Chainlink(LINK) is a cryptocurrency token that bridges the gap between decentralized currency and centralized data from the outside world. Here’s all you need to know:
What is a Smart Contract?
To understand Chainlink, you first need to know what a smart contract is. Whereas a traditional contract relies on a third party (like a lawyer) to ensure that a contract is followed, a smart contract is written in lines of code containing the terms of an agreement between two parties. When all conditions are met, the contract self-executes in a blockchain network such as Ethereum. Once contracts are executed, they become irreversible and traceable in the blockchain.
What is Chainlink (LINK)?
While smart contracts exist in a blockchain, the data that is required to execute them exist in databases outside the blockchain. LINK was made to connect your smart contracts to the outside world through a decentralized network of nodes called oracles. The network of nodes connects smart contracts to external data sources real-world data such as retail payments, price feeds, web API’s, and even the weather!
What is LINK?
If Chainlink is the protocol, the ERC-20 token used in the network is called LINK. LINK can be used in two specific ways:
First, LINK is used to pay node operators for retrieving data for smart contracts. Consider this as a fee for the LINK node operator who ensures that accurate data is transferred.
Second, LINK is used by node operators as a sort of security deposit to those running the oracles. Consider this as a kind of bond to ensure that oracles have consistent uptime and are available on the network upon request. If they aren't available, this deposit can be taken away.
Every time a LINK is used, it is taken out of circulation. LINK has a fixed supply of 1 billion tokens, with 426 million already in circulation
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