The Blockchain Oracle

Hi frens. I hope your week has been great. Welcome to another episode of my BLOCKCHAIN BULLETIN. In this article, we shall delve into the meaning of blockchain oracle. The goal of this post is to explain its meaning, significance and impact to the blockchain. However, for one to fully understand what blockchain oracle is, you have to know what smart contracts are.

What are smart contracts?

Smart contracts are contracts run and executed on the blockchain. The codes for these contracts means they are executed automatically without any need for a third party or an intermediary. Provided the conditions for the contract are met, then execution will not be a problem. Smart contracts are relevant across different industries to automate processes and responses, as well as remove third party barriers, hence boosting transparency and security in transactions.

What is a Blockchain Oracle?

In simple terms, a blockchain oracle is a software, programmed to act as a bridge between a blockchain and the outside world. So, for smart contracts or commands entered on the blockchain to interact with relevant outside information, it needs an oracle to do so successfully. Introducing data and sources from the outside world to the blockchain goes a long way to adding texture and value to its use cases.

Impacts of an Oracle on a Blockchain

A blockchain oracle, by bridging external data to the blockchain, makes Decentralized Applications improve their performances and functionalities. Having access to necessary information from multiple sources, courtesy of the oracle - like market prices and performance, will enable it execute contracts based on a recent and informed database. This means you can rely on your decentralized applications to give you an accurate and reliable output. For instance, in Defi, you can trust the blockchain to take account of any changes in exchange rate when executing a transaction.

So, when you think of an oracle, you think of data accuracy, reliability, and security. And thanks to decentralized, you can almost completely trust the outcome you get because a decentralized blockchain also implores the use of multiple oracles to gather various corresponding information to avoid the risk of false or fraudulent data.

Without the integration of oracles, a blockchain in its isolated nature, would hardly have access to real world data and information relevant to its functionality. With this, you can expect stunted data processing and execution. An oracle or multiple is designed to prevent that from happening by connecting the blockchain to real time data to influence its functions in the direction of security, innovation, accuracy, and reliability.

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