Chainlink: Linking smart contracts with real-world applications
September 4, 2019
As a business owner, having smart-contracts in place when you conduct any business, is a smart business option since itís safe, secure and reliable. In any business, it is important that everything runs smoothly, especially when it comes to payments. However, as soon as your business involves several different blockchains, or when youíre also sending, transferring, and receiving payments via the centralized banking systems, like bank transfers or PayPal, you will probably run into problems. So how can we bridge the gap? Keep reading, this article will explain about a solution to these issues.
What is Chainlink?
To provide value, it is paramount that smart contracts are capable of interfacing with data, events, and different payment methods, such as PayPal, Credit card payments, Swift transfers, and bank transfers. However, blockchain-run smart contracts can't communicate with these external systems on their own. An oracle provides this connection to those systems, but its centralized nature would offset any advantages that would be gained by the use of smart contracts.
Chainlink, as the first decentralized oracle, gives access to any external API, making it possible to easily connect smart contracts to the data or APIs needed to function, and also send payments from the contract to real-world bank accounts and payments systems.
No problems, but solutions
Only when a smart contract uses multiple inputs in order to prove valid performance, and multiple outputs involving outside systems and/or send payments, it will be truly valuable.
When a smart contract is implemented, it encounters a problem with regards to connectivity. Smart contracts aren't able to access data on their own.
Centralized oracles are a point of failure because this would mean that the smart contract/data input would be established through one single node.
The solution is a highly reliable decentralized oracle network. Due to the decentralized nature of Chainlink's oracle network, it provides secure and safe data transfer and communication.
Multiple Chainlinks are evaluating the same data, canceling out any one point of failure while maintaining the smart contract's value. This makes the communication and transactions between smart contracts, APIs and real-world banking systems extremely safe and reliable.
We see several promising developments for the future of Chainlink and its partners, and this is only the beginning! Many leading smart contract networks, as well as individual teams, have already adopted Chainlink. Examples are:
- Chainlink is collaborating with Web3 Foundation for their Polkadot project.
- Hedera Hashgraph and Chainlink are working together to integrate the Chainlink decentralized oracle network with Hedera's enterprise-grade distributed public ledger.
- Market Protocol and Chainlink are collaborating to make off-chain asset trading possible on the Ethereum Network, fulfilling Market Protocol's vision to bring the $100+ trillion derivatives market to the blockchain by offering safe, solvent, and trustless derivative trading of stocks, cryptocurrencies, and traditional assets.
Aside from this, Chainlink will be collaborating with leading technology companies to connect smart contracts externally with everyday user applications:
- Google will be working with Chainlink on building hybrid blockchain/cloud applications with Ethereum and Google Cloud.
- While Oracle announced in June that they will support more than 50 Chainlink nodes and teams to provide high-quality inputs and outputs into Oracleís various blockchain environments.
Above developments are quite impressive and it seems that decentralized integration of blockchain-powered smart contracts with real-world applications, and banking systems are now within reach for everyone and any enterprise who require security, and safe, reliable contracts.
Reasons why smart contracts are the contracts of the future
- Financial markets, the insurance industry, the global trade markets, and many others depend on reliable contracts. Smart contracts provide superior guarantees in regards to the execution of a contract.
- Costly contractual breaches and fraud are very often due to weak and failing security systems. Things like title insurance fraud will be something of the past with the implementation of smart contracts.
- With smart contracts, global financial markets can work in a safer, and more transparent way. Just imagine what the world would have looked like if all mortgages issued between 2004 and 2008 would have been built as smart contracts, constantly tracking ownership, credit score, income, etc.
- It is possible to provide an alternative legal system for developing markets where it is currently not possible to form certain kinds of agreements. Blockchain and smart contracts make it possible to implement a working system of contracts for global economies.
Whether you're a contract creator, want to provide external data directly to a smart contract or build an eternal adapter, why not give it a try and see for yourself what Chainlink can do for you?