Blockchain Oracles and the Oracle Problem

In this book, you will learn:
•What is a blockchain, and what is Bitcoin?
•What are Ethereum and smart contracts?
•What are oracles, and why do we need them?
•What is the oracle problem?
•What attempts have been made to address the oracle problem?
•What impacts does the oracle problem have on real-world blockchains?

Technical Knowledge required: None
Audience: General
Level: Entry

Abstract:
In ancient times, people turned to oracles for guidance on events beyond their understanding.
On the blockchain, oracles serve as a bridge to the real world.
Using blockchain technology for applications other than cryptocurrencies requires oracles to digest external data into the chain. Unlike blockchains, oracles are centralized and trusted third parties that reintroduce the single point of failure and the concept of trust into a trustless and decentralized environment.
Blockchain is the ultimate disruptive technology, capable of turning entire industries on their heads. However, since oracles can upload false or erroneous data to the blockchain, their implementation is often perceived as a problem. This book closely considers the blockchain’s dependency on oracles and their real-world impact.
A clearer understanding of the implications of oracles may point to the limits of the technology, but it can also provide important hints for its future development.