Steemit Crypto Academy Contest / S8W4 - Blockchain Oracles.
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Blockchain network and smart contracts transactions have settled many issues that are related with centralized systems, that have help blockchain to access relevant data from external source. However, here in this post I have talked about more on what I know about blockchain Oracle.
Do you know what Blockchain Oracles are? We want to know your opinion.
Yes, I know what blockchain Oracles are. It is a third-party Network that help in providing external source of information to smart contracts. This means that blockchain Oracle stands as a bridge between outside world blockchain network.
Now, since smart contracts and blockchain cannot access information that is outside blockchain network, the use of Oracle is what is then used to help both blockchain and smart contracts to access information. To this, without the help of blockchain Oracles, smart contact wouldn't be that useful since they would only have access to information within their own networks.
In a nutshell, what I came to know again about blockchain Oracle, is that it is responsible for sending, verifying and executing of information (data) gotten from external centralized source before transmitting the information (data) to smart contracts.
| Importance of Blockchain Oracles |
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Blockchain Oracles are very important bad as they're interacted with external source of data. Blockchain Oracles stand like an application programming interface to the outside world of blockchain network. To cut everything short, blockchain Oracles are important in verifying and authenticate external source of data, so they can rely on how to close the system.
The most important requirements of blockchain Oracles with smart contracts is the identifying of significant data. Also, blockchain Oracles are important as they can provide much relevant information from physical hardware like big data applications, software, price variations, successful transaction and many more.
What are the types of Oracles?
There are several types of Oracles which are categorized in different ways. However, here I have briefly shared and discussed some of the types of Oracles according to their relation.
- Inbound vs outbound Oracles
Inbound oracles: This is the type of Oracles that receive off chain data (information) and bring the information (data) received to the blockchain, so it can be probably used in the smart contract.
Outbound oracles: This is a type of Oracles that transmit data (information) from the blockchain and send it to the outside world.
- Centralized vs decentralized
Centralized Oracles: This is the types of Oracles that has a central control unit which depends on a single information (data). This type of Oracle are prompt to risk, meaning it can be hack and manipulated at the same time.
Decentralized Oracles: This is the type of Oracles that does not depend on a single Oracle node and data (information) source. It is the type of Oracle that combine different data source and Oracle that are independent operator into a blockchain to come up with a solution.
Software Oracles: This is the type of Oracle that get information from Digital source like website and application programming interface databases directly.
Hardware oracles: This is the type of Oracle that get information from real world source like Internet of a thing (IoT) device and sensor. The best example of this type of Oracle is Chain link, that have an oracle that can interact (communicate) with sensors.
What do you think about decentralized Oracles?
What I do think about decentralized oracles is that it is the type of Oracles that attempt to achieve deterministic and restlessness results that depend on effect and cause instead of relying on individual relationship.
Decentralized Oracles try to achieve result or come up with solution in the same way blockchain network is seeking to achieve positive results.
Since decentralized oracles don't rely on a single Oracle node or data source to solve a problem, it solves the problem of a single Oracle source that is faced in a centralized oracle. In a case, where a centralized oracle fails to work for any reason, the smart contract of a Decentralized oracle will be able to perform the work as a Program.
What I also think about decentralized oracles is that it has the potential of Increasing the level of security and fairness to smart contracts and other Oracles. I think decentralized Oracles is the best Oracle among all other types of Oracles.
Give us a use case of a decentralized Oracle.
Decentralized oracles are very important in real world, which make the oracle not to be overlooked. The use case of a Decentralized Oracle is very vast, which I have talked about four of the use case here.
Insurance:
Decentralized Oracle is insurance company to get information about flight, weather, etc. that can be used in insurance company. For instance, there is a flight delay provide by Ethersic and crop insurance products, which decentralized Oracles have tried to solve by getting information about weather conditions and payments claim.
NFTs:
NFTs are another use case of decentralized oracles, which are used to create a verifiable randomness function. With the use of decentralized Oracles, NFTs are used randomly for minting. For instance, verifiable randomness function (VRF), have been used by Aavegotchi to ensure quality of Avatars.
DeFi:
Decentralized finance (DeFi) is another use case of decentralized oracles. It is use for financial data like updating the market price of different digital assets. Also, decentralized oracles are used in DeFi to calculate the borrowing capacity and collateral level of a borrower. For instance, AAVE which is a Decentralized Finance platform make uses of price feed oracles to get the price of digital assets that can be used in its smart contracts.
Cross-chain services
Decentralized oracles are used to solve interoperability problem between two different blockchains. With the use of decentralized oracles, data can be transmitted between two different blockchains without having problem.
I am inviting: @jueco, @inspiracion, and @jasminemary.
✨💡 Your piece was incredibly insightful and simple to grasp, and I truly value the effort you put into detailing the various kinds of Oracles and their purposes. 🙌📖 Your enthusiasm and expertise in this area are evident, and I gained a wealth of knowledge from your writing. 🧠👌 I particularly admired your emphasis on the significance of decentralized Oracles and their ability to enhance safety and impartiality in smart contracts. 🌐👏 Your practical examples, spanning from insurance to DeFi to NFTs, effectively demonstrated the real-world uses of blockchain Oracles. 💌🌟 Thank you so much for imparting your wisdom with us! You are an indispensable part of the blockchain community!
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Hi @anthony002, I hope you are doing well and enjoying your life.
You have presented with us your view on what is blockchain oracles, why it is used and it's importance in today's world.
You have also explained the types of oracles including hardware, software, decentralized, centralized, inbound and outbound.
In last, you have shared with us your view of decentralized oracles and 4 different use cases of it including NFTs, DeFi, Insurance, and cross chain service.
Overall, you have good knowledge of blockchain oracles. I wish you best of luck for the contest :)
@anthony002
dear friend you have explained the topic very well and tell us what is the role of blockchain oracles for act as a bridge transfer of information because before the blockchain oracles it was not possible to transfer information from contracts to external world.
but this problem has been solved due to oracles as it as intermediate. You have very briefly describe the different types of blockchain oracles than you quoted with the simple examples and make it understand able for everyone.
Furthermore, explain why decentralized oracles are becoming familiar you have a given different examples.
For example you told us it's benefits in weather predictions and the insurance companies how we can check the delay of flights.
Over all you have presented the topic very well and make it understand understandable for new commerce and for others steemian by a simple language and appropriate way.
I wish you very good luck for this contest.