What is a crypto oracle?

Welcome to the cryptohunt jam where we spend one minute a day explaining crypto. In plain English.

Today: Let's understand what a crypto oracle is.

Imagine you had a bet with your friend: If the temperature goes above 100 Fahrenheit next week, you get $20 from them. If it doesn't, they get $20 from you.

And you decide to do this with blockchains, so you set up a smart contract. This is a simple program, and both of you deposit $20 worth of crypto into it. It will pay the winner $40 when the time comes.

There is only one problem: The program doesn't know what temperature it is outside, because blockchains are designed to work entirely by themselves.

That's where an Oracle comes in: It is a third party data source that your smart contract can get the current temperature from.

So there you have it: An oracle is just an external data source, and hopefully one that you can rely on. And guess what - you were right, and it got really hot - and the smart contract worked. Congrats, you made $20!

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.