- Blockchain oracles are a relatively new concept in the smart contract space
- They are set to become very important as blockchain technology grows
- Blockchain oracles take data from various real-world sources and feed them into a blockchain
The purpose of oracles in the blockchain space is something that not many in the blockchain and cryptocurrency world are aware of, except having the vague concept that Chainlink might be one. Other examples of blockchain oracles include DIA Data, Band Protocol, and Augur. But what are oracles and what purpose do they serve? Our quick guide will answer your essential questions.
Real World Data on the Blockchain
The word ‘oracle’ is defined by the Cambridge Dictionary as “someone who knows a lot about a subject and can give good advice”, which gives you some idea of what blockchain oracles offer. In the cryptocurrency world, blockchain oracles provide a wide variety of data from primary or secondary sources which are fed into the smart contract and recorded on the blockchain.
Blockchain oracles come in two formats – hardware and software. Hardware oracles use primary information through monitoring equipment to record data and feed it into smart contracts. Examples of these include weather stations, supply chain RFID tags, and GPS data, with Internet of Things devices also being great examples of hardware oracles.
Software blockchain oracles provide data from secondary sources, such as stock prices, weather data, or even the outcome of sporting events. Software oracles have more of a trust issue, given that their data comes from third parties, whereas hardware oracles generate their own, although they rely on 100% functionality and uptime to be accurate.
Blockchain Oracles Set to Grow and Improve
With the likely expansion of smart contracts and blockchain technology, the variety and types of information that will be combined together will mean that blockchain oracles will have an increasingly big part to play.
Only a select few oracles exist at the moment, but it is likely that this number will increase as the technology improves, increasing the speed with which they can receive and send information and proving to be the fulcrum of many blockchain solutions.