Crypto 101: What Are Oracles?

by birtanpublished on August 4, 2020

what's going on everybody welcome back to the channel as some of you know I recently did a video on chain link which is a blockchain based Oracle project I felt like it was a pretty interesting topic and I wanted to do more research

On Oracle's themselves so I decided to make a crypto 101 video on it not to mention it's been quite a while since I've made one of these videos regardless before we get started I want to remind everyone to go join my discord server if

You haven't and also if you want to support the channel you can do so by becoming one of my patrons I'm gonna leave all the links that are very important down below in the description my usual disclaimer I'm not a financial

Advisor this is not financial advice please always your own research alright let's get into it what our blockchain Oracles well blockchain Oracle sounds kind of like something from ancient Greek mythology and in a way they

Function in a similar role in ancient stories people who didn't have enough information to make decisions turn to Oracle's in the form of people for information beyond their understanding the term Oracle comes from the latin

Verb or rare which was used in ancient times to refer to a person or a group that connected the gods to the people for the purpose of this video though an Oracle is better defined as a translator of information provided by an outside

Platform blockchain based projects like Bitcoin and ethereum do not have a capability to access information that is not on their existing block chains so there's no direct way to validate any information

Oracle's provide the necessary data to trigger smart contracts to execute when the original terms of the contract are met these conditions could be anything associated with smart contracts temperature payment completion price all

Kinds of stuff these Oracle's are the only way for smart contracts to interact data outside the blockchain environment let's use a hypothetical situation to better explain consider that Wendy and Joe initiate a bet and what the

Temperature would be on Sunday afternoon Wendy believes that the temperature is gonna be 51 degrees or above and Joe believes that the temperature is gonna be 50 degrees or below they design a smart contract which they will both send

Funds to it pays out the winner depending on what the temperature is in order for the smart contract to determine the temperature and thus payout the winner and must obtain information from the weather from a

Trusted source or an Oracle after using the local news website for the weather a temperature reading of 52 on Sunday is reported back in a smart contract then execute on its condition and sends all its funds to one day a

Weak point of Oracle's is that they require trust the sources that they receive their data from must be seen as credible so let's say Wendy's somehow knew someone in the weather station and was able to have them change the

Temperature reading on the website in her favor this would be an example of fraudulent data to solve this problem the smart contract should request data from multiple Oracle's instead of just relying on one centralized one

Blockchain Oracle's come in many shapes and sizes such as software Oracle's Hardware Oracle's inbound outbound and consensus based Oracle's software Oracle's usually deal with information that's online and easily accessible such

As websites or public databases they provide information like temperature public transport information and maybe the price of financial assets software Oracle's are super important because of their connections to the Internet and

Their ability to supply the most up-to-date information for smart contracts Hardware Oracle's are sensors that are placed in physical objects so for example the use of an RFID tag in a supply chain tracking once the item

Arrives at a specific warehouse or is moved or scanned or whatever that information will then be sent to the smart contract facilitating the tracking of goods along supply chain inbound Oracle's this form of an Oracle has the

Function of simply supplying data to a smart contract this data is external to the smart contract and once it receives the info it will facilitate the smart contract to execute an example of this would be the website I mentioned before

Or earlier that was supplying the temperature reading for the two people's bets and an outbound Oracle does the opposite it supplies the smart contract data to an external source to use the example from above once more Wendie it

Was identified as the winner of the bet right so the smart contracts can update the wallet provider in order to automatically update her balance to show the increase in funds in this instance the smart contract itself is operating

As an outbound Oracle and finally consensus or prediction based Oracle's these Oracle's gather information from numerous locations and they are perfect for monitoring financial markets we're using one source of data could be

Unreliable currently there's several companies and projects developing Oracle's chain link being one of them that I covered recently and I mentioned before and also black cent and Oracle eyes there's also non crypto related

Companies like IBM and Microsoft that are developing Oracle's as well all in all Oracle's serve a very important role in helping to streamline the adoption of blockchain technology for blockchains to have a sustainable impact in

Practical applications and various industries they're gonna need to be able to interface accurately and reliably with real-world data being able to link the outside occurrences to a blockchain in a seamless and trusted manner is huge

It's gonna open up all kinds of use cases for blockchain technology and smart contracts to be pretty much limitless alright guys that wraps it up for me today if you have any comments you got any questions leave them down

Below in the comment section I hope you liked my crip don't want a one video on Oracle's and as always thanks for supporting the channel hey there if you enjoyed my crypto 101 video then you should go check out my crypto 101

Playlist or I mean really any playlists for that matter let me know what you think in the comments and as always thanks for watching the channel everyone

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