Introducing Blockchain Oracle to you!
This article is about Blockchain Oracles, something you will come across when you’ll have to feed real-world data which isn’t available in the blockchain.
Smart contracts in the blockchain powers a wide range of application, from financial services and supply chain management to gaming and voting systems. However, in order to interact with the real world, smart contracts need access to real-world data, such as prices, weather information, and events. Blockchain oracles serve as a bridge between the blockchain and the external world by providing smart contracts with the necessary data. By doing so, blockchain oracles enable the creation of trustless and decentralized applications that can automate various business processes and interactions without the need for intermediaries.
So, what actually is this oracle?
A blockchain oracle is a service or mechanism that allows smart contracts on a blockchain to interact with data and systems that exist outside the blockchain. It acts as a bridge between the blockchain and external data sources, enabling smart contracts to access and process real-world information.
Oracles provide critical information to smart contracts, such as stock prices, weather data, and other real-time information, that can be used to trigger the execution of certain actions within the smart contract. They essentially help to make smart contracts more flexible and dynamic by enabling them to respond to real-world events and conditions.
Oracles can be centralized or decentralized, depending on the implementation. Centralized oracles rely on a single trusted source to provide data to the blockchain, while decentralized oracles use a consensus mechanism to gather and verify data from multiple sources before delivering it to the smart contract.
Blockchain oracles are becoming increasingly important as more and more use cases for blockchain technology emerge, particularly in industries such as finance, insurance, and supply chain management.
That’s cool, Right?
Go on reading…
We need blockchain oracles because they enable smart contracts to interact with external data and systems, which is necessary for many blockchain use cases. Smart contracts are essentially self-executing contracts that can automatically trigger certain actions based on predefined conditions. However, these conditions often depend on real-world data that is not available on the blockchain itself.
For example, a smart contract that triggers a payment when a certain condition is met might require access to external data sources such as stock prices, weather data, or exchange rates. Oracles provide a way for smart contracts to access this information and trigger the payment automatically, without the need for manual intervention.
In addition to providing access to external data sources, oracles can also enable smart contracts to interact with other blockchain networks or off-chain systems, such as payment gateways or IoT devices. This makes smart contracts more versatile and flexible, and enables them to support a wider range of use cases.
Overall, blockchain oracles play a critical role in enabling blockchain-based applications to interact with the real world, and are essential for unlocking the full potential of blockchain technology.
Sounds awesome!! But how to use them?
Oracles can be used in blockchain in a variety of ways, depending on the specific use case and implementation. Here are some examples:
- Smart contracts: Oracles can be used to provide external data to smart contracts, which can then use this information to trigger certain actions. For example, a smart contract might be programmed to automatically execute a payment when a certain condition is met, such as when the price of a commodity reaches a certain level. Oracles can provide the necessary data to make this possible.
- Supply chain management: Oracles can be used to track goods and products as they move through the supply chain, providing real-time information on their location, condition, and other relevant data. This information can be stored on the blockchain, enabling stakeholders to track the entire journey of the product from start to finish.
- Insurance: Oracles can be used to provide real-time data on events such as natural disasters or accidents, which can be used to trigger insurance payouts automatically. For example, an insurance policy might be programmed to pay out automatically if a natural disaster is confirmed by a trusted data source, such as a government agency.
- Gaming: Oracles can be used to provide real-time data on the outcome of events in games, such as the roll of a dice or the outcome of a sports match. This information can be used to determine the outcome of bets or other types of transactions on the blockchain.
Overall, oracles provide a way for blockchain-based applications to interact with the real world, enabling them to support a wide range of use cases and applications.
References:
https://www.linkedin.com/pulse/what-oracles-why-do-we-need-them-blockchain-concepts-beginners/
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