Blockchain Oracles and Why They Matter

Blockchain Oracles and Why They Matter

Blockchain oracles are effectively a secure communication channel between real-world data and a blockchain. Among the projects that will be achieving this feat is Algoracle.

Data makes the world function. Whether it’s collecting or generating, data continues to be one of the most vitally discussed topics throughout the tech sector.

Oracle networks help deploy various data points to your devices. The integrity of the oracle is vital to the entire existence of a service. A custom oracle service, positioned to provide accurate time weather data, faces numerous security issues that could expose the network to malicious actors.

One of the most significant issues with aggregating data is when organizations use centralized oracles. Using this protocol allows for vulnerabilities and many points of failure because the network only uses one source to provide its data output. This oracle network functions as a monopoly-like structure that, if tampered with, could lead to inaccurate information being distributed, which could lead to harmful results.

To be sure that the oracle data has complete integrity, the process of data innovation continues to grow. But when it comes to providing more secure data infrastructure, blockchain oracles contain an effective solution for challenges that regular oracle data distribution faces.

Blockchain-based oracles offer many different utilities, one of the major ones is their use in smart contracts. These smart contracts function by allowing specific triggers within the blockchain universe to deploy accurate real-world data to verify certain conditions and execute transactions.

For example, imagine you are betting on a specific sports game, and winning this particular bet, your team must score a certain amount of points. In this example it doesn’t matter if they succeed; they need to achieve a set number of points.

The blockchain oracle binds to a smart contract. Once your team reaches that set winning score, the oracle pushes this data (the score) to the application. Your bet can now be completed, and your transaction, the winnings, is sent. Yet, just the blockchain alone cannot pull data, and it must come through a validated oracle transfer that ensures the smart contract conditions are fulfilled, giving you the ability to win big! This is an example of why blockchain oracles are becoming more essential than ever in an increasingly decentralized world.

Blockchain oracles are effectively a secure communication channel between real-world data and a blockchain. Among the projects that will be achieving this feat is Algoracle.

One significant obstacle is delivering accurate real-time data onto a blockchain in a readable format. Algoracle addresses this challenge by acting as middleware, mediating and analyzing between the data and the blockchain. Essentially smart contracts request data from Algoracle, which then takes this request in one programming language and translates it into another valuable language for querying off-chain data.

Once collected, the data is converted into a format that the smart contract can read and send it to the application. Instead of providing this service via a centralized oracle design that uses only one primary source, Algoracle utilizes a decentralized system to avoid a single point of failure vulnerability that poses a threat to commonly employed data sharing mechanisms. Convincingly, Algoracle establishes the goal of connecting two separate universes of data.

Below is a simple breakdown of Algoracle’s simple connectivity process.

1. A feed provider signs up to provide data feed via the Algoracle App and pay a deposit.

• 2. The deposit is handled by a smart payment contract, and once confirmed, the API of the provider is added to the indexing list.

• 3. The feed provider would need to set up a webhook that will accept a list of authorized nodes and store the public keys of these nodes.

• 4. The nodes will use their digital signatures and timestamp as a seed when calling the feed providers API.

To learn more about how the Algoracle protocol works or to become a part of the system visit the Algoracle Home Page.

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