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What are Oracles in Crypto [Explained]

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Unknown Speaker  0:00  

Welcome to the New To Crypto podcast designed to guide you through the crypto landscape with pinpoint accuracy created for the new and intermediate crypto investor. Join your host Crypto Travels Michael as he takes you through the different facets of getting started and succeeding in your crypto journey. New to crypto podcast brings you new episodes daily Monday through Friday with surprise bonus episodes sometimes on the weekend. Let me ask you, are you new to crypto don’t know where to start? Are you more experienced but have questions? Then you’re in the right place. This podcast is designed for you, coming at you from the training center in the lifestyle design studio. Here’s your host Crypto Travels Michael.

 

Michael  0:51  

Welcome to today’s episode. This podcast is now been heard in 98 countries in 1100 cities around the world so I thank you for listening and tuning in and making this one of the fastest growing podcasts and shows and crypto. Today’s episode is all about what are Oracles in crypto? So let me ask you, what is an Oracle? Well, an Oracle is a service offered by third parties that provides external information and allow smart contracts to essentially make decisions if you will. It’s like a command. Oracles are usually outside of the blockchain when smart contracts need more data and this data is not found on the blockchain. They basically resort to certain external sources and these external sources are what we know as blockchain Oracles or Oracles in blockchain or Oracles in crypto blockchain, Oracles work to automate processes with information that is not in an initial order Smart Contracts need extra information of what makes an exception and they use blockchain Oracles for this. There are several types of blockchain Oracles, depending on the source from which they obtain the data that they need there’s hardware blockchain, Oracles which are linked to information sources that come from scanners and barcodes, etc, and they will be in charge of verifying and translating this information into certain numerical values so that Smart Contracts can make certain decisions afterwards. 

 

There’s also software blockchain Oracles these are very popular and are linked to non physical information sources such as databases, websites, servers, etc. They also translate information for Smart Contracts and their action. The next one is inbound blockchain Oracles and those seeks sources of information from the outside world in general. There’s also outbound blockchain Oracles which provides Smart Contracts with the ability to send data to the outside world. There’s also a consensus blockchain Oracles which obtained data from prediction markets Chainlink, for example, is a decentralized distributed Oracle network that makes it possible for off chain data to connect to the blockchain and also vice versa the other way around, so Chainlink makes it possible to connect different chains together Chainlink manages to compensate for the shortcomings of many blockchains and plays an important role in connecting them to external systems basically off chain systems or connecting them to each other in this way functioning as middleware if you will Chainlink manages to solve the problem of data transfer. For this reason, Chainlink is conceived as a decentralized distributed Oracle as it provides a secure, reliable and decentralized solution for data transmission between the real world and the digital world. The operation principle of Chainlink is based on a network of nodes called Chainlink nodes. 

 

Its function is to feed the smart contracts operating within the Ethereum network with the data obtained coming from one or several events in the real world. In addition, Chainlink uses the incentive policy as a date of protection measure. In this way it seeks to avoid malicious manipulations or bad practices with the data obtained. Thus a financial compensation is established as an incentive for correct answers from node operators. In other words, the more reliable and accurate the information the more valuable the economic compensation will be. It is expected that Chainlink will continue to grow steadily because thanks to its great performance, it has been adopted by many different projects, both large and small and companies throughout the entire blockchain crypto sphere. Some of the companies that have adopted it is Google Oracle Swift, which is the Society for International Banking, communications and BSN, China’s state owned blockchain services network. So let me break down what Band Protocol is and how that ties in. Band Protocol is an open source Oracle blockchain project that aggregates and connects real world data and API’s to smart contracts man protocols blockchain, which is called Band Chain is capable of processing 1000s of transactions per second and is able to send Oracle data across multiple blockchain. 

 

The team has put a lot of hope and investment into their Oracle and says it is an extremely important tool within their ecosystem. So Band Protocol aims to be the data infrastructure layer for web 3.0 applications by making data available for querying on the blockchain using delegated proof of stake or DPoS to ensure data integrity Band Protocol was born as a competitor to Chainlink and it has several differences that make it up as a challenger. The main difference is that ban protocol version two or v2 uses its own blockchain man chain, which is based on tender mint and it operates within the cosmos ecosystem. The flexible design of Band Protocol, Oracles allow developers to use any real world data including sporting events, weather conditions, random numbers, and more. In fact, developers can create custom Oracles using something that they have called Web assembly. So the use and importance of Oracles has become extremely important in the crypto sphere because they feed from external systems vital information into blockchains that Smart Contracts may need to execute under specific conditions. The growing need for Oracles represents the continued expansion of blockchain systems into practical and real world use cases. 

 

There are several different crypto projects which also use Oracle; synthetix would be one of them. I have a previous episode all about synthetics that I highly recommend you listen to that if you have not basically synthetix uses decentralized Oracles as well and their project Mirror Protocol is another one which Mirror runs on terrace blockchain and I also did it in episode all about Mirror protocol and I highly recommend you listen to that one. If you haven’t, both of those projects, use Oracles and they illustrate the importance of Oracles with blockchain and crypto sphere. So I hope today’s episode has been informative and has really kind of helped you give an overview of what is an Oracle, what is an Oracle in crypto. So if you like today’s episode, definitely like and subscribe to the podcast. My team and I are working hard about providing you excellent content and helping you grow in your crypto journey. So definitely tune in here tomorrow, and I’ll join you here. Until then make it a great day.

 

Unknown Speaker  8:08  

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By: cryptotravelsmichael
0

Table of Contents

It’s time to learn a bit more about some of the unseen systems and services fueling Smart Contract decisions. I’m talking about Oracles, the answer to getting more data when an initial order doesn’t have certain information. Several projects use Oracle to execute Smart Contracts and there is a fast growing need for their use. 

So in this episode I’m going to break down some more information and give you an overview to answer the question, what is an Oracle in crypto?

What Are Oracles? 

Oracles give a blockchain or smart contract the ability to communicate with data sources. They serve as an application programming interface (API) to the rest of the globe. 

Outside data must be conveyed to the closed blockchain system in several circumstances, especially when smart contracts are linked to real-world events. 

External data is queried, verified, and authenticated by crypto oracles, which then relay it to the closed system. After that, the validated data would be utilized to verify a smart contract.

What is Chainlink? 

An oracle is a middleware software that functions as a translator, converting information about the world to smart contracts on the blockchain and back.

Smart contracts are pre-specified blockchain deals that evaluate data and execute automatically when specific circumstances are satisfied.

Chainlink is a decentralized network of nodes that connects off-blockchain data and information to on-blockchain smart contracts via oracles.

This technique, together with additional secure technology, removes the dependability difficulties that could arise if only a single centralized source is used.

What is Band Protocol? 

Band Protocol is a decentralized oracle project that connects the blockchain ecosystem to the rest of the world’s data. 

It makes use of the BandChain, a public blockchain that lets any entity access data using application programming interfaces (APIs) or other standard web services.

Although the Band Protocol works with a variety of blockchains, notably Ethereum, it is a component of the Cosmos Network, which interconnects blockchain systems.

Efficiency and scale, cross-chain interoperability, and data adaptability are the three core focuses of Band Protocol. 

The development of smart contracts is a foundation of the dApp and DeFi industries, both of which are quickly expanding. 

With reaction times estimated in seconds, Band Protocol aims to give trustworthy data to a wide range of public blockchains. Fast and precise responses are required to fulfill the data needs of asking smart contracts adequately.

The use and importance of Oracles has become extremely important in the crypto sphere because they feed, from external systems, vital information into blockchains that smart contracts may need to execute under specific conditions.

- Crypto Travels Michael

Here's What We Discussed in Detail in This Interview

 

[00:01 – 01:23] Opening Segment

  • Welcome to another incredible episode
  • An intro to Oracles
    • A service offered by third parties
    • Providing external information 
    • Allows Smart Contracts to make decisions – like a command
    • Usually outside of the blockchain

 

[01:24 – 05:12] What are Oracles in Crypto?

  • Blockchain oracles
    • Resorting to external sources for more data 
    • Automating process with information not in an order
  • Different types of Blockchain Oracles
    • Hardware Blockchain Oracles
      • Linked to info from barcodes and scanners 
    • Software Blockchain Oracles
      • Linked to non-physical information sources 
    • Inbound Blockchain Oracles
      • Seeking outside information
      • Ability to send data to the outside world 
      • Example: Chainlink 
  • How Chainlink works 
    • Based on a network of Nodes 
    • Feeding smart contracts with data
  • Expectations for the future of Chainlink
    • Expected to continue to grow 
    • Several big name companies that have adopted it 

 

[05:13 – 08:48] Band Protocol, the Open Source Oracle Blockchain

  • What is Band Protocol?
    • Oracle Blockchain project
    • Band Chain – processes 1,000’s of transactions per second 
    • Important tool to the Oracle ecosystem
    • Uses DPOS to ensure data integrity
  • How Band challenges Chainlink 
    • Band V2 uses its own blockchain
    • Bandchain based on Tendermint
    • Custom Oracles via web assembly
  • The importance of Oracle for Crypto
    • Vital information into blockchains
    • Needed by Smart Contracts to execute
    • Growing need for its use 
    • Several different projects use the

Learn more about Mirror Protocol

Killer Resources

HOW TO REACH TO CRYPTO TRAVELS MICHAEL

Final Thoughts

External data is provided by oracles to smart contracts that use blockchain technology. They are, in essence, a means of communication between the outside world and the blockchain world.

Oracles provide a secure manner of bringing off-chain data to a blockchain network’s on-chain ecosystem since blockchains and smart contracts are closed systems with inflexible rules for connecting to other data sources.

Chainlink is a decentralized oracle network that feeds real information to blockchain smart contracts. Smart contracts are pre-defined blockchain agreements that analyze data and execute instantly when specific circumstances are satisfied.

LINK tokens are the cryptocurrency tokens that are used to pay for network services.

Band Protocol is a decentralized data oracle that collects and transmits real-world data to smart contracts on blockchains like Cosmos and Ethereum.

Numerous different smart contracts and decentralized applications (dApps) utilize a range of real-world data inputs varying from recent issues and sporting activities to climate and even numeric codes.

Decentralized Finance (DeFi) programs demand reliable price feeds. The Band Protocol is one technique to safely and securely introduce external data to the on-chain ecosystem.

The New to Crypto Podcast is designed to guide you through the crypto landscape with pinpoint accuracy. New episodes are added daily. Be sure to subscribe to the podcast and listen to all of the episodes to help you in your cryptocurrency journey.

I’d love to hear from you! Email me at show@newtocrypto.io and let’s chat.

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