What is Oracle? Simple explanation for newbies.

When learning about crypto, you will certainly hear of Oracle. So what is Oracle and why is it so important? There are Oracle coins that you should know.

NOTE: Because the word Oracle appears in many fields, but this article I only talk about blockchain. If that's not what you're looking for, skip it!

Before going into the definition of what Oracle is, I want to take an example for you to understand.

For example, Alice and Bob bet $1,000 to see who will be the President of the United States in the December 2020 election. Will Trump or Biden win?

Each person transfers funds to the Smart Contract and waits for the result. After the official results are available, this amount of $2,000 will be transferred to the correct guesser.

But because Smart Contract cannot interact with external data. So it will need a reliable feed to execute.

And that's where Oracle comes in "like a god".

What is Oracle?

Oralce is a third-party service that provides real-time data for blockchain and Smart Contracts.

Oralce itself isn't data, it just searches, verifies data, and transmits it.

Note: A smart contract or smart contract is a self-executing contract without anyone affecting it. As in the above example, whoever wins the bet will automatically transfer money to that person.

Thanks to Oracle, blockchain and Smart Contracts (on-chain) can interact with external data (off-chain) and vice versa.

In other words, Oracle is the "bridge" between the blockchain and the outside world.

Oralce helps to expand the scope of Smart Contracts, so it plays a huge role in the ecosystem of blockchains.

Oracle classification

Oracle can be classified as follows:

1/ Origin of data

Based on this classification, we have two types of Oracle: data from software and data from hardware.

Oracle software this is basically any data on the Internet hence it is the most common form of Oracle.

It could be exchange rates, exchange rates, or real-time flight information.

Hardware-sourced data is information obtained from the real world and fed back into Smart Contracts.

For example, sensors placed at ports to see if trucks have arrived or have not been applied in logistics technology ...

2/ Direction of data

Or in other words, Oracle receives/sends information from the outside into the Smart Contract. The two examples above can also be divided according to this classification.

3/ Reliability of data

That is, these data are taken from a centralized or decentralized Oracle.

Centralized Oracle is data provided by a single organization so it is high risk.

Whereas in decentralized Oracle, data is queried and validated by multiple Oracles based on consensus mechanism.

Oracle's problem

Oracles get information off-chain, so it's not protected by the blockchain's security mechanisms.

In other words, when Oracle is attacked, the Smart Contract based on it is also attacked.

Some typical Oracles

• Chainlink (LINK)
• Band Protocol (BAND)
• DIA (DIA)
• Tellor (TRB)

So just go through what is Oracle as well as how to classify Oracles. I will continue to update later.

Good luck!