What Is Chainlink Network?
Founded in 2017, Chainlink is a blockchain abstraction layer that enables universally connected smart contracts. Through a decentralized oracle network, Chainlink allows blockchains to securely interact with external data feeds, events and payment methods, providing the critical off-chain information needed by complex smart contracts to become the dominant form of digital agreement.
The Chainlink Network is a new internet-based service based on the idea of smart contracts and digital asset networks. The network enables participants in such inter-party marketplaces to use digital currencies to pay each other for the services they render, in effect allowing participants to create value from value, rather than creating value from money. This concept is not too much different from the payment systems used in physical locations, such as the ATM or the credit card terminal. However, by placing trades on an exchange platform based on digital currencies such as e-gold and e-uggets, and matching them with bids in real time from buyers and sellers, this system allows for far more direct interaction between buyers and sellers than can be found with more traditional marketplaces. Additionally, due to the nature of the token that can be exchanged, these smart contract arrangements are far less prone to fraudulent transactions than are credit card systems.
With the use of a smart contract, the value of the digital agreements and contracts of value themselves becomes an enforceable contract, thus tying their transfer to the performance of an act or performance of some kind. For example, one may wish to exchange gold and silver coins for shares in a new company, and in turn hold these shares in the company for a certain period of time. By placing a bet on a particular company’s stock price, one is able to convert their silver into shares, and therefore hold these shares indefinitely, whilst converting their gold into actual physical gold at the same time. The Chainlink Network takes the barebones model of these smart contract systems and extends it into the ether by providing participants in the Chainlink Network with digital proofs of the validity of the digital agreements they have placed.
As the network grows, these smart contracts will also become more complex, with participants being able to add and remove other data feeds, and participate in dividend collecting mechanisms as well as stake transferring among each other. While initially it may seem that such systems are not highly complex, in practice they are capable of supporting a wide range of activities, with proof-of-authority systems acting as an extra layer of security. At the end of the day, the goal of decentralization in general, whether in the form of open-source protocols like the Chainlink Network, or more specific decentralized oracle service platforms like MaidSafe or Distributed Ledger Protocols (DFP), is to provide a way for participants in a system to interact in a manner that is friendly to the users, while still giving value to the system in return.