Oracles are a highly important technological development that takes the power of Blockchains, smart contracts, and cryptocurrencies to the next level by providing the possibility of linking off chain data with Blockchain activities. Before diving deeper into the uses of oracles and their importance, it is vital to understand the benefits underlying smart contracts. Essentially, smart contracts are like real-world, physical, contracts. However, they function on the Blockchain and are self-verifying, self-executing, and tamper proof. Each smart contract possesses predetermined conditions and executes itself when these conditions are met and satisfied. So, how do oracles come into play here? Well, they help link virtual Blockchains with real-world events, which is actually much more important than it might seem at first.
Types of Oracles out there and what they do.
First off, bitcoin and Ethereum Blockchains do not have easy access to information that lays outside of Blockchains and until now, it was impossible to validate off chain conditions and events that are more complicated than basic fund and cryptocurrency transfers. Oracles act as decentralized middlemen for feeding outside data to Blockchain platforms. They are capable of securely linking various smart contracts to bank payments, payment plans, deliveries, market price alterations, temperature monitoring, and much, much more.
Currently, oracles are the only way for smart contracts to associated with and use utilize physical data and information outside of Blockchain environments. There are quite a few different types of oracles. Such as hardware, software, consensus-based, outbound, and inbound oracles. Let’s take a look at these.
Hardware Oracles: Rely on cryptographic evidence, RFID readings, and sensors. Hardware oracles see use cases in analyzing and recording the speed of vehicles that cross certain movement sensors and product relocations.
Software Oracles: These types of oracles pertain to the relay of information that is available online, such as flight times, fluctuations in prices, and data related to websites.
Consensus-Based Oracles: Ideal for predicting and confirming outcomes that are set to take place in the future. Generally, consensus-based oracles operate through the use of multiple oracles to avoid unreliable and risky information, as well as market manipulations through rating systems.
Outbound Oracles: Can grant smart contracts the ability to utilize and send data pertaining to the outside world. Think smart locks on garages, factories, homes, and even cars.
Inbound Oracles: Ideal for monitoring and utilizing data from external world that relates to finances, such as stock changes, buy orders for fiat fluctuations, and much more.
Is there a possible future for Blockchains without Oracles and how far has the tech come along?
Oracles are extremely important, without them, there is no future for smart contract advancements and development. Smart contracts can function based on Blockchain information and activities like token distribution, trades, and etc. However, linking them to real-world events opens up a lot of doors and possibilities. The real-world applications of smart contracts and oracles sprawl practically over every field and industry known to man, the possibilities of automation here are truly phenomenal.
It’s important to note that Blockchains operate under sequential principles. Meaning that certain specific events take place and are recorded one after another in an ordered and continuous fashion. However, information and events that are not generally digitized, by nature do not comply with a perfect sequential order. Therefore, it is impossible for Blockchains to adopt organic means of two-way communication without the use of oracles. Oracles are the next step towards allowing real and digital words as well as different Blockchains to interact with one another seamlessly. The technology is currently in its growth stages and developers who have Blockchain and various industry experiences are highly sought after.
Who stands behind Oracles and what is the target base?
Many organizations are interested in adopting and pursuing Blockchain based oracles for the execution of sophisticated and trustless contracts. The ChainLink startup has developed sophisticated oracles that open up doors for smart contract creators to work with key off Blockchain data, API’s, and other payment processors.
Large corporations like IBM, Swift, Sony, and a multitude of banks have expressed interested in adopting this tech due to their understanding of the underlying potential and benefits that can be drawn from such Blockchain technology. As a matter of fact, Swift has already run successful tests with ChainLink utilizing their decentralized, trustless oracles. Anybody with access to the Blockchain can benefit from the use of oracles and smart contracts
Where do we go from here?
Blockchains, cryptocurrencies, oracles, and smart contracts are here to stay, this is certain. Constant progress is being made to improve these technologies on a daily basis, more and more organizations and startups are taking steps towards integrating their business operations with the Blockchain due to the plethora of benefits it provides. However, a large portion of the mass market is quite hesitant in accepting the crypto world. Oracles will surely play a large part in paving the pathway towards a higher rate of mass adoption in regards to crypto tech by making everything more user-friendly, elegant, and simple.
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