Why oracles such as Chainlink are so important.

Why oracles such as Chainlink are so important.

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I browse through this subreddit fairly often and I rarely really see anyone properly bring up Chainlink or oracles. I feel like many people here do not know much on the topic. So what makes an oracle so important?

Firstly I’ll quickly have to define what a smart contract is. A smart contract is a contract where no third party is involved as the contract is self-executed by the blockchain due to a agreement which then becomes lines of computer code.

So where does an oracle such as Chainlink come into this? Well without an oracle a smart contract on a blockchain only has access to on-chain data meaning without an oracle a smart contract does not have access to any off-chain data meaning it knows nothing off the outside world. Such as who is the current president, what is the price of gold or an event that occurs.

A Simple visualisation

An easy way to understand just how important this is, is when most people bring up the potential smart contract uses in the real world on lets say ethereum the majority of these examples need off-chain data.

So what makes Chainlink in particular important as an oracle? What’s the competition like? While Chainlink does have competitors at this point in time Chainlink is ahead of the herd due to it being the first decentralised oracle and having really important long term connections most note worthy being google. This has given Chainlink a great chunk of the market share in this area meaning competitors will have a hard time gaining their own. This is why I personally think Chainlink will continue being the leader in this area going into the future.

I hope this sheds just a bit of light on what an oracle actually does and why this makes them important for the cryptospace.

I highly recommend anyone interested in wanting to know a bit more about oracles and Chainlink to check out this informative fact sheet https://www.chainlinkecosystem.com/factsheet/

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