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Blockchain Oracles

17:26 21/12/2017
Blockchain Oracles

The word “oracle” is from classical antiquity and means a person who is considered to provide people information regarding their future. When it comes to blockchain oracles, their role and functions are somewhat similar — they are used to provide necessary data.

 

Regardless of what particular blockchain system we take into consideration (Bitcoin, Ethereum, NEO, EOS, etc) off-chain information cannot be reached from the inside if it. This means that smart contracts (smarts) cannot be executed if necessary conditions are not validated. An oracle is an intermediate software that allows getting access to data outside blockchain.

 

Any time a smart contract requires external data, it addresses an oracle. This could be information about humidity, bank loan, satellites position, etc. The only way for smarts to execute their function is requesting a correspondent oracle about off-chain data and receive response relying on it.

 

Now it should be more clear why oracles are so important. Just like heroes of antiquity could not get further without additional data received from the oracles, smart contracts cannot work without information taken from blockchain oracles, as it makes smarts ten times less useful as they could be.

 

On the other hand, smarts accompanied by these extensions can be applied in any possible real world area. Just as data is recorded into blockchain, it can be used in all smarts that require it. Any use case and implementation area is possible.

 

What makes oracles important?

 

Such situation is caused by one of the fundamental properties of blockchain-based technologies. Blockchain is unchangeable. Once data is inside of an approved block, it cannot be removed or substituted. If at some point external data should be constantly renewed in blockchain, it will conflict with the fundamental principle. Basically, flexibility is sacrifice in favor of reliability.

 

What makes oracles important

On the other hand, the off-chain world is volatile and rapidly changing. Pieces of world parameters can be similar but they will never be the same. This makes non-flexible solutions useless without an additional support.

 

Such incompatibility of two models is a default state. Thus, an instrument to solve this problem is required. In this aspect, oracles are a perfect solution. Of course, they require two separate parts to be allocated inside and outside of the chain.

 

Something interesting is always happening in this field of research. Some oracles are supposed to interact with an external API. This can lead to simple and reliable network access providing payment capabilities or even interaction with other blockchain-based solutions.

 

Demand for this special kind of intermediate programs is rising. There is already too much ado about blockchain technologies today, and it seems to keep growing in the future.

 

The fresh market of oracles is expanding very fast. Several players have already got involved in the technological race. Namely, these products are Oraclize, ChainLink and Blocksense. Major computer market players like IBM or Microsoft are also interested in this potentially profitable field.

 

More and more people tend to use smarts nowadays. This means that the need for oracles will obviously increase as well since they work as instruments that make smarts possible. A huge variety of use cases guarantees that oracles will remain relevant as long as blockchain enters new business areas.

 

Most likely, standardization and unification will become the next trend. Once developers get common tools for creating both smarts and oracles, we will see the next level of the blockchain development.

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