The Oracle problem
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The Oracle Problem Discussion Page
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As Chainlink aptly puts it, “for smart contracts to realize upwards of 90% of their potential use cases, they must connect to the outside world”[1]--Reggie (talk) 05:11, 29 July 2022 (UTC)
While blockchains are great for maintaining security, this comes at the cost of being closed to the outside world.
For any project that wants to bring external data into a blockchain, they need to find a way to source that data, without sacrificing the trustless and decentralized nature of the underlying blockchain.
[2]--Reggie (talk) 08:48, 28 July 2022 (UTC)
“The oracle problem revolves around a very simple limitation—blockchains cannot pull in data from or push data out to any external system as built-in functionality. As such, blockchains are isolated networks, akin to a computer with no Internet connection.”[3]--Reggie (talk) 05:11, 29 July 2022 (UTC)
In order to create a bridge between the blockchain (on-chain) and the outside world (off-chain), an additional and separate piece of infrastructure known as an “oracle” is required.[4]
Blockchain nodes are designed to perform standardized and uniform operations to generate consensus on a set of transactions (solving the double-spend problem). However, they are not suited to answer subjective questions about probabilistic real-world data, as blockchain nodes do not always have access to the same information, making generating consensus on even the most basic data requests challenging and source quality enforcement impossible. [4] Reggie (talk) 04:40, 22 June 2022 (UTC)