Blockchain oracles are arguably among the most underrated participants of the crypto space. Without them, most blockchains would be unable to communicate with the non-crypto world, which would prevent countless synergies and the true mass adoption of crypto ecosystems. In this article, we’ll take a look at how things can change for blockchain oracles, like Chainlink (LINK), and whether they can become the next hit of the industry soon.
Contrary to the oracles in ancient Greek myths, blockchain oracles don’t tell futures and fortunes; rather, they connect the real world with the crypto space. Try to imagine oracles as the ultimate translation agencies of blockchains: they translate blockchains’ data so that conventional systems understand it, and make those coming from the real world to blockchain-compatible.
Most oracles are decentralized networks of many nodes that are randomly selected to actually carry out the translation mentioned above. This way, they manage to solve the oracle problem, which points out that the data coming to a blockchain should not be transformed by a centralized entity.
With the help of blockchain oracles, global crypto ecosystems like Ethereum are able to communicate with the real world and create use cases like never before. These include processing real-world data and storing them on blockchains, building DApps with conventional data inputs, and the list goes on.
Without oracles, blockchains and the real world would be almost completely cut off from each other, which would make the global integration of these novel systems close to impossible.
Let’s take a look at Chainlink (LINK), one of the top blockchain oracles of its time, to illustrate the workings and benefits of these systems. Chainlink is a fully decentralized, anonymous oracle network that is said to be compatible with any blockchain out there. With Chainlink, anyone can get real-world data for their smart contracts, which is an incredibly versatile and useful feature.
For instance, such information includes market data and crypto asset prices, which are found everywhere in the crypto world. Without oracles, blockchains would have a really hard time figuring out the exact prices of cryptocurrencies, which would essentially stop DeFi as a whole from operating. Another type of widely used data is randomness, which only oracles can provide efficiently for blockchains. Next time you see a randomly generated NFT collection, remember that it was likely made possible by oracles.
As you can see, blockchain oracles are in places where most users don’t even recognize their true importance. A crypto world without oracles would be a very different one; no DeFi, no random NFTs, and many more functions that are taken for granted but are only possibly thanks to oracles like Chainlink. Overall, blockchain oracles and their tokens have the potential to become the next hit of the crypto space, but that will likely require more exposure that makes investors realize the vital roles of these underrated translators of the industry.
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