Oracle: Read Real-World Data, Read The Future of Blockchain

Johnny Lyu
Aug 2, 2019 · 3 min read

As Facebook was educating the U.S. Senate about cryptocurrency and blockchain, across the Pacific Ocean, Chinese Internet giant Alibaba’s subsidiary Ant Financial announced over 40 cases employing blockchain technology, proudly.

By the way, we all know it’s THE U.S. Senate, the members of which were questioning Mark Zuckerberg about Facebook’s profitability given that the social network “remains free”.

No hard feelings, my American friends. I simply hope to see regulatory and policy tailwind spread globally.

If, however, I have to make another analogous US-Sino comparison like the one above, I found some references from Cointelegraph:

I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity. — Donald Trump.

A new generation of technology represented by artificial intelligence, quantum information, mobile communications, internet of things and blockchain is accelerating breakthrough applications. — Xi Jinping.

But anyway, in a press conference on July 30, Geoff Jiang, a VP at Ant Financial, said the forty-ish use scenarios span product sourcing, tenement, contracting, logistics and charity. Impressive indeed.

However, if I was there, I would really like to ask Jiang, out of curiosity more than anything, about the phase that calls the data from the real world and then processes the computation for the smart contract. The first half of this phase, to be specific.

In the computer science area, there is a theory called Oracle Machine invented by Alan Turing, who is considered as the father of modern computers.

This oracle, not the database software and technology provider Oracle Corporation, is used to study decision problems — the yes-or-no sort of questions rather than those that need actual computing.

Regardless of the distinguished algorithm and output, the input must be data. Oracle is the gateway to such data.

Let me give you an example.

There is a blockchain-based insurance provider that offers flight delay insurance. Policy holders buy the insurance via the insurer’s DApp before the flight takes off. The schedule info is accordingly included in the smart contract for compensation, which would be triggered if it reads that there is a lag in the actual take-off time.

But there are two issues that need to be addressed in this case:

a) The smart contract runs in an environment relatively isolated from the real-world information;

b) The on-chain data is relational, while the real-world data is random or arbitrary, needing to be standardized according to certain blockchain protocols.

Oracle is able to cope with these two issues. In this case, it stands between the DApp and the data sources, which provide credible information from the real world that the delay actually happened.

Now you might wonder, how do I know it’s credible information? Very good question — the insurance firm should hire you.

Sorry. But yes, very true if it’s a centralized oracle, the risk of either side suffering from a malicious information source is higher. But what if the information comes from all the stakeholders? Other passengers, the airline, outbound airport, inbound airport, aeronautical satellite service provider, etc. Especially with reasonable incentives, I’d be surprised if the odds aren’t in favor of justice.

How badly do we need oracle in blockchain?

In the current era approaching Web 3.0, consider smart contracts as programs, and blockchain as a computer. What is the problem with this high-functioning computer?

As we discussed above, smart contracts run in a sandbox environment. That said, this “computer” is one not connected to the Internet, so it can only process with data stored in its own hardware.

So again, how badly do we need oracle? You tell me.


KuCoin aims at providing users digital asset transaction and exchange services which are even more safe and convenient, integrating premium assets worldwide, and constructing state of the art transaction platform.

Johnny Lyu

Written by

KuCoin Co-founder & VP, doubles the partner of KuCoin’s investment affiliate Phoenix Global Capital, blockchain frontrunner, investor and advisor.


KuCoin aims at providing users digital asset transaction and exchange services which are even more safe and convenient, integrating premium assets worldwide, and constructing state of the art transaction platform.

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