Chainlink is seemingly one of the most important & talked about protocols since the invention of Ethereum itself. While Ethereum brought to life the amazing innovation of Smart Contracts and Automated Agreements, Chainlink is pushing this to the next level by solving the Oracle Problem.
The Oracle Problem
The Oracle Problem is the issue of securely getting outside, real-world information into the blockchain itself. While the market generally uses the term “Smart Contracts” they can actually be jokingly called “Dumb Contracts” if there is no reliable oracle present. This is because Ethereum and other blockchains inherently only have information that is internal to themselves, meaning they have no ability to answer questions like:
- What is the weather today in Los Angeles?
- What is the price of Ethereum?
- Did Flight D-42498 out of Miami Airport get delayed?
- Did Apple perform a stock split?
- Is Trump the President of the United States of America?
Getting these answers into a blockchain in a secure, decentralized and trust-less way is incredibly difficult and is the essence of what Chainlink is trying to solve. Until there is a reliable Oracle to feed this information into an Ethereum smart contract, there can never be robust decentralized applications that offer Insurance, Prediction Markets, Decentralized Exchanges, Arbitration, Credit Markets and many more interesting use cases.
The LINK token, Built on Ethereum™
Chainlink has a native token known as LINK.
LINK is built on Ethereum and is used to pay Chainlink Nodes for the data they provide into the Ethereum blockchain and (eventually) other smart contract platforms. In addition, LINK will be used as a collateral that Chainlink Nodes will put at stake (Proof of Stake) in order to show that they are economically aligned with and believe in the data they are providing. If these nodes misbehave or provide bad data, they may be subject to slashing and lose their LINK.
If you want to learn more about Chainlink, the oracle problem and the future of smart contracts – head to www.ChainlinkLabs.com