One of the main problems with blockchain technology is the fact that there are a ton of different decentralized ledgers out there – but the vast majority of them can’t really communicate with each other. ERC-20 Tokens and NEP-5 Tokens are obviously exceptions to that, but in most cases it is not possible to send one smart contract through multiple platforms. That’s where oracle networks, like ChainLink (LINK) come in.
What is an oracle network?
The ChainLink coin is Blockchain networks like Ethereum (ETH) and NEO (NEO) can’t directly access data that exists outside of their own networks – so they need an oracle network to work as the communications connection. This is how the company behind LINK, SmartContract, describes its oracle network:
“ChainLink is secure blockchain middleware that allows smart contracts on various networks to connect with the critical resources they need to become useful for 90% of use cases. We’ve been creating secure oracles for Bitcoin and Ethereum for over 3 years, connecting smart contracts on various networks to critical external data feeds as triggers, and the many off-chain systems needed to become operational.
Our team is excited about making a world where smart contracts are securely connected to the off-chain data, APIs and widely accepted payments they need to work for 90% of real use cases.”
— [blokt] (@bloktcrypto) February 1, 2018
This network links smart contracts from various blockchain networks to any possible external system application programming interface (API) – which connect disjointed systems in pretty much everything we do online.
The ChainLink coin network will cut across any API – and then some
That means that smart contracts on the Ethereum (ETH) blockchain can be integrated with data from external sources, events data, retail payments (like credit cards and PayPal) as well as bank payments.
Oracle systems have been complicated in the past, because the whole concept sort of defeats the decentralization aspect of the technology – if all blockchain networks are linked through a central hub, then they aren’t really decentralized.
The team behind the ChainLink coin, however, has solved this problem – and claim to have a way to grab only certain necessary information to maintain a decentralized platform.
But, perhaps more importantly, this coin will enable interaction between top cryptocurrency networks – bridging the gap that we would all love to close up as soon as possible.
People really seem to be getting excited about the ChainLink coin too – it’s up 17% compared to its price 24 hours ago, and it’s gained about 45% in the past week.
Note: This network does, indeed, have some competition already that offers a similar idea – it’s called OracleChain.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.