This article was first published on Metal Blog
In basic terms, Chainlink is a decentralized network that can communicate directly with smart contracts, providing them with real-time data and automating how contracts are carried out. LINK is the cryptocurrency used in the Chainlink system and fuels this network of smart contracts and data.
That’s the overhead view of what Chainlink is. But understanding why this cryptocurrency has developed such a large, enthusiastic following requires a more in-depth analysis of why it was created, what problems it tries to solve, and how some of its proponents consider it to be the basis of a “4th industrial revolution.”
Smart Contracts, Oracles, and Chainlink
You’ve likely signed dozens of contracts throughout your life, some without even knowing it. A lease for an apartment is a contract; you agree to pay a certain amount of money each month, and your landlord agrees to provide you with shelter and basic services each month. In this example, if you stop paying your rent, your landlord will eventually notice and carry out some predetermined actions, like fines, warnings, or even eviction.
This is simple and makes sense to most of us, but smart contracts take this one step further. Smart contracts exist within a blockchain, allowing the contract to be verifiable, unchangeable, and trusted by all parties. When something is secured in a blockchain, no details can be hidden and no clauses can be added in at a later date unbeknownst to you. However, in order for a smart contract to work in the real world, data needs to be provided to the blockchain.
Think of it like this: you pay your rent, that’s data; that data goes to your landlord, they verify that you paid the correct amount, and they allow you to continue using your apartment. While this system works, it’s a ...
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