchanges during an Initial Coin Offering (ICO). Then, another 35 percent is used to provide incentives for node operators and the rest is allocated for the development of the Chainlink blockchain.

The allocation of funds for the development of the blockchain was made because Chainlink seeks to make the system more secure than the others.

How Chainlink Works

The system of Chainlink is made up of a set of nodes that function to collect valid and safer information. In essence, nodes work to create smart contracts that are better infrastructure-wise and more secure. As a result, crypto miners are calmer and trust the Chainlink blockchain.

The network created can be analogous to the internet. The existence of what is Chainlink can make each blockchain maximize its existing potential. All data that cannot be obtained from certain digital asset blockchains can now enter through an external adapter which is Chainlink itself.

In other words, one blockchain with another can be connected. For example, Steam and Epic Games. Known as digital video game retailers, these two online stores function to provide infrastructure to various parties who want to market their applications and provide a way for buyers to access them.

Interesting Features of Chainlink

Here are some interesting features from Chainlink that you can enjoy, including:

1. Reputation

Reputation is the first interesting feature of Chainlink. This feature serves to provide an assessment of nodes from various aspects, such as the time span for doing work and the amount of work that must be done at one time or simultaneously.

2. Security Level

Smart contract developers who choose the Chainlink service can choose the number of nodes they want to use according to their needs. The more the number of nodes used, the higher the level of security. However, the costs incurred are also getting bigger.

3. Aggregation

When out-of-link is selected, Chainlink will make an agreement in the program and send the desired data. After that, the aggregation contract will collect the data sent and average it so that the aggregate response is known.

Oracle technology with its capabilities is able to solve problems in smart contracts and makes Chainlink an important actor in the blockchain and cryptocurrency industry. The LINK token is also increasing rapidly. In early May 2020, the LINK token reached an all-time high of over 14 US dollars.

Chainlink Network Architecture

To carry out its work process, Chainlink uses three types of smart contracts on the network. The three are aggregating contracts, order matching contracts and reputating contracts. As explained above, all three have different functions and tasks. Starting from data collectors, oracle executors, and reputation guarantors.

Even though using the three types of technology above, smart contracts are still needed because the interactions are carried out not only from data providers operating in the blockchain network. The existence of smart contracts can facilitate transactions in the network without any obstacles that hinder it.

That was a discussion about what Chainlink is, the scope of the network, the features offered and how it works. You can easily access other information about what Chainlink is via various browsers.

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