- Chainlink is the brainchild of Sergey Nazarov and Steve Ellis, who are currently leading the company as CEO & CTO
- Securities smart contracts, insurance smart contracts, and trade finance smart contracts form its most prominent use cases
- Chainlink aims to connect public blockchains with the data which exists outside the blockchain
Chainlink is a decentralized oracle network. It is the next step in the evolution of blockchain technology as it feeds external data to help different chains interact with each other.
Currently, there’s no way for the chains to interact among themselves because of a difference in consensus mechanism between blockchains. To solve this problem, ChainLink creates a fully decentralized solution through a secure Oracle network.
Chainlink’s name suggests what it aims to do. It will link smart contracts to the data which exists outside of the blockchain. It works using a quality smart contract that cannot be tampered and thus helps limit the trust in any single party.
It all began in September 2014 with the launch of Chainlink’s parent company, SmartContract Ltd. The company was created to develop a bridge between external applications and public blockchains. The team at SmartContract Ltd. eventually developed Chainlink, a product that can help connect smart contracts to data feeds from any web API and data sources.
The Brain Behind the Chainlink
Chainlink is the brainchild of Sergey Nazarov and Steve Ellis. They formed a company called SmartContract Ltd. and the Chainlink project is a part of it. They have two offices and both of them are in the United States, one in New York and another one in San Francisco.
Sergey Nazarov has been in the cryptocurrency industry since 2011 and is considered as one of the leading experts in the industry. He is the current CEO of SmartContract Ltd. Steve Ellis, the other co-founder, currently leads SmartContract Ltd. as its CTO.
The Chainlink gained popularity in October 2017 during its ICO. However, it has been under development since long before that. It raised $32 million from its ICO which is far less than what some of the other top ICOs raised. They also came out with a white paper in the month of their ICO.
An Explosive Growth Pattern
During the bear market of 2018, the Chainlink project didn’t see much growth and neither did it see a decline. Its native cryptocurrency known as LINK was comparatively unaffected during the bear market of 2018 as it never really took off like the other popular altcoins.
The summer of 2019 changed everything when it suddenly saw an astounding growth. Finally, the crypto community realized the true potential of the project. The LINK token grew to a price of over $4 from the lows of $0.5 within just two months. This monumental growth contributed to the sudden rise of the Chainlink project.
There were multiple reasons behind its sudden growth. The launch of Chainlink mainnet in May contributed the most in the sudden price rise of the LINK token. Plus, the news about Coinbase accepting LINK token as a part of its offering also supported the sudden rise in its price. The current price of the LINK token is $4.82.
How Does Chainlink Function?
The protocol is based on Oracles, works smoothly in a decentralized infrastructure, and limits trust in a single party. It acts as a bridge that connects the blockchain ecosystem to the external applications.
On-chain and off-chain components form the bulk of the Chainlink ecosystem. The smart contracts in Chainlink can integrate non-blockchain applications as well. An on-chain component of Chainlink helps in the selection of an Oracle and creation of an Oracle record.
Once the Oracle is created, the agreement can be reported to the on-chain infrastructure only after it is executed off-chain. The off-chain component is aided by the ChainLink Core along with the subtask schemes and external adaptors, which are equipped within the off-chain architecture itself.
Currently, the Chainlink solution is based on the Ethereum network. However, there are plans to update it so that cross-chain transactions can happen in the future.
Major Use Cases
As per the Chainlink whitepaper, the most prominent applications of Chainlink are in Securities smart contracts, Insurance smart contracts, and Trade finance smart contracts.
#1. Securities Smart Contracts
The bonds and smart contracts are based on interest rate derivatives and thus, they can implement Chainlink as it will lead to an increase in the effectiveness of them. Securities smart contracts is a perfect fit for the implementation of Chainlink as they depend on different financial websites and APIs to report data about market prices and more.
#2. Insurance smart contracts
Smart contracts will be a game-changer for the insurance industry. Chainlink will add another layer of superiority to insurance smart contracts as it can help feed data from external sources to it. It will help smart insurance contracts define the insurable event and decide if payments are to be disbursed to the insured individual or organization.
#3. Trade finance smart contracts
The trade finance smart contracts can be powered by Chainlink to confirm if the contractual obligations were fulfilled or not. Plus, it can feed data to the smart contract through ERP systems or GPS to check if all the contractual conditions are being fulfilled.
The Road Ahead
Chainlink is aiming for the bullseye of the blockchain world by achieving unrivaled and astounding success, never seen before. They have proved their mettle to the wide blockchain community by signing many high-profile partnerships and increasing the adoption of Chainlink oracles.
The road ahead won’t be an easy one for Chainlink as its success depends on multiple factors. They will grow further if the commercial usage of smart contracts and decentralized oracles grows worldwide. Chainlink will also have to prove that it offers a decentralized Oracle solution which is both reliable and secured.
It will face roadblocks ahead for sure. However, Chainlink is moving quite swiftly in its aim of linking the blockchain technology with the outside world.