What is Chainlink (LINK)? | Blockchain Oracles Explained with Chainlink (LINK) | FBE Capital

today we dive into the world of blockchain oracles to understand chain link and the use of the link token so the simple answer to what is chain link is that it's an oracle network and this then leads to the question what is an oracle network and why do we even need these oracle networks well for this we have to look at how blockchain networks currently function and in particular the use of smart contracts on these blockchains now smart contracts are pieces of code on the blockchain that will execute when certain conditions are met and this provides full transparency and security to all parties involved that the contract will be executed and that no single entity can pull out or alter the terms of the deal last minute so where does chain leak fit in well this all has to do with the built-in security of the blockchain which is that blockchains themselves cannot pull data from external sources they only have access to the data that's already on the ledger it is part of the reason why blockchain is so secure so this means that weather data financial data and information about sport matches or flights is inaccessible to the blockchain which obviously severely limits the use of smart contracts since all this information is part of everyday life and when you go one step further and say what if the blockchain had access to a real world data source or oracle how would you then know if that data source is accurate and how would you be sure that no one could manipulate that data source to influence the outcome of the smart contracts on the blockchain even oracles with the best intentions can be compromised or make mistakes and this is why you don't want a single data source but rather multiple oracles to verify the data so these two steps of communicating with an external data source and guaranteeing data integrity is also known as the oracle problem and this is where chain link comes in chain link is a decentralized oracle network that allows smart contracts to access real-world data feeds effectively making them hybrid smart contracts these hybrid smart contracts can read and write data that is not on the blockchain which opens the door for creating much more useful smart contracts and depths that can be used in everyday life as you can see here the chain link oracle network will collect information from multiple sources that are not on the blockchain also known as offchain then perform the needed calculations after which it will format this data in such a way that it's readable by the blockchain this all happens in a secure environment using cryptographic techniques to ensure that the data is only accessible by those for whom it's intended thereby guaranteeing the safety of using the chain link network in addition to this each smart contract is provided with a customized service from the chain link oracle network and this means that the performance of chain link with one specific smart contract does not affect the reliability or security of other smart contracts on the blockchain this allows thousands if not millions of oracle systems to run on the same blockchain without affecting the performance of other smart contracts it allows for chain link to provide information from one blockchain to another for more complicated debt development so now that the purpose of the chain link network is clear you might ask where does the link token fit in is it even necessary before we continue please like and subscribe to the channel for more videos while the link token is used to compensate the operators of the oracles on the network on a proof of work blockchain you get rewarded for doing complex computations and on the proof of stake blockchain you get rewarded for staking your capital to guarantee the integrity of the staking node with the chain link oracle network the same principle applies since the node operators need to be incentivized to retrieve or provide the data that is requested by the smart contract in addition to getting the information the node operator also has to do off-chain computations formatted data so the blockchain can access it and guarantee the uptime so if a smart contract selects the chain link network for an off-chain data request it will have to pay a certain amount of linked tokens to get the information this amount will vary depending on the supply and demand of the data requested now this immediately opens the door to the question is the link token the best way to pay operators to which i say that's a discussion for another time but i will say that it's very likely that in the future oracle networks will change their payment form or even allow a multi-currency payment system it will all depend on how the use of oracle networks will continue to develop this was what is changing please like and subscribe to the channel for more videos

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