Blockchain Oracles: An Important Part of Web3 Development
Tags: web3, blockchain, opensource, nf
Published: 2024-06-03 09:57:34


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The new version of the Internet called Web3 is currently under construction and has been developed under the new blockchain technology , which will empower Internet users to be owners of their personal data and content, being able to monetize through the tokenization of your digital assets.


An important part of the development of Web3 are the blockchain oracles , which I consider to be the bridge that will take us from the applications of the Web2 world in a secure way to the new world of Web3.

But, in order to understand the importance of oracles in **[Web3 development](https://www.blockchainx.tech/web3-development-company/)**, it is necessary to understand some basic concepts, such as Web3.

**## What is Web3?**
If today we are talking about Web3, it is because there are previous versions, such as Web1 and Web2. The first was primarily based on the publication of material that was received passively by users without participation via blogs and portals built on an open protocol architecture, which meant they were not owned by a single firm.

**## Web3**
The second Web2 that is currently in force, on the other hand, is characterized by the appearance of social networks and the participation of users, who became content creators. However, the activity is centralized in these social networks, which control the distribution of user information and data.

Instead, Web3 promises to combine the best of its predecessors : returning to the open protocols of Web1 while maintaining user participation in the creation of Web2 content. To achieve this, it is essential to use [blockchain development](https://www.blockchainx.tech/) that offers a decentralized infrastructure where each user will be the owner of their data and will be able to exchange digital assets represented in tokens.


Currently, if you want to be part of a social network, you must provide your data to create a user and be able to interact with or publish content on said platform. These data and content are used by the owner of the social network to monetize them through personalized advertising ads.

With Web3, users will own their data and will be able to obtain tokens for their content directly from other users.

**## What is a blockchain oracle?**
A blockchain oracle is a mechanism that allows smart contracts on a blockchain to access external information not found on it . External information can be anything from the price of a cryptocurrency on a stock exchange to the results of a sporting event.

Blockchain oracles allow smart contracts to be executed in an automated manner in real time and autonomously in response to changes in external information, increasing the efficiency and security of contract execution.

Blockchain oracles are important because blockchains alone do not have the ability to access external off-chain information . Oracles are also important because they help ensure that contracts are executed fairly and objectively, as the information provided is verifiable and reliable.

**## Types of blockchain oracles**
There are different types of blockchain oracles: centralized ones, which are less secure because they are controlled by a single entity , and decentralized ones , which use a network of decentralized sources that increase security and reduce the possibility of manipulation or censorship.

Currently, there is diversity, but the best known are of the following types:

**Price Oracles:** These oracles provide real-time asset price information. They are useful for applications that require accurate price information, such as cryptocurrency trading .
**Event Oracles:** These oracles provide information about specific events, such as the outcome of an election or a sports game. The information is used to activate smart contracts that automatically execute certain actions .
**Identity Oracles:** These oracles provide verified identity information, allowing smart contracts to be executed securely and efficiently without the need for a trusted third party.
**Data Oracles : **These oracles provide information of all kinds, from weather data to traffic statistics. They are useful for applications that require accurate and up-to-date information to function correctly.

**## main problem of blockchain oracles**
The main problem with centralized oracles is the lack of reliability and security in the information they provide. They may be subject to malicious attacks, manipulations or inadvertent errors that may affect the integrity of the information provided.

This can lead to incorrect execution of smart contracts and financial losses for blockchain users . They can also be a single point of failure in the blockchain 's chain of trust , which defeats the fundamental goal of decentralization and disintermediation of transactions.

To address these issues, decentralized oracles are being developed, which use a network of nodes to provide reliable and secure information to the blockchain, thereby reducing dependence on a single centralized entity. However, there is still a lot of work to do to improve the reliability and security of oracles on blockchains .

## Conclusion
It may not be possible to fully trust a decentralized application in the Web3 world that requires off-chain data without an oracle. This is because decentralized applications running on a blockchain can only store and process data on-chain. Data that is outside the chain is considered off-chain data.

Without an oracle, decentralized applications would have no way to access off-chain data in a reliable and verifiable manner. Therefore, if a decentralized application requires off-chain data for its operation, it is essential that a trusted oracle be used to provide this data.