Chainlink's Real World Applications

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Contributor, Benzinga
July 21, 2022

Chainlink is a decentralized oracle network that provides a “link” to real-world adoption of blockchain technology. The growing popularity of cryptocurrency and blockchain technologies has given rise to new ideas for implementation in many different real-world industries. There’s just one problem; blockchains are typically closed off from the rest of the world, only processing data that comes from within. This is where Chainlink shines. 

Chainlink was built to bridge the gap between resources that exist on or off the blockchain, meaning outside datasets can be communicated to the blockchain and take advantage of the resources that blockchain technology offers. The ability of smart contracts to interact with real-world data provides solutions to many existing problems, a few of which will be covered below.

What can VRF Technology do?

An attractive feature that Chainlink offers is the VRF (Verifiable Random Function) technology. When a new request for a random outcome is submitted to the network, the VRF generates a random number and subsequently sends a cryptographic proof to be verified as random and published on-chain before the party requesting a random outcome receives it. So, what does that mean? The data generated can be verified by anybody, and cannot be altered to ensure a desired outcome.

This technology is currently utilized in processes like ensuring NFT collections are generated randomly and for spawning loot in blockchain games. But why limit VRF to strictly on-chain use when the technology could shift entire industries?

One example that comes to mind is the McDonalds Monopoly Sweepstakes incident. Still a popular event yearly, the Monopoly Sweepstakes promised a chance to win large sums of money by pulling a winning game piece shipped to a computer-generated location. But customers in the mid-1990s never had a real chance to win. Unfortunately, the man hired to run security for this sweepstakes event, Jerome Jacobson, was not immune to human nature and greed. He would sell winning pieces to friends, family, and eventually even the mob. In total, he stole over $24 million that was intended for lucky customers.

VRF technology takes human nature out of the picture. There isn’t a chance for someone like Jerome Jacobson to game the system for their own gain. Each random result requested is verified and published on-chain before the requesting party gets the outcome. If Chainlink’s VRF were to be utilized, any game piece redeemed outside of the chosen locations could indicate fraud, and it wouldn’t take multiple years or $24 million stolen before someone caught on.

Building off of the last point, VRF technology could be used to transform the gambling sector and ensure the public’s faith in games like Powerball and Megamillions. But VRF technology isn’t all that Chainlink has to offer.

A basic Chainlink smart contract is one that acts as a bridge to the blockchain and other payment systems. If you hold most of your assets in crypto but don’t want to exchange them for fiat currency every time you want to make a purchase, then Chainlink is the answer. You can pay your bills using Bitcoin if you take advantage of Request Invoicing.

Crypto-backed fiat loans can be automated on the blockchain with Chainlink. Even allowing for collateral and interest being built in. The blockchain would not give up ownership rights until the loan is paid off, at which point the contract confirms the requirements have been met and collateral would be returned.

Using a third-party escrow site and paying unnecessary fees? With Chainlink that is no longer necessary. The chain allows for smart-contract escrow services. The terms of any deal can be hard-coded into the contract, and until the obligations have been met by both parties the contract will not execute. When these obligations are met, the contract will execute and send the assets to the respective parties.

Chainlink offers solutions that can expedite the mass adoption of cryptocurrency. Allowing both on-chain and off-chain data to interact with the Chainlink network provides the “trustless” security of the blockchain integrated with real-world industries. The vast functions of Chainlink have the ability to reshape how we have traditionally done business in the real world if we choose to take advantage of this technology.

Written by: James Hill at Blockstaradvisors.com (@blockstar_adv)

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