Thread by @alex_valaitis

Let's break down the difference between a 'Blockchain' and a @chainlink 'Decentralized Oracle Network' (aka a 'DON').

Everyone in crypto has heard of the former, but not everyone understands the latter.

While they share some similarities there are some important differences 🧵

@chainlink In concrete terms, a 'blockchain' is a peer-to-peer network consisting of unique nodes (computers) that help record transactions between participants and maintain consensus of the digital ledger tracking those transactions.

@chainlink To get more specific, a 'blockchain NETWORK' is the blockchain ledger plus everyone contributing to that ledger.

Whereas, a 'blockchain PROTOCOL' refers to the rules that govern the blockchain network.

@chainlink A 'Decentralized Oracle Network' is a network consisting of 'Oracles', which are independent entities that connect blockchains to external systems/data.

To be more specific, they allow verifiably true data to be input/output to blockchains which are otherwise closed off networks

@chainlink Quick note: similar to blockchain nodes, Oracles are ultimately just computers/hardware running specific software as well.

Some people might get confused by the general term 'entity' vs 'participant', so I like to describe it in as tangible terms as possible.

@chainlink So how are these two types of networks similar?

Well for starters, they both are decentralized digital networks that rely on coordination between its participants.

Specifically, these participants are trying to reach consensus on something that impacts the network.

@chainlink So how are they different?

One way that they are different is the type of participants. Generally speaking, participants in a blockchain network can be a mix of individuals and/or entities.

In the case of DONs, the participants skew heavily towards established entities.

@chainlink Another way that they are different is WHAT they are trying to reach consensus on.

In the case of a blockchain network, the network is trying to achieve consensus on which node has the right to append a new block of transactions to the ledger...

@chainlink In the case of a DON, the network is trying to come to consensus on what is the verifiably true piece of data to feed into a blockchain network.

This can range from a price feed to a random number (VRF) or proof of reserves (PoR).

@chainlink The important nuance here is that DON's are much more broad in terms of the types of use cases/data they process & need to come to consensus on

Blockchains are designed to be inherently narrow in terms of their functionality. As this increases network security & stability

@chainlink Some #Bitcoin maximalists even argue that smart contracts introduce security risks to some degree.

However, Ethereum and other layer-1s have proven that the value/range of use cases unlocked by smart contracts are worth any slight perceived risk in security & network stability.

@chainlink Hopefully this thread helped explain how these 2 concepts are different in clear terms.

I also tried to allude to why both types of networks need to exist, which is known as the 'Blockchain Oracle Problem':

blog.chain.link/what-is-the-bl… blog.chain.link/what-is-the-bl…

@chainlink Lastly, I know some simplifications were made in my descriptions above since Twitter has character limitations.

Let me know if I missed anything (or if you disagree) in the comments below!