There is no denying that smart contracts have redefined automation in digital business exchanges. Fundamentally, smart contracts are pre-defined rules coded within blockchain-based machines that govern transactional agreements. To put it simply, they assess information and execute the rules automatically when certain conditions are met.
From being just a concept in the early 1990s to a cryptocurrency market buzzword in the present day, smart contracts have come a long way. However, they can not interact with external resources or accept input data. This problem led to the evolution of a bridge system using an oracle that can overcome such limitations. This is where chainlink comes into the picture.
What Is Chainlink?
Chainlink is a decentralized oracle network that dramatically enhances the capabilities of smart contracts. This industry-standard oracle network connects smart contracts to real-world data input, off-chain computations, payments, events, and more. What is more, chainlink data feeds are highly reliable and tamper-proof. They uphold the security assurance inherent to blockchain technology.
LINK is the native token that drives the chainlink platform and is similar to Bitcoin (BTC) and Ethereum (ETH). It ensures payment for node operators within the system. You can use chainlink in several industries where the proof of events and data stamps are a priority, such as payments, securities, insurance, supply chain, etc.
Use Cases for Chainlink and the Decentralized Oracle Networks for Any Smart Contract
Chainlink provides the key to governments and enterprises to leverage the benefits of blockchain technology in numerous ways without restructuring their existing systems. Thanks to its ability to connect with any API and provide off-chain data in an on-chain format, chainlink throws open the possibility of a wide variety of use cases.
As the most widely used decentralized oracle network, chainlink is securing billions of dollars at present for live applications across various use cases. Some of the major use cases are as follows:
Decentralized Finance (DeFi)
Several traditional financial products are being developed on the blockchain with the help of smart contracts to enhance their transparency and security. These DeFi applications employ chainlink to determine asset price, verify collateralization, obtain interest rates, etc. As a result, these products attain the ability to carry out functions such as automatic issuing of dividends, sanctioning a loan at fair market value, settling an options contract, and more.
Game developers have woken up to the advantages of launching smart contract-based gaming applications on the blockchain, often incorporating NFT as rare digital collectibles. Among the primary building blocks of several blockchain games is a source of randomness that produces random in-game scenarios or picks the lucky winner of contests or prizes.
Chainlink Products and Its Overall Future
Chainlink products are available across various platforms, including finance, games, insurance, supply chains, utilities, external payments, authorization, identity, etc.
With numerous practical applications of blockchain technology being implemented, chainlink stands to make smart contracts more efficient, accurate, and secure. This robust ecosystem of decentralized oracle networks is growing at a rapid pace. Investing in LINK can be a sound decision, given that chainlink has become the industry standard oracle network for blockchain technology.