Crypto WOTD — Oracles

Oracles — which instantly brings to mind the popular move Matrix and the all-knowing “Oracle” So what exactly is a blockchain oracle?

In short, blockchain oracles are essentially third-party services that feeds relevant information to the smart contract in order for it to be executed! I learn best via an example here it goes

Wager a bet on the weather
Bob and Freddy are gambling addicts and they decided to bet against each other on the weather situation. Bob bets it will rain while Freddy wagers it will be a bright and sunny day. They agree on the terms on the bet (a roundhouse kick at each other + $10k USD) , locking the funds in a smart contract, which will release all the funds to the winner based on the results of the weather situation.

As the smart contract cannot interact with external data, it has to depend on an oracle to feed it the necessary information — thus the oracle queries a weather API to get the results and relays it to the smart contract, which will, in turn, executes based on the outcome!

There are many types of oracles (Hardware oracle, software oracle etc) but let's keep this short for our crypto word of the day! :)