Blockchain Oracle DeclassifiedUnless someone is living under a rock, there is no way that one has not come across the word “Blockchain”. In fact, the word blockchain seems to be a buzzword for a couple of years. Although there has been a lot of hype about blockchain technology lately. Still, a lot of folks are unaware of what blockchain is and how does it work.
Blockchain is a distributed ledger, meaning that among all peers in the network, a ledger is spread across the network, and each peer has its own copy of the complete ledger. A block in a blockchain is a collection of data. The data is added to the block in the blockchain, by connecting it with other blocks in chronological order, creating a chain of blocks linked together. The first block in the Blockchain is called Genesis Block. Blockchain technology holds the key to the future as it will be replacing the way money is managed, goods are tracked in transit and how ownership of assets is recorded.
Even though this new technology is gaining widespread popularity, there still are many issues that tend to plague the blockchains, including the security issue, decentralization, scaling, speed, and so on. As, many technologists are seeking to use blockchains as a solution for transactions and taking the less critical transactions off-chain or off-line, before adding those transactions to the chain altogether.
Nevertheless, unlike blockchains, when stuff happens off-chain, it is not recorded in a sequence, as it is in blockchains. So, how can a blockchain be synced in order to record new information that has been previously determined by on-chain transactions? Oracles might be holding the key. According to BlockchainHub, an oracle can be defined as:
“…an agent that finds and verifies real-world occurrences and submits this information to a blockchain to be used by smart contracts.”
Firstly; for smart contracts and blockchains, Oracle is a way to interact. If blockchains determine one-way streets, then Oracle is the road between off-chain and on-chain events. Off-chain or real-world data is brought by inbound Oracle, while outbound oracle informs about the event that has occurred to an entity from outside the blockchain.
Secondly; before the blockchain technology, the procedure querying was more than enough to bring measuring points into and out of applications from other data sources. As blockchains are sequential and categorical; however, unordered off-chain data points are managed differently.
Lastly; just when it was realized that the role of middlemen is being removed by blockchain, oracles are needed more than ever before. Interestingly, by definition, oracles are the middleware between smart contracts and the real world.
