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Chainlink is a decentralized Oracle network that connects smart contracts with off-chain data feeds, APIs, and other blockchains. It bridges smart contracts and off-chain data sources, ensuring reliable and tamper-proof data feeding.

In simple terms, Chainlink is a technology that enables communication between smart contracts and external data sources.

The LINK token serves as the primary digital currency in the Chainlink network. It is precisely designed to compensate node operators for retrieving data from external sources and transmitting it to smart contracts. In addition, node operators use LINK as collateral, providing an additional layer of security to the network.

A Brief History of Chainlink 

Chainlink was founded in September 2017 by Sergey Nazarov, Ari Juels, and Steve Ellis. The founders of Chainlink identified the necessity of a trustworthy and secure method for smart contracts to interact with off-chain data. They believed that the absence of such a system would prevent smart contracts’ potential from being fully realized.

Smart contracts cannot fetch data independently and need a secure way to receive external data without compromising blockchain integrity. To solve this problem, the Chainlink team developed a decentralized network that bridges smart contracts and external data sources in May 2019. 

Rather than relying on a central authority to moderate data, Chainlink utilizes an Ethereum-based, decentralized network of node operators called Oracle,s who are incentivized to verify data and provide it back to smart contracts for usage.

Oracles retrieve accurate data from off-chain sources and deliver it to the requesting smart contract. They verify the data by aggregating it and using various validation methods to ensure its accuracy and reliability before sending it back to the requested smart contract.

Chainlink’s secure interaction between smart contracts and external data sources expands the capabilities of blockchain technology in decentralized applications for finance, insurance, supply chain management, and gaming.