What is Chainlink?

Karolina

23 Jan 2024
What is Chainlink?

At the heart of blockchain's functionality are smart contracts, self-executing contracts with the terms of the agreement directly written into code. While smart contracts have the potential to automate and streamline a wide range of processes, they are inherently limited by their inability to access real-world data or external systems on their own. This is where Chainlink enters the scene, offering a groundbreaking solution to one of the most pressing challenges in the blockchain ecosystem.

Chainlink is a decentralized oracle network designed to bridge the gap between smart contracts on the blockchain and real-world data. It acts as a middleware, allowing smart contracts to securely and reliably interact with external data feeds, web APIs, and traditional bank payment systems. This capability is crucial for the execution of smart contracts under specific conditions that depend on real-time information, such as market prices, weather data, or other external APIs.

Historical Background and Development

Launched in June 2017 by the company SmartContract, Chainlink was conceived to create a secure, blockchain-agnostic layer. Layer that facilitates data exchange between blockchains and the outside world. Co-founded by Sergey Nazarov and Steve Ellis, Chainlink aims to solve the oracle problem. This problem is the challenge of providing smart contracts with accurate and tamper-proof data without sacrificing decentralization or security.

Oracles play a critical role in the functionality of smart contracts. It acts as a data feeds that trigger contract execution upon the fulfillment of predefined conditions. However, relying on a single source of truth or a centralized oracle can introduce points of failure and security vulnerabilities. Chainlink addresses these concerns by creating a network of decentralized oracles.

By enabling seamless interaction, Chainlink opens up new avenues for blockchain integration across various sectors. For example finance, insurance, and supply chain management.

The Problem with Smart Contracts

Smart contracts are powerful tools that automate the execution of agreements on the blockchain, ensuring that transactions are processed when predefined conditions are met. However, a significant limitation arises from their inability to natively access or verify external data. This means that without an intermediary, smart contracts cannot interact with any information or systems outside their native blockchain. This limitation severely restricts the scope of applications for smart contracts, confining them to operations that only rely on data available within the blockchain.

The Solution: Decentralized Oracles

Oracles serve as bridges between the blockchain and the external world, enabling smart contracts to access off-chain data. However, traditional oracles introduce a central point of failure, undermining the decentralized nature of blockchains. Decentralized oracles, on the other hand, mitigate this risk by sourcing data from multiple, independent oracles and aggregating it before feeding it to the smart contract. This approach not only maintains the integrity and security of the data but also preserves the decentralized ethos of blockchain technology.

Source: Chainlink Website

Decentralization: Ensuring Data Integrity and Security

Chainlink's decentralized architecture is foundational to its ability to provide secure and reliable data to smart contracts. By distributing the data sourcing and aggregation process across multiple nodes, Chainlink ensures that the data remains tamper-proof and reflective of true market conditions, thereby maintaining the integrity and security of the data provided to smart contracts.

Flexibility: Adaptable to Various Blockchains

One of strengths is its blockchain-agnostic design, allowing it to serve as an oracle solution for any blockchain. This flexibility is crucial for the widespread adoption of blockchain technology, as it enables Chainlink to support a diverse range of applications across different blockchain environments, facilitating seamless data integration and interoperability.

Trustworthiness: Reputation System for Node Operators

Chainlink incorporates a comprehensive reputation system that monitors the performance and reliability of node operators. This system incentivizes nodes to provide accurate and timely data, as their reputation and the potential for future earnings are directly tied to their performance. This not only ensures the reliability of the data provided to smart contracts but also fosters a trustworthy ecosystem of oracle services.

LINK is the native cryptocurrency token of the Chainlink network, designed to facilitate the various operations within its ecosystem. As an ERC-20 token on the Ethereum blockchain, LINK is used as the primary medium of exchange for services on the Chainlink network. It plays a crucial role in ensuring the proper functioning of the decentralized oracle network by compensating node operators for retrieving data, formatting it, and guaranteeing uptime by staking LINK as collateral.

Source: CoinMarketCap
  • Node Operator Payments. LINK tokens are used to compensate Chainlink node operators for their efforts in providing secure and reliable data to the smart contracts. This includes rewards for retrieving data, processing queries, and ensuring the data's integrity.
  • Staking. Although staking is a feature that is being progressively introduced into the Chainlink ecosystem, it represents a significant use case for LINK tokens. Staking involves locking up LINK tokens as a form of security deposit to guarantee the performance and reliability of node operators within the network.
  • Governance. In future developments, LINK might also play a role in the governance of the Chainlink ecosystem, allowing token holders to vote on key decisions and protocols within the network.

Key Takeaways

Key TakeawayDescription
FunctionalityChainlink addresses the oracle problem, providing a secure bridge between smart contracts and external data sources.
Decentralized OraclesUtilizes decentralized oracles to ensure data integrity and security, mitigating the risk of centralized points of failure.
LINK CryptocurrencyLINK tokens facilitate operations within the Chainlink ecosystem, including compensating node operators and potentially governing the network.
Key Takeaways

Conclusion

Chainlink represents a pivotal innovation in the blockchain ecosystem, addressing the critical "oracle problem" by providing a secure bridge. Its decentralized oracle network ensures that smart contracts can interact with the real world in a trustless manner. This opens up a myriad of possibilities for automation and decentralized applications.

In essence, Chainlink not only broadens the scope and functionality of smart contracts but also embodies the decentralization and security principles of blockchain technology. Its ongoing development and adoption are testament to the blockchain community's recognition of the need for data exchange mechanisms.

If you are interested in utilizing Chainlink or other blockchain-based solutions for your project, please reach out to contact@nextrope.com

FAQ

What is the problem that Chainlink aims to solve?

  • Chainlink addresses the limitation of smart contracts by providing them with access to real-world data and external systems, enabling them to execute based on real-time information securely.

How does Chainlink work to bridge the gap between smart contracts and external data sources?

  • Chainlink utilizes a decentralized oracle network to securely and reliably interact with external data feeds, web APIs, and traditional bank payment systems, acting as a middleware between smart contracts and the real world.

What are the key features of Chainlink?

  • Chainlink's key features include decentralization, ensuring data integrity and security; flexibility, being adaptable to various blockchains; and trustworthiness, incorporating a reputation system for node operators to maintain a reliable ecosystem.

More about this Topic on Nextrope Blog

  1. Chainlink vs Polkadot
  2. NFT and Gaming: Chainlink Use Cases
  3. Chainlink in DeFi: Use Cases
  4. Chainlink vs. Avalanche: Exploring the Blockchain Frontier
  5. Authorization and Identity: Chainlink Use Cases
  6. Chainlink and On-Chain Finance Use Cases

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AI in Real Estate: How Does It Support the Housing Market?

Miłosz Mach

18 Mar 2025
AI in Real Estate: How Does It Support the Housing Market?

The digital transformation is reshaping numerous sectors of the economy, and real estate is no exception. By 2025, AI will no longer be a mere gadget but a powerful tool that facilitates customer interactions, streamlines decision-making processes, and optimizes sales operations. Simultaneously, blockchain technology ensures security, transparency, and scalability in transactions. With this article, we launch a series of publications exploring AI in business, focusing today on the application of artificial intelligence within the real estate industry.

AI vs. Tradition: Key Implementations of AI in Real Estate

Designing, selling, and managing properties—traditional methods are increasingly giving way to data-driven decision-making.

Breakthroughs in Customer Service

AI-powered chatbots and virtual assistants are revolutionizing how companies interact with their customers. These tools handle hundreds of inquiries simultaneously, personalize offers, and guide clients through the purchasing process. Implementing AI agents can lead to higher-quality leads for developers and automate responses to most standard customer queries. However, technical challenges in deploying such systems include:

  • Integration with existing real estate databases: Chatbots must have access to up-to-date listings, prices, and availability.
  • Personalization of communication: Systems must adapt their interactions to individual customer needs.
  • Management of industry-specific knowledge: Chatbots require specialized expertise about local real estate markets.

Advanced Data Analysis

Cognitive AI systems utilize deep learning to analyze complex relationships within the real estate market, such as macroeconomic trends, local zoning plans, and user behavior on social media platforms. Deploying such solutions necessitates:

  • Collecting high-quality historical data.
  • Building infrastructure for real-time data processing.
  • Developing appropriate machine learning models.
  • Continuously monitoring and updating models based on new data.

Intelligent Design

Generative artificial intelligence is revolutionizing architectural design. These advanced algorithms can produce dozens of building design variants that account for site constraints, legal requirements, energy efficiency considerations, and aesthetic preferences.

Optimizing Building Energy Efficiency

Smart building management systems (BMS) leverage AI to optimize energy consumption while maintaining resident comfort. Reinforcement learning algorithms analyze data from temperature, humidity, and air quality sensors to adjust heating, cooling, and ventilation parameters effectively.

Integration of AI with Blockchain in Real Estate

The convergence of AI with blockchain technology opens up new possibilities for the real estate sector. Blockchain is a distributed database where information is stored in immutable "blocks." It ensures transaction security and data transparency while AI analyzes these data points to derive actionable insights. In practice, this means that ownership histories, all transactions, and property modifications are recorded in an unalterable format, with AI aiding in interpreting these records and informing decision-making processes.

AI has the potential to bring significant value to the real estate sector—estimated between $110 billion and $180 billion by experts at McKinsey & Company.

Key development directions over the coming years include:

  • Autonomous negotiation systems: AI agents equipped with game theory strategies capable of conducting complex negotiations.
  • AI in urban planning: Algorithms designed to plan city development and optimize spatial allocation.
  • Property tokenization: Leveraging blockchain technology to divide properties into digital tokens that enable fractional investment opportunities.

Conclusion

For companies today, the question is no longer "if" but "how" to implement AI to maximize benefits and enhance competitiveness. A strategic approach begins with identifying specific business challenges followed by selecting appropriate technologies.

What values could AI potentially bring to your organization?
  • Reduction of operational costs through automation
  • Enhanced customer experience and shorter transaction times
  • Increased accuracy in forecasts and valuations, minimizing business risks
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Want to implement AI in your real estate business?

Nextrope specializes in implementing AI and blockchain solutions tailored to specific business needs. Our expertise allows us to:

  • Create intelligent chatbots that serve customers 24/7
  • Implement analytical systems for property valuation
  • Build secure blockchain solutions for real estate transactions
Schedule a free consultation

Or check out other articles from the "AI in Business" series

AI-Driven Frontend Automation: Elevating Developer Productivity to New Heights

Gracjan Prusik

11 Mar 2025
AI-Driven Frontend Automation: Elevating Developer Productivity to New Heights

AI Revolution in the Frontend Developer's Workshop

In today's world, programming without AI support means giving up a powerful tool that radically increases a developer's productivity and efficiency. For the modern developer, AI in frontend automation is not just a curiosity, but a key tool that enhances productivity. From automatically generating components, to refactoring, and testing – AI tools are fundamentally changing our daily work, allowing us to focus on the creative aspects of programming instead of the tedious task of writing repetitive code. In this article, I will show how these tools are most commonly used to work faster, smarter, and with greater satisfaction.

This post kicks off a series dedicated to the use of AI in frontend automation, where we will analyze and discuss specific tools, techniques, and practical use cases of AI that help developers in their everyday tasks.

AI in Frontend Automation – How It Helps with Code Refactoring

One of the most common uses of AI is improving code quality and finding errors. These tools can analyze code and suggest optimizations. As a result, we will be able to write code much faster and significantly reduce the risk of human error.

How AI Saves Us from Frustrating Bugs

Imagine this situation: you spend hours debugging an application, not understanding why data isn't being fetched. Everything seems correct, the syntax is fine, yet something isn't working. Often, the problem lies in small details that are hard to catch when reviewing the code.

Let’s take a look at an example:

function fetchData() {
    fetch("htts://jsonplaceholder.typicode.com/posts")
      .then((response) => response.json())
      .then((data) => console.log(data))
      .catch((error) => console.error(error));
}

At first glance, the code looks correct. However, upon running it, no data is retrieved. Why? There’s a typo in the URL – "htts" instead of "https." This is a classic example of an error that could cost a developer hours of frustrating debugging.

When we ask AI to refactor this code, not only will we receive a more readable version using newer patterns (async/await), but also – and most importantly – AI will automatically detect and fix the typo in the URL:

async function fetchPosts() {
    try {
      const response = await fetch(
        "https://jsonplaceholder.typicode.com/posts"
      );
      const data = await response.json();
      console.log(data);
    } catch (error) {
      console.error(error);
    }
}

How AI in Frontend Automation Speeds Up UI Creation

One of the most obvious applications of AI in frontend development is generating UI components. Tools like GitHub Copilot, ChatGPT, or Claude can generate component code based on a short description or an image provided to them.

With these tools, we can create complex user interfaces in just a few seconds. Generating a complete, functional UI component often takes less than a minute. Furthermore, the generated code is typically error-free, includes appropriate animations, and is fully responsive, adapting to different screen sizes. It is important to describe exactly what we expect.

Here’s a view generated by Claude after entering the request: “Based on the loaded data, display posts. The page should be responsive. The main colors are: #CCFF89, #151515, and #E4E4E4.”

Generated posts view

AI in Code Analysis and Understanding

AI can analyze existing code and help understand it, which is particularly useful in large, complex projects or code written by someone else.

Example: Generating a summary of a function's behavior

Let’s assume we have a function for processing user data, the workings of which we don’t understand at first glance. AI can analyze the code and generate a readable explanation:

function processUserData(users) {
  return users
    .filter(user => user.isActive) // Checks the `isActive` value for each user and keeps only the objects where `isActive` is true
    .map(user => ({ 
      id: user.id, // Retrieves the `id` value from each user object
      name: `${user.firstName} ${user.lastName}`, // Creates a new string by combining `firstName` and `lastName`
      email: user.email.toLowerCase(), // Converts the email address to lowercase
    }));
}

In this case, AI not only summarizes the code's functionality but also breaks down individual operations into easier-to-understand segments.

AI in Frontend Automation – Translations and Error Detection

Every frontend developer knows that programming isn’t just about creatively building interfaces—it also involves many repetitive, tedious tasks. One of these is implementing translations for multilingual applications (i18n). Adding translations for each key in JSON files and then verifying them can be time-consuming and error-prone.

However, AI can significantly speed up this process. Using ChatGPT, DeepSeek, or Claude allows for automatic generation of translations for the user interface, as well as detecting linguistic and stylistic errors.

Example:

We have a translation file in JSON format:

{
  "welcome_message": "Welcome to our application!",
  "logout_button": "Log out",
  "error_message": "Something went wrong. Please try again later."
}

AI can automatically generate its Polish version:

{
  "welcome_message": "Witaj w naszej aplikacji!",
  "logout_button": "Wyloguj się",
  "error_message": "Coś poszło nie tak. Spróbuj ponownie później."
}

Moreover, AI can detect spelling errors or inconsistencies in translations. For example, if one part of the application uses "Log out" and another says "Exit," AI can suggest unifying the terminology.

This type of automation not only saves time but also minimizes the risk of human errors. And this is just one example – AI also assists in generating documentation, writing tests, and optimizing performance, which we will discuss in upcoming articles.

Summary

Artificial intelligence is transforming the way frontend developers work daily. From generating components and refactoring code to detecting errors, automating testing, and documentation—AI significantly accelerates and streamlines the development process. Without these tools, we would lose a lot of valuable time, which we certainly want to avoid.

In the next parts of this series, we will cover topics such as:

Stay tuned to keep up with the latest insights!