Good day once again to everyone, my name is oluwatimileyin and I welcome you to the season 8 of the engagement challenge.
I welcome you to my participation in the week 4 of the Engagement contest with the title: “Blockchain Oracles."
In a simple terms, Blockchain oracles is a tool in the cryptocurrency world and this tool allows the operation of platforms that are built on blockchain to work and connect with the outside world.
Or, let's just say Blockchain oracle work as a bridge between transactions that are off-chain, i.e transactions that doesn't involve Blockchain to interact or work with transactions that are on blockchain.
By using this method, the Blockchain oracle then allow smart contracts to access some external data, like weather, or sports scores, and use this data to perform some actions on the blockchain.
The Blockchain oracles is very important especially when we are trying to make more use of the Blockchain network to interact with the real-world network.
There are three types of Blockchain oracles which are:
Centralized , Decentralized , and Bidirectional Oracle.
Centralized oracles - Centralized Oracles are the type of Oracles that are being managed by a single entity, which means it is getting it's information only from one source.
Decentralized oracles - This are the type of an Oracles that have to depend on a network to verify the information from the off-chain before delivering it to the blockchain.
Decentralized oracles are secured and reliable, since they don't use a single point and also, they are almost impossible to manipulate.
Bidirectional Oracles - This is another type of Oracles, but it is the most unique as it allows information to work both ways, meaning it can send and receive data at the same time, it works for both sides.
As said earlier, Decentralized oracles are the type of oracles that provides a more secure method of transmitting information between the two Chains.
Unlike the centralized oracles which are controlled by a single entity, decentralized oracles are not but they depend on a network to verify the data given to them.
In my opinion, decentralized oracles has the greatest potential among the types of Oracles, and it is more safer and reliable as they have remove the need for a central authority to provide the data.
Decentralized oracles provide a network that is more trusty and they provide a more secure method of information verification, and this method is more important in industries where data's are need to be accurate , for example in the finance's management.
Here, I will give two use case where decentralized Oracles can perform wonders.
Decentralized Finance - Decentralized finance is a use case for decentralized Oracles, In the DeFi system, smart contracts are used to perform transactions without needing for intermediaries. In the process, but smart contracts need to make use of reliable data before they could execute, which is where the decentralized Oracles come in.
For example, let assume you want to use a DeFi application that allows you to borrow assets between cryptocurrencies. The smart contract you are making use of would need to know the exact market value of the cryptocurrency you want to borrow with in order to calculate how much quantity you can borrow, so in this case, a decentralized Oracle can be used to provide this data in a secure and more reliable way, as it can be used to ensure that the smart contract executes the transaction as intended without any intermediaries.
Companies Management - This is also another use for decentralized Oracles is in companies management, where decentralized Oracles can be used to verify information about the quality of a product.
The decentralized Oracles can then be used to collect customers feedback from different source and verify whether or not the product is as quality as it says, and this will help to build more trust between the consumers and reduce the risk of fraud or avoid low quality product.
Here is where I pen down my entry to this contest, therefore I would use the moment to invite @yakspeace, @Lhorgic, and @jueco to participate in this as well.
Research 1 Link
Research 2 Link
Research 3 Link
The way you broke down the lecture in a simplified manner endeared me to this beautiful piece. You have written beautifully about blockchain Oracle. Thanks for the invite.
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Thank you my boss, I just knew I had to take part in the contest, it took a lot of research thou, but there is the eagerness to learn, let me wait for your entry as well for new knowledge on the topic.
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Hello @negro-bby, I hope you are fine.
Good to see your participation in the SEC S8W4. You have explained what is blockchain oracles and why it is used.
The types of oracles are well explained that let newbies learn more about blockchain oracles. You can add more types if you want like inbound, outbound, human.
You have also shared your view of decentralized oracles and the use cases of it including DeFi and companies management.
All in all, you did a great work and I learn from it. Thank You for this. Wish you success in the contest :)
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Yes that's correct . Besides connecting blockchains with external world, oracles also connect blockchains with each other.
Yes the independent nodes on which decentralised oracles operate are autonomous and have noneditable operating system free of central censorship.
Yes it is contrary to inbound and outbound oracles which only recieve and send information.
Good luck
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@negro-bby greetings
Thank you for sharing detailed information about the blockchain oracles. Your post detailed has shown you have clear depth over the topic as you try to answer all the questions very well.
You told very briefly how the blockchain oracles acts as a bridge for connection of data from inside to exterior World.
You are absolutely right decentralized oracles allowed us to transfer data with more accurately and less hacking chance. More precisely, can be done and useful in large scale business sectors where they facilitate in short time period.
You have described in a brief way the different types of blockchain oracles and further explained it with examples.
Best of luck
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