What is an Oracle?
An oracle is a trusted source of information that provides data to smart contracts on the blockchain. Smart contracts are self-executing contracts with the terms of the agreement written directly into lines of code. They can be used to automate various tasks, such as payments, supply chain management, and more. However, they require real-world data to function properly, which is where oracles come in.
What is Chainlink?
Chainlink is a decentralized oracle network that provides secure and reliable access to external data sources for smart contracts on the blockchain. It was founded in 2016 by Sergey Nazarykin, Michael Ganor, and Daniel Krugger, who saw a need for a more secure and reliable way to provide data to smart contracts.
How does Chainlink work?
Chainlink’s oracle network works by providing smart contracts on the blockchain with access to external data sources through its decentralized architecture. When a smart contract needs data from an external source, it sends a request to the Chainlink node closest to that source. The node then retrieves the data and sends it back to the smart contract on the blockchain.
Why is Chainlink important?
Chainlink is important because it provides a secure and reliable way to provide data to smart contracts on the blockchain. This allows for more complex and sophisticated applications to be built on the blockchain, which can help drive innovation and adoption of the technology.
One example of a company that has integrated Chainlink’s oracle network is DeBeers, a leading diamond manufacturer. DeBeers used Chainlink to provide real-time data about diamond prices and availability to its customers, allowing them to make more informed decisions about their purchases.
Another example is the Decentralized Autonomous Organization (DAO) called MakerDAO, which uses Chainlink’s oracle network to provide real-world data about collateral value. MakerDAO is a platform that allows anyone to create and manage decentralized applications on the Ethereum blockchain.
Chainlink has also been used in various other industries, such as finance, gaming, and supply chain management. For example, a cryptocurrency exchange called Kyber Network uses Chainlink’s oracle network to provide real-time price feeds for its customers, allowing them to make more informed trading decisions.
