What is ChainLink
Chainlink’s decentralized oracle network plays an important role in the actual implementation of blockchain technology. The purpose of this network is to provide information about various external data sources.
LINK is the native cryptocurrency of the Chainlink network, helping fund the growth of the project.
The oracle service facilitates better interconnectivity between smart contracts, which can then seamlessly access trusted data feeds, payments, APIs, and a wide range of other resources. In other words, ChainLink acts as an intermediary between systems outside the chain and systems inside the chain.
The concept of a decentralized oracle essentially solves the most significant problem in creating smart contracts, i.e. centralized oracles.
History of ChainLink
ChainLink was created in 2017 by Sergey Nazarov, Steve Ellis, and Cornell University professor Ari Jewell, and the network itself was officially released in 2019.
In 2018, Chainlink integrated Town Crier, a blockchain oracle that Jewell also worked on. Town Crier connects Ethereum’s blockchain to web sources that use HTTPS.
Chainlink’s trademark was registered in the Cayman Islands in March 2013 and the corporation formed is Smartcontract Chainlink Sezc, Ltd.
In 2020, Chainlink is integrating DECO, a Cornell project co-created with Juels. DECO is described by its authors as a protocol that uses zero-knowledge proofs (ZK-proof) to allow users to prove that information is true on the blockchain oracle without revealing sensitive information, such as birthdates.
In April 2021, Chainlink published a second white paper, ChainLink 2.0: The Next Step in the Evolution of Decentralized Oracle Networks, which details a vision for expanding the role and capabilities of decentralized oracle networks to include hybrid smart contracts that leverage on-chain code and off-chain services.
ChainLink Architecture
The Chainlink blockchain uses different nodes to receive data required for smart contracts. However, these nodes reach a specific consensus before transmitting the data to the smart contract. As a result, the contract itself need not depend on a single centralized oracle.
Furthermore, Chainlink nodes can retrieve data once or multiple times. The two important components in Chainlink are the on-chain and off-chain components. Let us understand more about these components and their importance.
Chain components
The components of the chain mainly refer to the oracle contracts based on the Ethereum blockchain that help monitor and process user data requests. On-chain oomponents transfer off-chain data requests to the Chainlink network to facilitate their processing in native blockchain contracts. The contracts can then match the requests with the corresponding oracle services. You can find three distinct parts of the Chainlink contracts:
- Reputation Contract
- Aggregation Contract
- Order Matching Contract
Each contract fulfills a separate role and drives the desired functionality of the Chainlink blockchain. The Reputation Contract helps in documenting the performance metrics of oracle service providers while simultaneously monitoring their success rates. The aggregation contract works on collecting responses from the oracle service providers followed by calculating the final answers to the initial questions. In addition, the order matching contract plays an important role in registering the users’ offers in the network and collecting offers from the oracle providers.
Components outside the chain
Off-chain components are the next significant aspect in answering the question “What’s so great about ChainLink?” as they include off-chain oracle nodes. Such nodes could help in collecting responses to various external queries.
All individual responses are then aggregated through various consensus mechanisms before being transformed into a single global response. Where is the destination for processing all the data? Chainlink Core helps connect the blockchain to off-chain data resources. It is essentially a device that supports the transformation of data off-chain, followed by its transfer to an oracle on-chain.
Off-chain nodes can receive compensation in the form of the LINK cryptocurrency.
How do I buy LINK?
1. Choose a crypto exchange
There are numerous cryptocurrency exchanges and marketplaces that range from easy-to-use systems to complex dashboards for advanced traders.
Because LINK is so popular, you’ll be able to purchase the token on most cryptocurrency exchanges, but it’s advisable to stick to a few of the more popular exchanges like Binance, Kraken, Coinbase, etc. Different platforms come with different fees, security measures, and may include other features, so it’s a good idea to do your research before signing up.
2. Create an account and confirm it
Start with account registration, which is completely free on the aforementioned platforms. For added security, 2FA – two-factor authentication – is also enabled. This way, you and your device are the only ones who can grant access to the account.
You are then taken through a KYC process, which is providing personal information – ID card/passport/driving license details, proof of address (e.g. bank statement or utility bill).
After completing these steps, you are ready to buy, sell and trade ChainLink (LINK), as well as take advantage of various services such as steaming.
3. Feed your account
Once your account has been registered and verified, you need to fund the account to start taking advantage of the platform’s buying and trading services.
The main deposit options are:
- Credit/Debit Card
- Bank deposit
- Peer-to-peer (P2P)
Where to buy LINK?
On Binance, the world’s largest cryptocurrency exchange, deposits are absolutely free.
