Chainlink article header

What is Chainlink (LINK)?

Chainlink wants to be the bridge between smart contracts and traditional systems. It serves as a middleware between traditional systems and smart contracts on the blockchain. Chainlink has already made partnerships with Google cloud and Oracle and thereby already has a foot in the door to being adopted by larger enterprises.

The oracle problem

One of the problems that Chainlink tries to solve is that traditional blockchains only carry data on-chain, meaning that it is not possible to transfer additional data. Traditional blockchains like Ethereum have a fixed set of data like transaction ID, timestamps etc. but they cannot listen or carry external data from the outside. This is where Chainlink tries to be different.

No way to carry external data on a smart contract

When a blockchain is communicating with several data sources (APIs) the blockchain will not be able to determine which data source that is correct. Traditional blockchains will only be able to send tokens back and forth but without carrying additional data. So therefore Chainlink serves as the middleware of translating the external data sources into something that the blockchain understands. For instance, you cannot send bitcoin on the Ethereum network. If a blockchain cannot communicate with supply chain management, markets, regulatory systems etc. then the enterprise use case is non-existing.

Chainlink connecting existing data sources

Chainlink solves the oracle problem by using a decentralised network of oracles that connect to the external data sources and feed the answers from the oracles into smart contracts on the blockchain.

Chainlink as middleware

Enterprise integration

With its unique way of solving the oracle problem and with already established partnerships Chainlink is currently leading the field of tokens that try to solve this.

The value of Chainlink should not be seen in the traded price on crypto exchanges but more like from the use case perspective. When larger enterprises incorporate Chainlink into their products, users of those will not even know Chainlink is a part of this particular service. Chainlink will play a key role in these products innovation and hopefully continue to drive the innovation forward.

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