Blockchain Oracles?

I don’t know about you, but when I hear the word “Oracle,” my mind automatically thinks of the Oracle of Delphi. As describes the Oracle of Delphi, “The Oracle of Delphi was an important Greek priestess and soothsayer who practiced divination in the Temple of Apollo at the ancient sanctuary of Delphi on Mount Parnassus. Also known as the Pythia, the oracle was a real woman carefully selected by the priests of the sanctuary. When one Pythia died, another one took her place as the high priestess.”

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From Greece and beyond, folks would come to have their questions and concerns about the future answered by the Pythia, the priestess of Apollo. The Oracle’s answers, generally cryptic, could decide something as minor as when a farmer would plant his crops, to a significant query as to when an empire should declare war.

In the digital world, the need to *oraclize is growing!

Life, unlike the blockchain, is not linear. Therefore a means to convey information to and from the blockchain for verification is satisfied by the introduction of Oracle technology.

A blockchain oracle marries the offline data to online data needed to create a smart contract. Smart contracts contain the rules, and these “oracles” provide them with the data they need to trigger and carry them out. The use-cases of smart contracts are endless so, the “inbound” Oracles (receiving information to the blockchain for the creation of smart contracts) is, at least theoretically, more significant than “outbound” Oracles.

For example, in real-estate: a property is for sale at a specific price. An inbound Oracle feeds this price to the blockchain (along with other pertinent information about the property), creating a smart contract. When a buyer meets the obligation, the smart contract is fulfilled. The Oracle verifies the completeness of the contract and executes the release of the funds. The Oracle could even serve as a signatory in a multi-sig deal.

*a term coined by Provable – an online Oracle service.

Types of Oracles on the blockchain:

Oracles give a means for smart contracts to communicate outside of a decentralized blockchain network. Blockchain oracles can assume various forms. Some of them include but are certainly not limited to:

  • Software oracles
  • Hardware oracles
  • Inbound oracles
  • Outbound oracles
  • Consensus-based oracles

Software oracles – This type of Oracle generally includes a variety of online sources of information that are easily accessible on websites and public databases. Example: data such as temperatures, weather predictions, public transport information, and the current market prices of various financial assets. Software oracles allow for the collection of the most up-to-date data to smart contracts.

Hardware oracles – To assist in tracking of merchandise which has an RFID tag, this type of Oracle can send information of any change occurrence from the real world to the smart contract. In essence, hardware oracles can facilitate the tracking of goods along the supply chains.

Inbound oracles – This type of oracle functions simply and solely to supply data to smart contracts. The provided data is external to the smart contract and, upon receiving information, begins a path of execution. (The weather website providing air temperature readings as exampled above would be an inbound oracle.)

Outbound oracles – These oracles communicate smart contract data to an external source. As an example, once a person has been identified as the victor of the wager, the smart contract can communicates this information to the wallet provider in order to automatically update their wallet balance to show an increase in funds. In this instance, the smart contract itself is operates as an outbound oracle.

Consensus-based oracles – The function of this oracle type is to query multiple oracle sources, then, based on the consensus, arrive at an outcome. For example, instead of using just one website as its source as in the previous case, a total of four sites and databases could be used. If all the oracles return the same temperature reading, the smart contract can execute.

Oracles Require Trust

Even with the advantages of oracles, there is one disadvantage:

Oracles require trust – The sources from where data is collected must be credible to be of value to use in a smart contract. Using the previous example, if someone somehow gained access to the weather website, it would then be easy to return a temperature reading that would allow for them to win the wager and hence win fulfillment of the smart contract. In short, if the data being supplied to smart contracts by oracles prove to be faulty, there exist security concerns as to the validity of the executing smart contract.

The possible remedy for this issue is to gather data from multiple Oracles rather than just one. Say the oracle returned a reading of 24 °C, but four other Oracles reported a value of 18 °C. In this case, more conditions could be added to the programming to resolve the conflict. The smart contract could be programmed to accept only the majority reported value, in this case, 18 °C, which would be the deciding factor in fulfilling the contract. Then again, the smart contract could be programmed no to execute at all and would require the intervention of both parties in the smart contract.


At this time, Oracles are needed as a means of communicating data from third-parties to smart contracts. They increase the scope of what a blockchain protocol can do by facilitating critical data exchanged to smart contracts in the network, both inbound as well as outbound.

The trust factor that Oracles require fly in the face of the trustless, decentralized nature of the blockchain-based protocols. To mitigate the lack of trust, smart contracts cast an increased level of complexity by adding multiple oracles for adding critical data to the smart contract.

About the author

Born in Illinois and the third oldest child of 10 children. Gail learned many lessons in life that would serve her well in her future. Patience, sharing, compassion, understanding, love, and acceptance were a way of life. Family is significant to Gail as a mother of three herself.
Gail lives by the motto "live and let live," and she takes pride in helping others. Educated, yes, but believes life is the best teacher and learning depends highly on an open mind.


  1. what a great posting Gail — love the way you bring history into your postings and believe this –no matter what it is –in Life Trust is always and will Always be the #1 part of any business or relationship — without Trust you technically have less than squat — just my opinion — great read and thank you —

  2. Oracles are very important. Any malformed or misinformation received could impact the entire Decentralized Ecosystem. That is why protection adjustment measures are put in place in order to verify the deviant data received.

  3. I sure agree with you RJ, trust is THE most important thing in life in general. Without trust there’s no confidence and basically no hope for the business to last or for a relationship to grow. This is why it it such a great thing that we have so much transparency in the crypto world. The NEED for trust just isn’t there.
    Trust is such an important aspect of our lives that we need to honor and respect it because if it is ever disrespected or worse, lost, it is darn near impossible to regain.

  4. Another informative posting. Always learning something from you. Contracts are always tricky things to deal with, & smart contracts have to reflect that complexity. A contract is simply an exchange of promises (Slades Case 1602), verification, execution are a whole different matter – hence the need for Oracles. Thank you Gail. You are an Oracle unto yourself.

  5. It’s a delight to learn about Oracles. Its as if an Oracle brings to life and allows a form of discernment within the AI world. Giving birth to wider scalability, more organization to automate the data and to constantly be on the lookout for greater utilization. I see compact data in an orderly fashion which seems to be infinite in multitudes of application. I find this a fascinating topic!

  6. Thanks, Gail, for the nice overview on oracle. I’ve offer wondered exactly what type of smart contracts Ethereum and Chain Link would be creating on their platforms. Decentralized finance seems to be a very hot topic at present. The more we become familiar with these other entities, the better off we will be. Thanks for the great information.

  7. i just have to come back and appreciate the reading and the facts involved in this posting — and yes I still go back to the fact that Trust is the basis of all good business contracts and also personal parts — hope that i am not being to forward or ???? but have learned in life enjoy honesty and seek Truth — just me actually — rjh

  8. Enlightening info as always Gail. I never knew a thing about smart contracts either until Henry started talking about them when the triggers first showed up on the Compumatrix scene. The Ethereum blockchain is all about smart contracts and that is what has made it so popular in my view. I guess with any monetary system, there always needs to be that trust factor. So many today think that our USD system is still backed my gold but it’s really only backed by trust.

  9. So many intricacies in the blockchain world. I’m seeing Oracles as the “magic” that happens when everything aligns, and trust is the common denominator. Wouldn’t that be a lovely world to live in? Thanks again, Gail…great post.

  10. I never realized there is so much involved with the blockchain oracles so much information these blogs are amazing and extremely educational. These oracles seem to be extremely important in the operation of many different processes especially the smart contracts, this is great information to know and it helps a lot to understand how it all goes together to make it work correctly.

  11. Gail thanks for a very informative blog. Oracles are a new concept to me. It appears that the trust factor is very important. Its interesting that the Oracles are the keepers of the rules for online and offline data. This would be crucial in any contract for a business to run successfully. I need to learn more on this concept.

  12. Oracles, knowledge is given or gotten from a source and then is transmitted via the blockchain. Commands send the answer to what we had asked, like the time, the weather, and calculations. Oracles send answers that connects the blockchain and to our natural existence and answers our inquires. Humanity is using the blockchain to carry out so many of our everyday issues in life.

  13. Thank you Gail what a great blog, I love the information. No one can ever say we are not educated here. I had no idea so today I learned something a little deeper and new. Thank you for all you great bloggers do!!!

  14. A great educational blog once again Gai Thanks.Besides Oracle of Delphi [Pythia] and the oracle of Omaha ,we have another chosen in Tibet by the name of Dalai Lama. But I did understand the concept of Oraclize and the inherent safeguards put in the protocols to implement the various contracts in a very appropriate and honest manner .I see you are now being called Oracle and I agree lol

  15. this is so intricate — as i continue to put things and New things into perspective and as i read each blog and then replies and then read the blog again and take notes and put blogs into overall concept — wow this is great instruction and I did not know a thing about Oracles in the online world — knew what a Oracle was in olden times but wow again Gail Thanks — rj

  16. this is just such a great info piece — and getting the understanding of how the Oracle is actually used in blockchain and crypto world and then none of this would be feasible unless the Trust Factor is established — just like here reading all these blogs –there is a Built-in Trust Factor that it is actual true info — appreciate that a ton really —

  17. I am not even going to pretend what I just read about oracles and the connection with cryptocurrency and block chain technological . I do however enjoy learning new things with in these blogs .and trying to understand something new I never knew before. Right now what I understand the most is HODL and I am very good at that. .. I am sure when I go back and read again . some of it will sink in .. Thanks Gail.

  18. Thank you Gail,Very informative article,cryptocurrencies, blockchain technology is such a deep subject and it is very important to understand it,what an important role oracle plays in smart contact,oracle is a code that connects blockchains to the real world,thank you for the information we are getting from the compumatrix blog.

  19. this is such a great read with great info on oracle and how that factors in the blockchain world and is a necessity for True Business and how it adds a level of quiet security for all who believe Trust is integral part of Success but also know just like here there are always those who want now and seem to do whatever to get the prize — unfortunate yes but this cheap no trust thought is prevalent everywhere it seems — jmho rj

  20. It is common knowledge that an oracle has been described as a person through whom a deity speaks, or a person known for giving wise or authoritative decisions or opinions. For our purposes, it seems the smart contract needs an oracle to supply data about when a triggering event has happened.

  21. such an intricate way of doing trustworthy business — it fascinates me to beyond when i keep coming back and learning more and then some small sentence or paragraph and wow –so many great parts to this and honestly becoming Clearer and Clearer for me — and the appreciation is still so very much !!

  22. Hi Gail, I’m not even going to pretend what I just read about oracles and the connection with cryptocurrency and block chain technological . I do however enjoy learning new things with in these blogs .and trying to understand something new I never knew before. Right now what I understand the most is HODL and I am very good at that.

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