What is Chainlink?
Chainlink is a decentralized oracle network that provides real-world data to blockchains. It is one of the main sources of data used to feed information to applications in decentralized finance. The developers also point to Chainlink's potential use in enabling smart contracts and decentralized exchanges. Why is Chainlink important? A centralized oracle network can be controlled by a centralized entity, which could be used to affect the data fed to an application. Chainlink can counter this by creating a decentralized network which acts as a distributed trust clearinghouse, storing data and providing global availability of data to a variety of blockchains. Chainlink relies on smart contracts, where a contract is encoded in code so that it will perform when certain conditions are met.
How does Chainlink work?
Think of Chainlink as a multi-party database. What is a multi-party database? Multi-party databases are databases that contain information about other entities such as contracts, contracts, identity, or assets. Multi-party databases are ideal for providing unchangeable and trusted data. They work by creating a network of nodes that can store information about other parties and are located around the world. These nodes hold a copy of the information, communicate with each other to share the data, and conduct all sorts of operations (like counting the books in a library) to verify the data. Essentially, it's a network of computers that use a protocol to verify data when any party (say a counterparty or librarian) asks the system for a copy of that data.
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Why does Chainlink matter?
Chainlink is important because it uses public oracles to act as a conduit between Ethereum and Bitcoin blockchains. This means the oracle data can go from one chain to the other and users will be able to view it directly on their phones or a website. The oracle network in Chainlink is being deployed at this time and it may be incorporated into Chainlink in the future. The Chainlink.info website explains it all in this video. Whats the business model for Chainlink? Possibly a few ways. One way that’s been proposed so far is the addition of ‘value-add services’ for the Chainlink blockchain. These services could include online exchanges, escrow services, ‘attraction and affinity’ to support social groups and associations.
Chainlink in the future
By design, Chainlink aims to have a public and permanent blockchain, and as such it will always be similar to Bitcoin’s block. There will be one version of the blockchain, one audit trail, and one blockchain explorer. It will have two branches. The first will be based on Chainlink technology and existing Bitcoin blockchain. The second will be based on the Neo paper. Chainlink will continue to have a public blockchain, but this version will use multiple checkpoints, with each checkpoint referencing previous checkpoints. It will have a blockchain explorer, where transactions, blocks, and addresses can be looked at with a similar ease to Bitcoin’s block explorer. Last but not least is how it will be regulated.
Conclusion
While you might be impressed with some of the core ideas that underpin blockchain technology and feel you might have something useful to contribute to the community, you should not immediately start trading or contributing to projects unless you have taken the time to properly educate yourself on the unique ways in which the blockchain and cryptocurrencies work. Unless you're very passionate about the space or fully understand all the nuances of cryptocurrency trading, there is no guarantee of profits in cryptocurrency trading. While there are tons of successful cryptocurrency traders, you must first find and learn the process for trading on the whole. You'll need a lot of self-discipline and persistence if you want to have any success with it.