Oracle Key Points
- An Oracle is a third-party information source that supplies data to blockchains that they can’t obtain on their own.
- Oracles are crucial for smart contracts on the blockchain, as they provide the real-world data needed for these contracts to execute.
- They can provide various types of data, such as pricing information, temperature readings, election results, and more.
- Oracles can be software-based, hardware-based, inbound (providing data to the blockchain), or outbound (providing data from the blockchain to the outside world).
Oracle Definition
An Oracle in the context of blockchain and cryptocurrency is an external data feed that provides information to the blockchain. They function as bridges between blockchains and the outside world, allowing smart contracts to interact with data outside their network.
What is an Oracle?
An Oracle is an agent that finds and verifies real-world occurrences and submits this information to a blockchain to be used by smart contracts.
Oracles are used to function as data feeds in smart contracts in blockchain networks.
They provide the necessary data to trigger smart contracts to execute when the original terms of the contract are met.
Who uses an Oracle?
Oracles are used by blockchain networks, especially those that utilize smart contracts.
For example, Ethereum, a blockchain platform for smart contracts, uses oracles to provide real-world data for contract execution.
Developers and organizations that create decentralized applications (DApps) on blockchain platforms also use oracles.
When is an Oracle used?
An Oracle is used when a smart contract requires data from the outside world to execute.
For example, a smart contract for a sports bet would require an oracle to provide the final score of the game.
Oracles are also used when a decentralized app (DApp) needs to interact with data outside of its blockchain.
Where does an Oracle operate?
Oracles operate outside the blockchain but are connected to it.
They function as a bridge between the external world and the blockchain, fetching data from various sources and delivering it to the blockchain.
Why are Oracles important?
Oracles are crucial in the world of blockchain and smart contracts because they provide the necessary external data for these contracts to execute.
Without oracles, smart contracts would be unable to interact with real-world data, limiting their functionality.
How does an Oracle work?
An Oracle works by providing a link between off-chain and on-chain events.
When a smart contract requires data, an oracle fetches the necessary information from the outside world and delivers it to the blockchain.
The smart contract then uses this information to execute its terms.
