/biz/ - Business & Finance

In order for blockchain to be used at their full potential, you need it to connect it with the real world data. Blockchain oracles are the means by which real-life data — like football scores, rainfall measurements or election results — are transmitted to a blockchain. Imagine that X and Y wish to place a wager on the outcome of a horse race. How would the smart contract know who to give the winnings to? An oracle can retrieve the information from the real world and deliver it onto a blockchain. Bitcoin and other native tokens don't need oracles because they do not represent or refer to anything outside of their own blockchains- those systems will not bring the adoption we all want to see.

Now let's say we have a house sale from X to Y. The smartcontract needs to verify if the house was actually transfered. That means there has to be a third party that you trust to verify the event in the real world actually happened. The most advanced oracle at the moment is ChainLink. Can you actually trust it? The answer is no. Here's why: For a p2p network to be decentralized, it has to be both OPEN and SYBIL RESISTANT. Chainlink is not both. You can either use it openly, then any node can be a malicious sybil node and there's no way to know, or you can use it by trusting the KYC provided by the Chainlink team, or some other arbitrary centralized reputation source. There is no mechanism for decentralized reputation in Chainlink. There's a centralized "reputation", which is utterly useless, you're just trusting another centralized guy. Let's also mention Chainlink team owns 30% of the coins.

A truly decentralized oracle network must be one where the data sources are chosen by the community, the validators are elected by the community, and the rules around staking, including rewards and slashing penalties, are also set by the community and not by a central authority.

Chainlink is not the perfect oracle we are looking for, the future of blockchain won't be built around it.