The Role of Oracles in Blockchain System

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It is no longer news that the block chain technology through its sovereignty, structure and features has been able to change and revolutionize the way we think about financial transactions, contracts, and trust yes, through the provision of decentralized and immutable ledger the block chain network is able to ensure transparency and security.

However, there are some other features which also allowed and facilitated the successful adoption block chain systems along with their effective and seamless interactions with the real or physical world seeing as it is a digital innovation in itself, one of these mechanisms is basically known as the Oracle.

Here today in this post of mine I will be discussing and explaining some of the important and crucial roles that oracles play in block chain systems, how they act as a bridge closing the gap between the block chain network and external data sources and facilitating the implementation of smart contracts which operates based on real world inputs.

• ITS FACILITATION OF DECENTRALIZED FINANCE

One role in which oracles play in the block network is that it facilitates the operation of a vital part of the block chain technology which is decentralized Finance, this aspect and part of the block chain network is responsible for facilitating financial services such as lending or borrowing while eliminating the risk of centralization.

One can say that oracles are basically essential and integral to decentralized finances owing to the fact that they provide real time data and information that is vital to the operation and continued accessibility of the services in which decentralized finances offers, for example, DeFi platforms use price oracles to determine the value of various cryptocurrencies and assets.

Price feeds from oracles is important because they ensure that users can trade and lend assets at fair and current market values, they are also very functional in cases of collateral discovery where accurate information on values of assets are needed to prevent financial loss as a result of under collateralization or forced liquidation.

• ENHANCING TRANSPARENCY AND ENSURING ACCOUNTABILITY

Another role in which oracles play in the block chain network is by providing verifiable and authentic data and information to smart contracts and as a result enhancing transparency and ensuring accountability this two features we well know are the basic principles on which the block chain technology is built or operates on.

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Additionally, this role is particularly important and useful when it comes to field or sector supply chain management, where oracles can help and facilitate the provision of real time data about the movement and status of the goods to be supplied and how they move through the supply chain.

Basically, by inputing and providing this data and information for the the block chain network to utilize, the oracles helps to make sure that all parties involved in transactions have access to accurate, real time and immutable records as a result enhancing transparency and ensuring accountability.

• ENSURING TRUST AND INTEGRITY OF DATA

Another important role of oracles is that they are essential and important for ensuring and maintaining the integrity and trustworthiness of data that is inputed into the block chain, seeing as maintaining integrity of data is paramount because the block chain operates on a trustless system and as such should everly be reliable.

Therefore inorder to maintain and foster trust, many block chain systems employ and take advantage of decentralized oracles, which is able to collect and compile accurate data and information from different and multiple sources as a result reducing the risk or potential of single points of failure or data breaches and manipulation.

How the decentralized oracle networks like Chainlink work or operates is by making use if multiple data sources, providers and verification mechanisms so as to ensure the data inputed or provided to smart contracts is accurate hence maintaining the integrity of block chain operations and fostering the trust of its users.

Another role, one of the primary roles of oracles is basically to serve as a source or provider of external data for block chain systems who rely of accurate data for its effective and proper functioning, one of which is the smart contracts, we all know what they are, they are self executing contracts with the terms or conditions of the agreement programmed into its code.

Oracles basically plays the pivotal take role of supplying accurate data to the different block chain systems which ranges from financial market prices, weather conditions to sports scores, and more therefore we can say that without oracles, smart contracts would be limited to the data they receive on chain and as a result, severely restricting their usability and wide range of applications or use cases.

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In conclusion, the role and importance of oracles can not be over stressed seeing as it offers and play a lot of essential and important roles, and as a result has proven to be a pivotal component of the block chain systems.