Blockchain technology: the oracle boom

Blockchain technology: the oracle boom

Blockchain technology: the oracle boom

Blockchain technology is among the most innovative of the last century and seems to be attracting more and more attention from the general public.

According to Forbes in the future more than $487 trillion will be brought into the world of blockchain, and oracles will be the specific element that will enable this exponential growth.

Blockchain technology and the role of oracles

Blockchain technology works as a distributed digital ledger over which data of any kind can be overwritten.

The concept of immutable data is not new and has prehistoric origins, but only in recent years has it become central again in mainstream narratives of innovative technologies.

To date, the best known and most used blockchains are public ones such as Ethereum, BSC, Polygon, Arbitrum, Optimism and Cosmos.

In each of these chains, mainly data inherent to the cryptocurrency world is transcribed, while data from the outside world is almost completely absent.

This is determined by the fact that the blockchain technology itself are unable to extrapolate real-world data but does an excellent job of transporting and storing data in the chain.

For blockchain to play a central role in societal development within social and administrative institutions as well as purely economic ones, there must be a gateway which bridges these different realities.

Blockchain oraclessuch as those developed by Chainlink, essentially perform this task: they take external data such as weather information and election data and bring it into the distributed networks.

See also  Blockchain Supply Chain Finance Market Size, Segmentation, Top Manufacturers and Forecast to 2030 - KaleidoScot

Forbes believes that oracles will be the main enabling element the expansion of this industry and the immersion of this technology in all areas of daily life.

There is still a long way to go, and proper security systems and infrastructure capable of handling the huge amount of data in the off-chain world are needed for blockchain to be used in contexts other than finance.

In addition, the technological knowledge barrier is holding back the development of this expansion given that cryptocurrencies and DLT systems are still being considered niche concepts.

It will be interesting to see how the situation regarding crypto-oracles develops in the coming years and whether more and more information intrinsic to the concrete world we know today will be present in blockchains.

Types of crypto-oracles

It is many types of crypto-oracleswho play different roles based on their technological background.

Generally speaking, we can simplify the concept by differentiating oracles based on the source of the data, the direction in which the information moves, and how that data earns the trust of the end user.

  • Data source: there are computer systems that collect data in a digital version while others refer to physical data. Oracles can represent hardware or software systems. Those of the software type refer to the most popular oracles in the crypto world, such as those developed by the Band Protocol, Quant and Chainlink projects, while hardware oracles are not yet present on a large scale, but represent the future of off-chain data transport. .
    An example of a hardware oracle might be radio frequency identification (RFID) chips that identify external data such as weather conditions or health information.
  • Direction of information: the direction of data carried by oracles can be incoming or outgoing: trivially, a piece of information can enter the blockchain from external situations (the real world), or it can, on the contrary, go from the on-chain world to the physical world.
    Crypto-AI systems essentially serve to make this transition happen as truthfully and efficiently as possible.
  • Trust mechanism: trust is a central concept in this story. An oracle can be decentralized or centralizedd, and in both cases there are conflicting directions when it comes to trust.
    Centralized systems have “points of error” ie points where they can be attacked and information can be manipulated while decentralized systems do not have this flaw, but can still be compromised if the infrastructure they depend on has errors in the code or the network nodes are not properly deployed.
See also  Aleph Zero partners with University of Nicosia to promote blockchain technology and education | News

Blockchain: the most innovative technologies at the moment

Innovations in blockchain emerge and improve year by year.

In 2014, the crypto community had make distributed computing systems available and these can perform a small list of actions.

After only 9 years, we are looking at a significant expansion of the blockchain ecosystem, although the Ethereum Mainnet is still emerging as dominant and most used web3 infrastructure in the world.

Innovative financial products such as tokenized shares, partially secured debt assumption and decentralized credit issuance are just some of the innovations that have emerged in recent years.

The technology of ZK rollups, which allows actions in the chain to take place without disclosing counterparty datais one of the dominant trends at the moment and the immediate future.

Projects such as ZK sync, Layer Zero and Azero have been planning their entry into the cryptocurrency industry in recent months, bringing optimism about the future of these technologies.

In fact, we can already boast of the introduction of these concepts by Optimism and Polygon, which serve as examples for those to come Zero knowledge systems.

Another trend to consider for the future of blockchain is AI, IoT and EoT projects, which aim to automate the processes we discussed in the preceding paragraphs.

The introduction of OpenAI’s flagship product, namely ChatGPT, was likely the most eye-opening to the potential of this technology, which really seems to be on the verge of becomes dominant in every sphere of modern society.

Even the giant Amazon is about to introduce its own prototype chatbot able to meet the needs of users and the development of the relationship between individuals and computer systems.

See also  Technical managers seek to prioritize privacy in blockchain regulation

We don’t know yet which direction the future will take and whether new technologies in the field will succeed in making this world mainstream worldwide.

What we can guess, however, is that evolution is taking its course, and whatever path it takes, it will be a success for all of humanity

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *