The main purpose of the Chainlink network is to provide support for a secure connection between data sources and smart contracts through decentralised oracles. Chainlink works by taking external information from external data sources, API, and payment systems and making that information available for on-chain users. This external information is not accessible to smart contract users, but the Chainlink system sources that information and places it in the smart contract network. These resources can then be integrated into the blockchain because the Chainlink network facilitates a safe and stable connection between Ethereum and smart contracts.
Technology & Supply
Learn more technical information about the digital asset.
Chainlink enables safe and secure connections between the network and smart contracts with the use of oracles. An oracle is a type of a specific system that enables the use of external data for on-chain utilisation through exposure. Smart contracts running and operating on Ethereum can only use on-chain data as available resources. This use is mostly limited to token transfers. Smart contract users are not able to source and use external data, API, and important information without oracle systems.
Oracles surmount the challenge of limited data sources by offering connection to and transparency of external data. Software oracles are used to retrieve data from the internet, websites, and application programming interfaces. The integrity of oracles is verified through smart contracts.
Oracles are created as trustless, which means that there is no entity with authority over the system, and the system is based on the canonical truth. Theft and corruption would not be profitable in such a system, which is how an oracle can establish a secure connection between on-chain operations and off-chain data.
Real-Life Chainlink Integrations
Since the genesis date of Chainlink (LINK) in September 2017, the decentralised oracle network has made significant real-life integrations. Google created public blockchain data for Bitcoin, Ethereum, and six other cryptocurrencies to be used as public datasets for off-chain business process input. Google later announced integration with the Chainlink network through a partnership. The partnership between Google and Chainlink made the integration of off-chain data and on-chain applications possible. Application builders using Google software can easily use external data sources for on-chain apps and implement data directly into the blockchain. Chainlink integration with Google software has enabled the sourcing of data such as interest rates and prices.
Chainlink is used by the STK cryptocurrency for smart contract integrations to verify payments such as SWIFT banking transactions. Chainlink is also white labelled in the relationship with the SWIFT banking technology provider. Chainlink’s Proof-of-Concept can be used to translate on-chain payments into SWIFT payment messages through integrations between off-chain data and smart contracts.