Blockchain Oracle

A blockchain oracle is an external service or device that provides smart contracts on a blockchain with access to real-world data, enabling them to execute based on information from outside the blockchain. Since blockchains are designed to be secure and tamper-proof, they cannot directly access off-chain data. Oracles bridge this gap by supplying external data, such as weather conditions, stock prices, or sports scores, to the blockchain. There are different types of oracles, including software oracles, hardware oracles, and consensus-based oracles, each serving different use cases in decentralized applications (DApps) and smart contracts.

Example

A decentralized insurance application might use a blockchain oracle to obtain weather data. If the oracle confirms that a specific event, like a flood, occurred, the smart contract would automatically trigger a payout to policyholders.