What are Oracles?
Oracles – Though a blockchain oracle may sound like an ancient term, it’s far from outdated, though because of their function, they take on a comparable role. In ancient times, people often did not have enough information, which is why oracles were consulted for decision-making. These oracles could provide information that was otherwise unavailable.
The information status of blockchains such as Bitcoin or Ethereum is similar because they cannot record information that is outside the blockchain. As a result, the functions of smart contracts cannot be guaranteed without external support, to validate the information. Thus, an oracle is simply a translator that provides the blockchain with external data.
Oracle provides the necessary data so that smart contracts can be executed as soon as the pre-defined conditions are met. These conditions can be anything related to the smart contract, such as temperature, terms of payment, or fees. Oracles record this changed data and then communicate it to the blockchain.
What Relevance does an Oracle Have for the Proper Functioning of a Blockchain?
Oracle plays an important role in the functioning of the blockchain. Without analyzing external data, it is almost impossible to guarantee the function of a smart contract. Furthermore, it can be assumed that smart contracts cannot reach their full potential without oracles.
However, with the help of these systems, smart contracts can be used for almost every field of application. Once the new data is fed into the blockchain, it can be used to execute the contracts and define new scenarios for use.
Alexander Weipprecht is the managing partner of Provimedia GmbH. As a trained IT specialist for application development, he has been advising leading companies on the following topics for more than 10 years: online marketing, SEO and software. Cryptocurrency is becoming increasingly important to businesses and investors. Through Coin Report and Krypto Magazin Germany, Alexander wants to give all people easy access to the subject matter.