ChainLink: A Cryptocurrency for Smart Contracts
ChainLink is a developing technology intended for application towards smart contracts, an increasingly eminent vehicle for negotiations. Transactions are irreversible and traceable under smart contracts, with no need for verification from a third party. Normal contracts can be completely transformed by this technology, as smart contracts eliminate the time, energy, and capital that goes into ensuring the legal function of normal contracts.
The purpose of ChainLink is to connect real world data to smart contracts, serving as collateral for the multiple inputs and outputs of the system summarized below:
The fundamental problem with smart contracts lies with verification. Smart contracts cannot access external data on their own, so a “link” if you will is required for the blockchain transaction to reach consensus.
A single node to connect the real world to smart contracts provides a single point of failure, defeating the purpose of decentralization in smart contracts.
The need for a decentralized oracle network is fulfilled with ChainLink. The details of the architecture are described by Steve Ellis, Sergey Nazarov, and Cornell’s Ari Juels in the white paper for ChainLink, but essentially ChainLink’s modular network accomplishes its goal on-chain through a three part procedure: oracle selection, data reporting, result aggregation. The off-chain architecture consists of the ChainLink core, external adapters, and subtask schemas, the mechanisms of which are also in the white paper. The simplified schematic for the result of this design is shown below.
The directed, decentralized network combined with this on-chain and off-chain architecture is what makes ChainLink a unique economic opportunity (a distributed network is also a prospect for research, but has yet to be implemented). Though ChainLink’s infrastructure is not complete yet, companies like Oracle, Google, and Intel have partnered with it already, with more scouting the scene, contemplating jumping on the bandwagon.
https://link.smartcontract.com/whitepaper