What Is the ‘Oracle Problem’ in Blockchain Technology?
The oracle problem is the challenge of securely and reliably feeding real-world, off-chain data into deterministic, on-chain smart contracts. Smart contracts are inherently isolated from the outside world.
If the external data provided by the oracle is inaccurate, manipulated, or unavailable, the smart contract will execute faulty logic, leading to incorrect settlements or losses.
Glossar
Oracle Problem
Discrepancy ⎊ The Oracle Problem, within cryptocurrency and derivative markets, represents a fundamental challenge in bridging off-chain real-world data with on-chain smart contracts, creating a potential for systemic risk.
Smart Contracts
Function ⎊ Smart contracts are self-executing agreements with the terms of the agreement directly written into lines of code, residing on a decentralized ledger.