The Oracle problem
From Chainlink Community Wiki
To understand the Oracle problem first we need to understand some blockchain basics.
In depth
REVIEW To fully comprehend the importance of Chainlink, it’s critical to first understand the underlying value of blockchains and smart contracts. Generally, a blockchain is a decentralized network of computers that performs computation and stores data in a shared ledger. A blockchain differs from traditional, centralized computer systems in that:
- No single person or group controls it.
- Everyone in the world has equal access to send it commands.
- The applications running on it and the data stored in it cannot be tampered with or deleted.
- All transactions processed over time are recorded in a continuously growing ledger.
- Transactions are paid for via a native cryptocurrency.
Blockchains achieve these properties by having thousands of computers run the same software, process the same transactions, store the same data, and consistently cross-check one another to reach consensus as a network about what is valid. All these network operations are backed by monetary incentives that reinforce honest behavior and consensus. [1] REVIEW
"Blockchains are purposely isolated networks with an internal source of truth based on fully known, verifiable, and accessible variables. Since each transaction from the genesis block is cryptographically signed, there is a publicly auditable transaction history of every public address." [2]
Blockchains are, by their very nature, isolated systems, so connecting a blockchain to off-chain data is like connecting a computer to the Internet—it enables an isolated system to interact with the real world. The high security guarantees of blockchains must be upheld when accessing off-chain data.
[3]
Chainlink solves the oracle problem by enabling decentralized oracle networks (DONs) to operate as a secure middleware layer connecting off-chain resources to blockchains. [4]