Blockchain and its new cryptocurrencies and chains are becoming popular day by day, making it one of the fastest-growing technologies in the business world. The first chain that came into the market after Bitcoin was Ethereum which brought the concept of “smart contracts.”
These smart contracts are paving the way for solving various real-world problems in the immutable, decentralized, distributed, yet trustworthy network. It means that Blockchain is no longer fixed for the cryptocurrency market. But it can also be employed to solve realistic problems by setting up terms or agreements in the form of some computation done in smart contracts (written in a programming language).
With this breakthrough, new ideas sprang up that brought solutions to the problems of the centralized world into the decentralized world. But with this, some significant bottlenecks in the advancement of Blockchain came up.
Before discussing accessing real-time data using Chainlink Oracles, it’s also essential to know the Blockchain technology bottlenecks. By knowing this, you can overcome challenges in less time.
3 Major Bottlenecks In The Advancement Of Blockchain
1. Every Transaction In Blockchain Takes Place On Blockchain
Every computation, be that solving a simple calculation from the Blockchain data (called on-chain data) or a complex computation that involves data from the real world (called off-chain data), in real-time, is needed to take place Blockchain itself.
It means that there had to be a way devised for an isolated system like Blockchain to access not only its on-chain data but also off-chain data. If this is achieved, putting a massive amount of data (off-chain data) on Blockchain would create extremely high levels of redundancy in every system that processes blockchain transactions.
2. No Relation Between Real World Data & Smart Contracts
There is no link between off-chain data & smart contracts, which means smart contracts could not process any computation related to off-chain data.
3. Bigger Transaction = Higher Cost
If any real-world problem ought to solve with Blockchain, then data has to be migrated over to Blockchain to solve that transaction, which means more time consumption will lead to a higher transaction (gas) cost.
How To Access Real-Time Data Employing Chainlink Oracles?
To solve the real-world computation off-chain & feed the solution to the on-chain smart contract, some mechanism that can make off-chain data immutable, decentralized, distributed, & secure was required. To make this possible, Chainlink created Oracles and combined them to form a Decentralized Oracles Network (DONs).
Oracles acted as entities that could connect off-chain data with the Blockchain’s smart contract. Oracles can solve all off-chain computations by preserving all the core fundamentals of Blockchain & acted as a bridge to feed the solution to the Blockchain’s smart contract.
Additionally, they enabled 2-way communication by creating a communication link between on-chain & off-chain data. It means all high costing computations can now be done off-chain while keeping it immutable, decentralized, distributed, & secure.
Oracles can achieve this connectivity by interfacing with external APIs & data feeds, allowing them to pull data for or push data from a smart contract.
Did You Know One Oracle Can Mislay Whole Trustworthiness?
Well, one Oracle could not be called decentralized or distributed as it certainly wasn’t giving immutability. This resulted in a loss of whole trustworthiness as data was received from outside a blockchain network. To feed any data to Blockchain, any system outside the Blockchain must have the same fundamentals.
Decentralized Oracle Network (DONs) To Maintain Credibility
To maintain trustworthiness, DONs were formed. The DONs is a network where several Blockchain oracles run by independent node operators are selected to retrieve & validate data from multiple off-chain sources. It ultimately helped achieve a Blockchain kind network outside of Blockchain in the real world to process any off-chain data.
It works as a Blockchain because the oracle nodes of these DONs have a resultant value aggregated to get a single trusted data point fed to the on-chain smart contract for further execution.
Moreover, the independent network of multiple DONs running simultaneously and independently of each other formed the chainlink network. In simple terms, Chainlink is a decentralized network of Oracles that lets users securely connect off-chain data to on-chain smart contracts & vice versa.
Know How Users Can Securely Connect Off-Chain Data To On-Chain Smart Contracts & Vice Versa
Here we have given an example that will help you understand the working to know how users can securely connect off-chain data to on-chain smart contracts & vice versa.
Assume there is an insurance company that insures packages delivered across the globe. John visits this company and asks to insure his package that requires to reach its destination in 3 days. In this case, if the package gets delayed due to any reason related to the flight carrier, John gets the claim. But, in case of delivery delays, various checks are done by the insurance company to ensure that the package was not delivered on time due to the lagging of the flight carrier; thus, settlement of the claim becomes a lengthy process.
To solve the above issue, the insurance company decides to opt for a Blockchain-based solution, & to fetch flight data in real-time, they opt for oracles. This oracle-based insurance company will monitor data coming through oracles via API and transmit the required information to the Blockchain. Then, with the help of smart contracts (based on the preset agreement between the client & company) and oracles, the Blockchain will determine if the events are occurring as per the preset agreement or not through consensus.
Smart contracts will then control the action to release a claim or not. Being on Blockchain, the whole process gets transparent, allowing the clients to track the status of the flight, henceforth, their packages. Thus, making it automated and trustless increases faith in the process, paving the path for smoother and faster claims.
Wrapping Up
Chainlink is also developing optional attributes such as advanced oracle computations, oracle and data privacy, and much more. By ensuring high security & credibility guarantees on par with the Blockchain, Chainlink oracles enable more refined smart contracts. Moreover, to know major things related to Blockchain Oracles, click here.
If you are looking to access real-time data using Chainlink Oracles or want to overcome Blockchain oracle issues in your blockchain ecosystem, take help from the best Blockchain development company (Infrablok). It will help by offering innovative Blockchain solutions.