Beginner's Guide to Chainlink

What is Chainlink?

• A global network of computers with the goal of transferring data from the real world to the blockchain—a crucial use case for the cryptocurrency industry's success.

• There are 1,658 integrations across 1,427 projects in the Chainlink ecosystem.

• As a result, Chainlink is now one of, if not THE, most widely integrated Web3 services. You could compare betting on Chainlink to betting on DeFi and Web3 as a whole.

• Chainlink supplies cryptocurrency blockchains with off-chain data, particularly the price of various coins and tokens. The majority of decentralized applications would not function without this data.

What issue is Chainlink attempting to address?

• Smart contracts—computer programs running on the blockchain—cannot access data from outside the system.

o As there would be a single, centralized point of failure if we used centralized data feeds to access this real-world data, this would eliminate the decentralized aspect of the smart contract.

o If a multi-billion dollar application is based on data input from a single oracle node, why would it be executed on a decentralised blockchain?

What is Chainlink’s answer?

• Chainlink provides a decentralised data set that is provided by dozens of reliable parties.

• These parties receive financial incentives to obtain the data that a smart contract requests.

What are some important applications for Chainlink?

Markets and Data Feeds

• Chainlink's market and data feeds enable DeFi, sports, weather, and other applications by providing blockchains with precise, aggregated data.

o For instance, Chainlink has partnered with AccuWeather, a provider of meteorology forecasting in the United States, to enhance its collection of real-world data feeds for crop insurance.

o Real estate data providers, such as ProspectNow, provides comprehensive data on every property in the United States, including 42 million commercial properties and 100 million residential properties in all 50 states. For the most recent quarter's average price per square foot of residential real estate, developers can call the ProspectNow Chainlink node with a specific ZIP code.

APIs

• Chainlink connects smart contracts to any external API, from conventional payment methods to Internet of Things (IoT) devices (such as smartphones) and cloud networks. Chainlink, for instance, is Google's official cloud partner whom use a Chainlink oracle to store all of its major queries on the blockchain.

Proof of Reserve

• Chainlink conducts an audit of the reserves backing tokenised assets to confirm that they are fully collateralized.

o For instance, Bitgo partnered with Chainlink to audit their reserves in October 2020. Bitgo is the company that issues WBTC, the largest wrapped Bitcoin token on Ethereum.

Gaming Projects

• Chainlink's VRF (Verifiable Random Function) can be utilised in gaming projects to generate a verifiable source of randomness for NFT applications that any user can demonstrate to be fair and temper-proof.